Market Entry Strategies of IKEA in China: A Detailed Research Report

This report examines IKEA's successful market entry strategies into the Chinese market, initially utilizing a joint venture approach before transitioning to a wholly-owned subsidiary model. The joint venture strategy enabled IKEA to mitigate business risks, navigate competition, and leverage existing distribution networks. The subsequent shift to a wholly-owned subsidiary facilitated market expansion and penetration, allowing IKEA to establish its own retail and production centers. IKEA adapted its products, pricing, and promotional activities to align with Chinese culture and consumer preferences, strategically locating retail stores along railway transportation networks. The report also highlights IKEA's future focus on e-commerce and social networking to further enhance its market presence in China. For more solved assignments and study resources, visit Desklib.

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The Research and Report on Market
Entry Strategies employed by IKEA for
gaining an entrance into the Chinese
market

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Executive Summary
Summary of the Report
The report outlines based on the use of a case study associated to IKEA an effective entry
strategy taken for entering an emerging market like China. It outlined the effectiveness of the
joint venture strategy used by IKEA for entering into the Chinese consumer market and
subsequently changing the strategic model to ‘wholly owned subsidiary’. The application of the
joint venture strategy in the initial period by IKEA for entering the Chinese market helped it in
cushioning itself from the emerging business risks and also growing competition both in the
regional and international landscape. Further, the use of the joint venture as an entry strategy also
helped IKEA in optimally exploiting the existent marketing and distribution network for
developing an effective presence in the Chinese soil. The shift from joint venture to wholly
owned subsidiary model was also reflected in the research report as the need changed from
gaining an effective entry point to market expansion and penetration. IKEA working based on
the use of the wholly owned subsidiary model gained the potential of setting up its own retail
stores and other production and distribution centres along the Chinese market. The gaining of
regional consumer and market knowledge in terms of working based on the joint venture model
in the initial period helped IKEA in easily adapting its products, price structures, promotional
and distribution activities in ideally matching the Chinese culture and needs. The above strategic
model used by IKEA rightly helped the company in cultivating large number of retail stores
along the railway transportation network in that Chinese commuters are interested more in
availing public transport systems. The research report also reflects on the further outlook of
IKEA in taking resort to e-commerce and social networking applications for enhancing its
presence in the Chinese market and in generating greater market penetration.

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Outlining the Purpose
The purpose of the report is to understand the key market entry strategies that are undertaken by
business organisations for effectively expanding their business presence in key emerging
markets. The report also focuses on understanding the manner in which the business strategies
are customised for developing an effective business and marketing presence in an emerging
market like that of China.
Research Method used
Secondary research activities are incorporated regards to studying of printed literatures like
books and journals and other online resources. The study of the secondary sources provides
needful background information in carrying out primary research activities in a subsequent
fashion. Primary research methods associated to the undertaking of interview and survey
activities are constituted for gaining of contemporary information from target respondents about
the efficacy of the entry and market penetration strategies used by IKEA in China. Interview and
survey activities carried out in the report also helped in involving of qualitative and quantitative
datasets that ideally helped in meeting the objectives of the triangulated research activity.
Further, in that the research is narrowed down on IKEA the application of the case study
research method also gained use in the research report.
Findings gained
The main findings reflect that IKEA used joint venture for gaining an effective entry into the
Chinese market in contrary to use of franchising model regards to entering India that acts as
another emerging market in the Asian economy. It reflected that the use of joint venture as an
entry strategy not only helped IKEA in cushioning against competitive pressures and business

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risks but also helped the organisation to adapt its market entry strategies based on adapting to the
Chinese consumer culture and needs. Interviews and surveys were constituted in the report for
understanding the effectiveness of the market entry and other expansion strategies undertaken by
IKEA for developing and sustaining an effective presence in the Chinese market.
Main Conclusions and Recommendations
The research report concluded that IKEA gained effectiveness in using the Joint Venture mode
as a potential strategy for entering the Chinese market. It also highlighted on the subsequent
marketing strategies and also the business and market expansion models that IKEA had
undertaken for gaining needed market penetration in China. In terms of recommendations, the
research report is reflected to be further enhanced based on the incorporation of the macro and
micro business environmental analysis such that the same would be able to highlight on the
opportunities and challenges that are ought to be faced by IKEA in terms of carrying out
business in China. It would also help in analysing the level of competitiveness in the furniture
market of China that would impact IKEA.

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Table of Contents
Methodology....................................................................................................................................6
Research Philosophy....................................................................................................................6
Research Design..........................................................................................................................6
Research Strategy........................................................................................................................7
Sampling......................................................................................................................................8
Data Collection strategy..............................................................................................................9
Data Analysis strategy...............................................................................................................10
Research Ethics..........................................................................................................................11
Results............................................................................................................................................11
Results of the Interview.............................................................................................................11
Reasons for which IKEA focused on the Chinese Market....................................................11
Emerging markets other than China......................................................................................12
Market Entry Strategies undertaken by IKEA for entering China........................................12
IKEA’s market strategies in developing business in China...................................................13
Need for development of country oriented strategies............................................................13
IKEA’s presence in China.....................................................................................................14
Link between market entry strategy and corporate objectives..............................................14
Results from Survey..................................................................................................................15
Consumer demand in the Chinese consumer market.............................................................15

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Product Designs of IKEA Furniture in China........................................................................16
Affordability of IKEA Furniture to Chinese Consumers......................................................17
Effectiveness of Joint Venture as an effective entry strategy in emerging markets..............18
Responses regarding the selection of different types of market entry strategies...................19
Responses regarding the use of technology by IKEA for both expanding and developing an
effective presence in China....................................................................................................20
Responses regarding existence of Glocalisation strategy regarding IKEA’s expansion in
China......................................................................................................................................21
Discussion......................................................................................................................................22
Consumer demand in the Chinese consumer market.............................................................22
Product Designs of IKEA Furniture in China........................................................................23
Affordability of IKEA Furniture to Chinese Consumers......................................................24
Effectiveness of Joint Venture as an effective entry strategy in emerging markets..............24
Responses regarding the selection of different types of market entry strategies...................25
Responses regarding the use of technology by IKEA for both expanding and developing an
effective presence in China....................................................................................................26
Responses regarding existence of Glocalisation strategy regarding IKEA’s expansion in
China......................................................................................................................................26
Conclusion.....................................................................................................................................27
Recommendations..........................................................................................................................29
Reflection.......................................................................................................................................29

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References......................................................................................................................................32
Appendix........................................................................................................................................35
Personal Information.................................................................................................................35
Interview Questions...................................................................................................................35
Survey Questions.......................................................................................................................36

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Methodology
Research Philosophy
The research is conducted through employing interpretivism and subsequently positivism
research paradigms. Use of interpretivism research philosophy gains ground in that the
researcher focuses on developing unstructured questionnaires for interviewing middle and high
level managerial respondents working in IKEA (Shannon-Baker, 2016). Employment of
interpretivism research philosophy is identified to render in-depth inferences in narrative format
that help in understanding the perception of the respondents associated to the research issue
(Maginess, 2016, pp. 1-6). Other than interpretivism research paradigm the development of
structured questionnaires for surveying employees and consumer groups of IKEA requires the
application of positivism research paradigm. Employment of positivism research philosophy is
taken to generate specific and quantitative nature of inferences that are ideally meant to address
the research objectives. It thereby helps in clarifying the inferences gained and in making the
work scientific in nature (Kivunja & Kuyini, 2017).
Research Design
The research is based both on the application of inductive and deductive research. The
significance of employing inductive research is gained in that the research activity requires the
study of considerable number of literatures available from books, journals, online articles, online
newspapers, company reports and other publications associated to the issue of strategies used by
companies for entering emerging markets (Beta, Picciarelli, & Ogilvie, 2015). The study of
considerable number of literatures ideally help in providing salient information regarding the

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topic under research and thereby help in serving as a necessary background for primary research.
It contributes in developing new conceptual understandings regards to the issue under research
(Creswell, 2014, pp. 105-107). Apart from inductive research elements the researcher is also
required in employing deductive research. Employing the deductive research design requires the
development of research hypothesis and thereby in involving interview and surveys for gaining
of pragmatic information that would help in proving the hypothesis framed (Singh & Khan,
2019, p. 150). Thus where in the case of inductive research design the researcher moves from
narrow to broader paradigms the deductive research design requires narrowing down the level of
research findings and thereby in generating specific inferences (Creswell, 2014, pp. 105-107).
Research Strategy
Different types of research strategies are focused on being involved by the researcher for
conducting the research. At the outset, the requirement in reviewing large number of literatures
associated to books, journals, online articles, reports and the like reflects the employment of
secondary research activity. The employment of secondary research as an effective tool rightly
helps in gathering considerable number of information within a short period and in a cost-
effective fashion (Rahi, 2017). It also helps in the gaining of high quality resources that are
authentic and credible and thus help in serving as quality background information for
undertaking of primary research activity. The researcher in a subsequent fashion is required to
undertake interviews and also surveys regards to the undertaking of primary research activity
(Mooij, Heskes, & Posthuma, 2015). The undertaking of interviews is identified to render high
volumes of qualitative and narrative data sets while the undertaking of surveys are identified in
generating quantitative data sets that are specific in nature. Involving of interviews and surveys
rightly help in the gaining of pragmatic information associated to the research issue and thereby

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make the research activity contemporary in nature (Kienzler & Kowalkowski, 2017). The
gaining and using of both qualitative and quantitative datasets ideally meet the objectives of
triangulated research findings which also help in augmenting the level of research quality. In
addition to the above research strategies the focus on carrying out the research activity on IKEA
and its expansion strategies relating to entering the Chinese market ideally encourage the
application of case study oriented research (Singh & Khan, 2019, p. 168). The application of
case study based research activity ideally contributes in the carrying out of the research from
diverse perspectives. Further, the application of case study oriented research activity confers the
same advantages like that gained based on involving secondary research resources and tools
(Kienzler & Kowalkowski, 2017).
Sampling
The involvement of interview oriented research requires and also the gaining in of qualitative
inferences requires employing non-probability sampling techniques like the clustered sample.
The employment of cluster sampling style helps in the selection of managerial respondents of
around 20 belonging to both the middle and higher level managerial profiles to design the
sampling population for the focused interview process (Halcomb & Hickman, 2015). The
employment of the cluster sampling process is made in that the sample respondents are selected
from clusters like the middle and higher level management belonging to IKEA (Gustafsson &
Fisk, 2018). The carrying out of survey activity requires the use of probability sampling
techniques like the stratified random sampling. The employment of stratified random sampling
activity is focused on being undertaken in that the survey population is ought to be constituted
based on the selection of both retail staffs and managers working in IKEA retail stores and
offices based in China in one hand and also the consumer groups interested in purchasing IKEA

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furniture products. A total of 100 respondents are focused on being selected based on the
employment of stratified random sampling model such that 50 respondents each would be
selected from the two strata sets encompassing the retail staffs and consumers respectively
(Badke, 2017). The employment of stratified random sampling procedure gains significance in
that it helps in the selection of sampling respondents from two different strata sets like that of
consumers and retail staffs. A set of 50 respondents each need to be selected from the two
different strata sets. The employment of stratified random sampling gains significance in that the
same helps in reducing the chances of emergence of sampling errors that are observed in case of
random sampling (Badke, 2017).
Data Collection strategy
Data collection regards to the interview is carried out based on the incorporation of gadgets like
microphone and tape recorders for recording the answers rendered by the respondents pertaining
to the focused group of IKEA’s managers. The development of unstructured questionnaire sets is
prepared and used for the undertaking of the interviews of the focused group (Wright, Nimmon,
& Law, 2016). Structured questionnaires are prepared for development of survey questionnaires
that are thereby distributed to the respondents based on use of mailers or through the
employment of electronic mailing and social networking platforms. Likewise, the use of
SurveyMonkey as an online tool for carrying out online surveys also needs to be employed for
collection of responses. The structured questionnaire sets need to be accompanied with five-point
likert scale where the respondents are encouraged to select one out of the five parameters for the
respective questions. The responses are tabulated in a spreadsheet in the form of a frequency
distribution table for subsequent analysis (Smith, 2017).

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Data Analysis strategy
The data analysis in the research is carried out in two parts. Qualitative datasets are analysed
based on using grounded theory approach that requires the formation of specific codes in terms
of coining phrases, keywords and also sentences. The identification of specific key texts
contributes in ideally grouping the qualitative information under different heads and thereby in
finding effective relationship between the codes. The analysis carried out based on the
development of specific codes like ‘reasons for expansion into emerging markets’, ‘strategies for
entering into emerging markets’, ‘success of strategies in helping IKEA develop an effective
presence in China’ and likewise ideally helps in rendering greater clarity and also in organising
the research findings in an effective fashion (Johnston, 2014). The analysis of the quantitative
datasets is made based on the application of the frequency distribution table that can be created
in an excel sheet based on the tabulation of parameters or categories and thereby in finding the
frequency of responses and the percentage of responses thereof in a simultaneous fashion.
Coupled with the tabulated datasets against each of the different structured questions the
quantitative data analysis section also focuses on creating different types of charts and other
graphical illustrations for clarifying the findings (Johnston, 2014).
Research Ethics
The researcher is required to fulfil and meet certain ethical guidelines in that interview and
survey activities are focused on being undertaken in fulfilling the research requirements. The
undertaking of the interview and survey activity needs to follow the activity concerning the
gaining of needed consent by the researcher from the interview and survey respondents before