IKEA in Russia: Strategies and Ethical Dilemmas

This article discusses IKEA's market entry strategy in Russia, the external factors that impacted their business prospects, and the impact of political machinery on emerging markets. It also explores strategies for growing business in underserved markets and IKEA's approach of establishing large shopping complexes.

Case 2: IKEA in Russia: emerging market strategies and ethical dilemmas
Introduction
The company IKEA has practised so many home visits to consumers to converse with people see
how they actually live and using the home and to recognize prospective needs not completely
realizing by consumers themselves. To understand the local family situations and also furnishing
so many traditions which can provide a base for an impactful introduction as well as marketing
of the concept of IKEA (Uslay et al, 2014).
The manager of the store has also pointed out the main priority in the places like Russia is the
normal cost of living and it comes to the car as well as TV and later maybe trip overseas. One
instance of how a company like IKEA has focussed the local place is in growing the settings of
room to completely reflect local situations in terms of apartment sizes as well as local
conventional based on furnishing (Deligonul et al, 2013). It is also possible to combine, mix and
match the variety of Russian home.
The entry strategy of the company of Russia is based on the basic level of standardization, the
concept of the market further holds that the current marketing program will be highly effective
since it can be customized as per the distinct needs of every targeted group of consumers.
Customers in distinct nations still have a wide variety of cultural background (Sanders et al,
2012). They change differently at the time of needs and wants which can be based on spending
powers, product cases and patterns of shopping since these changes are hard to transform, IKEA
must adopt the prices of products, promotions and channels which fit the customer wish in
Russia (Elg, Ulf et al, 2012). The company has determined to apply some form of adapted
international marketing strategy to adjust with the marketing strategy and mix components to

every international target market that bears more cost, however, hope for a large market return
and share.
Question 1: what are the various external factors which a company must take into account
while devising a market entry strategy for a new country? discuss these factors in the
Russian context and in the actions taken by IKEA.
The company faces a major number of external elements that can impede the ability to enter as
well as conduct business in Russia. IKEA facing challenges with the Russian government,
corrupt bureaucracy and finances. These challenges have further caused so many delays as per
the entry and continue to cause operational challenges that have influenced the effective
operations of IKEA in a place like Russia. Business have entered a new nation that must take so
many external elements into account before and during the entry time. IKEA’s starting attempt to
enter the country in 1991 was completely blocked because of the collapse of the Soviet Union.
There is other attempt as well that can be thwarted 2 years later by the constitutional crisis of
Russia and economic crisis (Lasserre et al, 2017). The ever-changing events and moving
elements forces IKEA to constantly stop, re-test and initiate again with a revision-based strategy
to get the goals. The important employee of IKEA Lennart Dahlgren completely oversaw
Russian operations of IKEA. He also recognized that the market of Russia came with so many
promises, he has some form of resentment towards Russia and based on a belief that the country
to house an immensely corrupt bureaucracy. As a matter of fact, organizations were also interest
in Russia must be completely up-front as well as honest while dealings. When an international
organization pay bribe, there is no end to any demand for the bribe (Piercy et al, 2016). This is
why, foreign organization must feel the urgency toward reporting the corruption. It is also
possible that the vocal opposition towards bribery in a place like Russia lead to the inability of

the company to gain some approval to enter the country. IKEA has a strong, international
reputation for just being hard-lined against any corruptive business activity and also has a record
of gaining accomplishment of the workforce adherence towards it rigorous ethical standards. The
company also faced continuous adherence the rigorous ethical standards (Zhao et al, 2012). The
company is also facing continuous setbacks when establishing new stores as well as advertising
for new stores. The whole expansion came towards a stop in the year 2009 when the company
will not completely succumb to pay bribe in order to gain some approval. Right after two years
of approval was in the end granted, sans bribe by the government of Russia (McCarthy et al,
2013). In the years that also ensued, the company further experienced fire, safety, health, tax,
building codes and customs-based challenges anyone of which can be delayed while the store
opens with ground-breaking rules by the store or access of the road in improving any kind of
barrier.
Question 2: what is the impact of strong and co-operative political machinery on the
business prospects of an emerging market? In this context, discuss IKEA’s Russian
sojourn. What should IKEA’s business strategy be in the future?
It has been seen that Russia is one of the developing markets when it comes to the vision of
machines with the current political and the conditions of the fiscal forms. They are set for the
dispersed quality for cooperating in the country. The head of the business media focus on the
facilitation through the cutting-edge vision where Russia trading has been made completely
sensible.
Russia has been working on the improvement in the market with focusing on the aeronautics and
the research with security and the development. It offers the market with the potential with

encouraging the remote guest for benefitting the offerings with communication. There are
different associations that are working on the Russian machine dreams.
IKEA is focusing on the strategy to deal with the modifications of the extent that has been made
with the costs related to the Russian lifestyle. It includes the globalisation with the
transformation set for the key variables. Here, Deresky focus on the globalisation with the key
variables for growth. The productive standards are set to figure out the advancement with the
relationship in the different country, based on the social, money and the political standards set
for the country.
Question 3: what are the strategies that a company should use to grow its business in an
emerging market? How do you establish a strong market presence in the underserved
market? Discuss IKEA's strategy of establishing large shopping complexes instead of
standalone shopping centres.
The opportunities by the company to accomplish some long-run success in Russian market was
that the owner of IKEA saw the nation as an investment in long-term which can also enable the
management to offer a long-term opinion that can become a competitive gain in many years to
come. The company was successful with the standard product variety which was the reason that
many of IKEA ranges focus on the modern style that is distinct from tradition Russian kind
however also attractive with new Russian consumer since it symbolises transformations
(McFarlin et al, 2014).
Marketing communication also became a crucial means to develop the right picture of IKEA in
Russia. Authorities of government as well as officials of so many ranks that were also a crucial
group of stakeholders. The goodwill and support were important for IKEA's expansion in Russia.

Authorities of the government and officials of different position were also crucial stakeholder
group and the overall goodwill as well as support was critical for the expansion of Russia. But
the company also faced some challenges in Russia like Lack of experienced domestic worker
(Panibratov et al, 2016). The new to many customers of Russia along with high customs fees,
importance to buy more from a local process, the challenge in finding as well as growing
suppliers in Russia, the low buying power of the customer of Russia. The Russian consumer with
the low price was immensely strong associated to many no so attractive products of bad quality
and one of the issue has based on overcoming this and also explaining how it is possible to
provide good products at low prices.
Conclusion
Selling in international location was considered very risky as well as expensive for any
organization so just large business grows too large for their domestic market which is used to
commit to this kind of marketing with an improved level of communication which is better to
transport links and free global trade (Percy et al, 2016).
Recommendations
For many companies, international marketing is now an option to profitably expand the sale and
for some companies, it is no longer a reason to remain based in one nation. Customers can also
make many decisions based on buying every day and the buying decisions in so many details are
based on answering the questions about what a customer can buy, where they actually buy and
how much one can buy and many other questions.

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