International Business and Global Markets

Running head: INTERNATIONAL BUSINESS AND GLOBAL MARKETS
International Business and Global Markets
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1INTERNATIONAL BUSINESS AND GLOBAL MARKETS
Executive Summary
This report had evaluated the given case and the external factors of IKEA to identify the risk
factors for entering into Russia. It had also identified all the elements required for establishing a
strong presence in an undeserved market. The report would conclude by discussing IKEA’s
strategy for establishing large shopping complexes instead of standalone shopping centres.
IKEA is the market leader in this segment offering home accessories, kitchen appliances and
ready-to-assemble furniture’s. The report conducted analysis based on the case study of IKEA in
Russia. The expansion made in Russia was not at all suitable for the organization and if they
wanted to sustain in that market they should have formed partnership with local companies to
avoid the political instability and corruption.

2INTERNATIONAL BUSINESS AND GLOBAL MARKETS
Table of Contents
Introduction......................................................................................................................................3
Crucial external Factors for Market Entry.......................................................................................3
PEST of Russia................................................................................................................................5
Risk faced by IKEA.........................................................................................................................8
Establishing Strong market presence...............................................................................................9
Establishing large shopping complexes instead of standalone shopping centres..........................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

3INTERNATIONAL BUSINESS AND GLOBAL MARKETS
Introduction
This report will evaluate the given case and the external factors of IKEA to identify the
risk factors for entering into Russia. It will also identify all the elements required for establishing
a strong presence in an undeserved market. The report will conclude by discussing IKEA’s
strategy for establishing large shopping complexes instead of standalone shopping centres.
IKEA is the market leader in this segment offering home accessories, kitchen appliances and
ready-to-assemble furniture’s. Ingvar Kamprad is the founder of the company and it’s a Dutch
multinational company founded by a Swedish person (IKEA, 2018). The organization has been
known for providing modern furniture at minimum prices taking into consideration a eco
friendly approach towards its resources.
Crucial external Factors for Market Entry
The different external factors affecting the market entry of a company are socio-cultural
factor, competitive environment, country risk, demand uncertainty, market size and market
growth (De Villa, Rajwani and Lawton, 2015). Market size is a crucial factor in making an
international entry because large countries large countries require large investments and
commitments such as equity participation and wholly owned subsidiaries. Market growth is the
next key factor as companies invests in markets with future potential growth. The markets such
United States, Germany, United Kingdom European countries and Japan have string well
developed market. There are industries in these markets that are already saturated such as
consumer electronics, automobiles and retail. Therefore, the growth of these countries is
declining due to it saturation and countries that are still developing will have the plenty of