IKEA is considered a success story in China. But the Swedish furniture giant had to face numerous challenges when it entered China in the late 1990s. China was very different from IKEA’s traditional markets in the West and IKEA had to adapt its strategy to suit the country. IKEA was able to project itself as an aspirational Western brand among the Chinese middle class. After initial failures, the company positioned its brand in China in such a way as to reflect consumers’ needs and that enabled it to create a positive brand image for itself. China soon became the fastest growing market for IKEA, and the company saw significant growth in the country. However, with worldwide speculation over China’s increased economic and financial risks from its rapid build-up of debt and the company itself getting embroiled in controversies, can IKEA expand its market and sustain its business in China? The case discusses the challenges before Angela Zhu (Angela), country retail manager of IKEA China, in 2017, as the company went ahead with its plans to grow its stores in China from 24 in the fiscal year 2017 to 34 in 2020. The onus was on Angela and the marketing team to make this happen by appealing to the Chinese customers and by increasing IKEA’s customer base in the country.
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The case is structured to achieve the following teaching objectives:
Assess IKEA’s entry and expansion strategy in China.
Analyze the marketing strategies adopted by IKEA in China.
Examine the interaction of global and local forces in shaping market dynamics and consumers’ preferences in China.
Analyze the macro-environmental factors influencing IKEA’s operations in China.
Understand the challenges faced by IKEA and explore strategies for the company going forward.
International Marketing; EPRG framework; Glocalization strategy; Standardization vs Adaptation; Mode of entry and expansion: International Marketing mix; PESTLE framework; Porter’s five forces model; Value-based Sustainable Service Business Matrix