This case is about Sweden-based furniture retail giant IKEA Group’s (IKEA) entry into and expansion in Russia. When IKEA entered this key emerging market as part of its international expansion strategy, it had to face several roadblocks when setting up stores, inaugurating them, and even while advertising them. According to the company, its strict adherence to its principle of non-tolerance for corruption did not go down well with Russian authorities who were largely believed to be corrupt.

Over the years, the company expanded and experienced success with its stores in Russia. Some of them, in fact, became the top grossing stores in the world for IKEA. It was also in Russia that the company introduced its successful new business model, wherein its furniture stores were operated not as standalone stores but as part of large shopping and entertainment complexes.

While IKEA tasted success in Russia, it was mired in several controversies: its executives were accused of taking kickbacks and engaging in corruption, while its ethical and environmentally sensitive image was also questioned as it was criticized for utilizing ill-defined Russian logging rules to cut down old growth forests. Despite several hurdles, IKEA planned to invest US$2.1 billion in the country since it sensed tremendous potential in the Russian market due to an increase in the disposable incomes of middle class consumers. However, the business environment in the country was fraught with risk for the company.

Business Environment Case Studies | Case Study in Management, Operations, Strategies, IT and Systems, Case Studies

Business Environment Case Studies Case Studies | Case Study in Management, Operations, Strategies, IT and Systems, Case Studies

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Issues

The case is structured to achieve the following teaching objectives:

	Understand the issues and challenges in entering and expanding operations in an emerging market.
	Analyze IKEA’s entry into Russia and how it tackled bureaucratic challenges while setting up its business in the country.
	Understand the trade-offs faced by companies like IKEA while operating in emerging markets like Russia.
	Develop strategies that could help IKEA to grow its business in an emerging market like Russia.

Contents

INTRODUCTION

ABOUT IKEA

CORPORATE STRUCTURE

INTERNATIONAL EXPANSION

EARLY HICCUPS IN RUSSIA

RUSSIAN CONSUMERS LOVE IKEA, BUT…

… IKEA FACES MANY ROADBLOCKS

FREEZE ON EXPANSION

ACCUSATIONS AGAINST IKEA

LOOKING AHEAD

EXHIBITS

Keywords

Business Environment, Politics, International Management, Emerging markets, Business Ethics, Entry and expansion, bureaucratic challenges, Corruption, Bribery, Russian Financial Crisis, Ruble Crisis, economic slowdown, Russia, BRIC

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