Ikea: a Long March to the Far East Case Study Analyses

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IKEA: A Long March to the Far East case study analyses

From its humble beginning as a small general retail store in a village situated in the south of Sweden, IKEA has grown into the world’s largest furniture retailer with 279 stores in 36 countries today. Specializing in furniture and home decoration, IKEA has an annual turnover of 19.8 billion euros (source: IKEA, www.ikea.com, accessed 25/03/2012). The IKEA catalogue is printed in 52 editions with 25 languages, with a global distribution in excess of 160 million copies. Armed with its international experience in Europe and North America, IKEA took the company into the third phase of its development by embarking on a major expansion into the Far East, in particular Japan and China. IKEA sees the Far Asia as an emerging market still in its infant stage. Its number of retail outlets in Malaysia, Singapore, Taiwan, Beijing, Shanghai and Hong Kong are very small and comprises a mere 3% of the company’s total sales. These stores were expected to be more successful in the near future. IKEA’s imminent strategic expansion into this region exemplified its ambitions to dominate this emerging market.

IKEA’s entry into Mainland China started in 1998 when it opened its first store in Shanghai, followed by Beijing in 1999. IKEA took its time to get to know the Chinese customers. This prudent approach to market entry took IKEA the following 5 years before it opened its first full-scale standard IKEA store in Shanghai in 2003. The store occupies 33,000 square meters and retails more than 7,000 products. A record of 80,000 visitors flocked to the store on the opening day. This new Shanghai store represents an important landmark for IKEA’s business development in China. It is the largest of its stores not only in China, but also in Asia. In the same year, the president of IKEA China, Ian Duffy, unveiled a long-term plan to…...

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