Global strategies used in trading for operation and expansion vary from one entity to the other. Some of the strategies depend on the type of industry, nature of the market, demands from the clients and other stakeholders, and the type of competition in the market. Globalization is another important factor that influences the whole international business strategies that entities adopt as it dictates market entry modalities (Luthans and Doh 557). It is important to remain sensitive to international trade values while at the same time keeping a balance for internal demands. Incorporation of the two ensures an entity succeeds in its approach to gaining international recognition while benefiting from wide global market base.
Ikea operates in the furniture industry with different stores starting from the home county, Sweden. That is the sector that has given it international fame when it began from a humble beginning (Luthans and Doh 557). It evolved from simple furnishing materials to be an international brand with branches from over 40 nations across the world. The competition witnessed in the industry was stiff right from the onset (Luthans and Doh 556). The high level of rivalry caused some of Ikea’s suppliers to quit business due to the low income that the business was generating. However, it is the competition that made the Ikea entrepreneur more innovative in his market approaches for sustainability when he decided to develop his brand.
Ikea used different entry strategies to trade in different nations. It entered China through a partnership with the Chinese government according to the policy that existed in the nation (Luthans and Doh 557). However, it failed to follow the same system while entering India which made the entry delay. The firm entered as an international entity without partnership after the Indian government had removed some of the barriers (Luthans and Doh 560). Moreover, it was able to enter the hospitality sector as a retail trade through a cost-effective strategy that ensured it delt and offered goods at relatively lower prices than the competitors.
Changes in Ikea strategies are caused by changes in communication and customer contacts. Digitization has led to increased social media usage and emerging customer apps used for purchases and inquiries. This implies that those employed in the human resource departments as customer contact points and those in the purchasing ends would have no work to do when the entity adopts the trending practice. Increased usage of digital frameworks has reduced the roles of salespersons leading to unemployment in many occasions and entities (Popelo et al. 161). Competition for customers is a major force pushing the entity to embrace digitization while cutting employment chances.
Ikea company should incorporate transnational strategy in its pursuit of more expansion opportunities. The strategy permits the entity to trade in its brand name across the globe which would ensure fame for the products and easy promotion for marketing. Just like many other global enterprises, Ikea should adopt the framework to give it an edge in product promotion where the same brand name sells everywhere whether through the media or on direct sales to the clients. In the digital era, it is simpler to use a single brand name irrespective of the location of a store of the company to avoid clients’ confusion (Shire 440). Since communication has been necessitated through the media, and information passed reaches a wider audience who should get uniform product details and names. Consequently, the strategy would work well for Ikea as an international firm with the aspirations to reach many clients from different destinations.
Luthans, Fred, and Jonathan P. Doh. International Management: Culture, strategy, and behavior. McGraw-Hill, 2018.
Popelo, O., Kychko, I., Tulchynska, S., Zhygalkevych, Z., & Treitiak, O. (2021). The Impact of Digitalization on the Forms Change of Employment and the Labor Market in the Context of the Information Economy Development. International Journal of Computer Science & Network Security, 21(5), 160-167.
Shire, Karen. “The social order of transnational migration markets.” Global Networks 20.3 (2020): 434-453.
Wilson, Mark. Ikea Plans to Cut 7500 Jobs, 2018. https://www.fastcompany.com/90271399/ikea-plans-to-eliminate-7500-jobs