Business Practice Portfolio Assignment IKEA

Added on - 18 Sep 2019

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Business Practice Portfolio
IKEA is known as a multinational group of companies that design and sells ready to assemblefurniture goods such as chairs, bed, and desks and different home accessories. It is mostlyrecognized for its high quality and creative designs. From some last decade, the organizationfaces the problem of lack of international environment dealing capacity. Due to this problem, itfaces various challenges while entering into the market of other countries. In this assignment, wewill study the problem of lack of international dealing capacity of IKEA and propose solutions toresolve the problem of the organization. During 2008, it is considered as the world largestfurniture retailer organization. It was established in Sweden during 1943 by Ingvar Kamprad,who was known as one of the world’s richest person in 2013. It has a critical corporate structure,the purpose of which is to avoid tax. With the help of proposed solutions, the organization is ableto conduct their business operations with foreign countries smoothly. As per the September 2016report the organization owns more than 389 stores in 48 different countries. Now it wants toenter into the Foreign Market. For this purpose it plans to open 25 stores, investing about 10,500Crore. It began constructing its first store in India on 11 August 2016. But somehow it is failed toestablish itself in the Indian market. It sells its product to different customers as well as variouseducation and small enterprises, business houses, and government houses. It fails due to itsinternational dealing capacity. According to the revenue generation is considered the biggesthome appliances organization.IKEA decides to enter international markets and go global for a range of reasons and thesedifferent motives at the time of entry should produce performance goals, different businessstrategies, and even forms of market participation. But, it's dealing capacity with the internationalcompetitive firms disappoint it. Due to lack of international competitive power, the organizationnot able to establish itself successfully in other countries such as India. The foremost reason1
behind its go to the global decision is to increase its sale. Expanding internationally helps theorganization in enhancing the sale of its products. Approximately 95 % of the world's populationlives outside the US (Thompson, 2013). So, the organization feels a good opportunity to expandits market in the foreign countries also. The organization has a different product or creativityadvantage with which it can easily enter the foreign market. Due to its creative designs, theorganization decided to establish itself in the market which ultimately helps the organization inenhancing the sale of its products. Another reason behind goes global is improve profits. It is animportant reason which motivates the organization to go global. The export market is not ascompetitive as the US, and therefore the price pressure on the organization are less. By enteringthe foreign market, the organization can enhance prices of its products which ultimately enhancethe profit level of the organization. With its globalization decision, the organization will be ableto enjoy a less competitive landscape which enhances the profit margin.But the lack of competitive capability prevents it in doing so. The reason behind it is differentlike lack of skilled human resources, capability, resources, and cultural knowledge (Anderson,2014). All of these problems prevent the organization from entering the foreign market.IKEA decided to enter the foreign Market. It has more growth opportunities if it successfullyexpands its business in foreign countries. But, due to its lack of international competitivecapability, it faces various problems while establishing itself in foreign countries. The first andthe foremost problem is talent gap. The organization faces lots of difficulty in finding andretaining the talented employees who have knowledge about an international or national marketfor highly skilled jobs. Highly talented employees help the organization in reducing their workburden because they easily handle both the national or international work processes (Armstrong,2014). IKEA requires very creative employees to maintain its quality, so it faces quite a2
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