Ikea's Entry to the Japanese Market

IKEA’s First Entry In The Japanese Market

Executive Summary

A Brief Introduction

A Swedish home furnishing company founded in 1926, IKEA, by the mid 19th century was a large furniture retailer that intended to enter the Japanese market on 1974. After going abroad on closer western markets, IKEA following the Asian economic boom, believed in easily enter an attractive market supposedly “close” to consumption habits and according to IKEA’s managers, Japan seemed a feasible and attractive choice. However after 12 years in Japan the Swedish company decided to leave as a notable failure.

IKEA, as other western companies such as Sephora and Carrefour believed in Japan to be the potential Asian country to begin their expansion toward the east and broaden their market; giving that Japan at the time was a powerful steady economy, that represented the second largest retail market in the world IKEA approach Japan with the same standardized strategy as any other western country without any major adaptation, believing that with their international knowledge at the time seemed enough. The idea, however, proved to be far from reality.

Because of the very nature of the retail industry, in which the market they serve is delimited geographically versus the idea of global manufacturing, one could easily argue that retailers need to be even more aware of cultural and general consumer behavior linked to their entry and management strategies. Retail sells, besides products, services; this makes it harder since the need of interaction between two cultures must be a cornerstone in their strategic planning.

IKEA’S Global Strategy

Why did IKEA Go Global?

IKEA internationalization objective is to encourage sales growth. As retailers, they need to have access to large markets to increase their sales. IKEA’s products are target for a mass driven market in which they search to maintain their model in new international markets, therefore being able to have low production costs to...