Ikea's Business Strategy in Russia

GLOBAL BUSINESS
DYNAMICS

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Contents
Summary...............................................................................................................................................2
Essence of the case............................................................................................................................2
Issues.................................................................................................................................................2
Causes...............................................................................................................................................3
Factors...............................................................................................................................................3
Solutions................................................................................................................................................3
External factors that need to be considered while making market entry strategy...............................3
Actions taken by Ikea........................................................................................................................4
Impact of strong and co-operative political machinery......................................................................4
Business strategy in future.................................................................................................................5
Strategies that can help its growth in the emerging markets............................................................5
Strong market presence in undeserved market...................................................................................6
Ikea’s strategy of establishing large shopping complexes.....................................................................6
Conclusion.............................................................................................................................................6
REFERENCES......................................................................................................................................7

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Summary
Essence of the case
Ikea is one of the biggest furniture companies in the world and they have been leaders in the
furniture market of Russia. This case study reflects the journey of Ikea in Russia where it can
be easily seen that due to the corruption and ill behaviour of the government staffs at different
levels of the government it was difficult for them to achieve the growth rate which they
desired. The case also illustrates the fact that in order to expand in different cities and regions
of Russia Ikea has to invest a lot of their money in giving bribery (Fey and Shekshnia, 2011).
The bribes are so common in the country that it is working like another parallel structure.
Due to this IKEA had to stop their expansion twice in a decade. Ikea believed that
transparency has been the core of their business but the local authorities of IKEA felt that
without using wrong practices, it is hard to make expansion as desired by the company
(Kleiner, 2012). They found that in Russia corruption was both at local and national levels.
Many of the officials had grudge against the company and hence they stopped many of the
construction projects of IKEA by not giving the required permissions. This increased their
operational budget and the overall cost of projects.
In the beginning company started with only two kinds of furniture one in the premium range
and other that is available at lowest of prices. They gave higher priority to values rather than
skills and work experience. This made a strong organisational culture to build inside the
company. This helped them in ensuring sustainability (Bruno, Bytchkova, and Estrin. 2013).
Even after so many pitfalls, this company continued to do their business in Russia. This is
because of the quality of raw materials like Timber in the county and also the amount of
opportunities available in the firm.
Issues
 In Russia, they faced issues related to the management of operations due to high
corruption at different levels of organisation (Jonsson and Foss. 2011). Many of their
officials were caught in the issue such as giving bribery to the government officials so
that they can easily fasten up the pace of their process of expansion.
 In Russia there were many officials that do not wanted Ikea to grow. This is the major
reason why they did not give permission to the company for doing different projects.
 The Russian Rubal crisis along with financial problems of Russia was another major
issue faced by Ikea.