Exploring International Market Expansion: The Case of IKEA
1. Choose ONE company in any country.
2. Evaluate the current operation and situation of this company by carrying out internal and external environmental analyses using appropriate international marketing theory. Using secondary research of the organisation/company and country, you are also required to evaluate the wider and competitive environments.
3. Based on the Task No. 2 analysis, research and suggest ONE NEW foreign market of your choice (this means that the company does not currently operate in this country) using international market research theory and justify why this country is a good/bad market to enter.
4. Provide suggestions for segmentation, targeting and positioning of your chosen organisation to allow the company to grow and sustain competitive advantage in the country identified in Task No.3.The Company cannot be Lyft
Exploring International Market Expansion: The Case of IKEA
Internal and External Environmental Analysis of IKEA
Internal Analysis:
- Strengths: IKEA is known for its strong brand reputation, cost leadership strategy, and innovative product designs. The company's flat-pack furniture concept and focus on sustainability have contributed to its competitive advantage.
- Weaknesses: Challenges such as complex supply chain management, dependence on global economic conditions, and occasional quality control issues pose risks to the company's operations.
External Analysis:
- Opportunities: Growing consumer interest in sustainable products, expansion into emerging markets, and e-commerce trends present opportunities for IKEA to diversify its market reach.
- Threats: Competition from local furniture retailers, changing consumer preferences, and geopolitical uncertainties affecting global trade may pose threats to IKEA's international operations.
Evaluation of Competitive Environment
IKEA faces competition from both traditional furniture retailers and online platforms offering similar products. Local customization preferences, pricing strategies, and brand positioning are key factors influencing competitive dynamics in the furniture industry.
Market Expansion Recommendation: India
Rationale for Market Selection:
- Market Potential: India's rapidly growing middle class, urbanization trends, and increasing disposable income make it an attractive market for furniture retailers.
- Cultural Fit: IKEA's focus on affordable yet stylish furniture aligns with Indian consumers' preferences for value and design.
- Regulatory Environment: Recent easing of foreign direct investment regulations in retail sectors in India provides favorable conditions for IKEA's entry.
Segmentation, Targeting, and Positioning Strategy
- Segmentation: Dividing the market based on demographics, psychographics, and behavioral factors can help IKEA target specific consumer segments in India.
- Targeting: Focusing on urban centers with high purchasing power and a preference for modern, space-efficient furniture can enhance IKEA's market penetration.
- Positioning: Emphasizing quality, affordability, sustainability, and Swedish design heritage can differentiate IKEA from local competitors and create a unique value proposition in the Indian market.
Conclusion
Expanding into the Indian market offers IKEA opportunities for growth and market diversification. By leveraging its core strengths, addressing market-specific challenges, and implementing a tailored marketing strategy, IKEA can establish a strong presence in India while sustaining its competitive advantage in the dynamic global furniture industry landscape.