IKEA: The Japanese Misadventure and Successful Re-entry
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Case Code: BSTR289 Case Length: 18 Pages Period: 2002-2008 Pub Date: 2008 Teaching Note: Not Available |
Price: Rs.300 Organization: IKEA Industry: Retail Countries: Japan Themes: International Business, Globalization Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Japanese Misadventure
IKEA first entered Japan in 1974 through a joint venture with a Japanese company as part of its plans to expand globally. However, even after twelve years in the country, IKEA could not gain a foothold in the market and decided to exit Japan in 1986...
IKEA Japan: The Second Coming
IKEA sent some officials to start the ground work and carry out the initial set up process in 2002. Gordon Gustavsson (Gustavsson), who had been with IKEA since the 1980s was chosen for the task. His main task was to set up the first store in the country and make it operational. Earlier Gustavsson had played a major role in setting up IKEA stores in China...
Opening New Stores
Most foreign retailers entering Japan preferred to lease stores but IKEA bought land to develop its stores. Analysts were of the view that this reflected IKEA's long term view for the country. IKEA initially planned to enter cities with a population of more than one million...
Store and Employee Management
IKEA's Swedish identity was also reflected in its stores' HR policies and practices and corporate culture. For instance, IKEA's management style was characterized by informality, openness and caring which reflected the typical values of Swedish nationals. At the store level, there were only three levels of hierarchy between store manager and 'co-workers' as employees were called. The employees in Japan were paid much higher compared than employees in other Asian countries like China. ...
Localization Strategies
IKEA maintained some level of standardization. The products, and their quality were standardized across the world. The stores around the world looked similar, and all the furniture had to be assembled by the customers. IKEA had same culture all across its stores. IKEA chose to maintain some level of standardization as it wanted to give its consumers a Swedish experience and it believed that excessive localization would not allow it to maintain its exclusivity and would become just one of several such stores in the country where it operated...
Promotional Strategies
Before opening new stores, IKEA adopted a buzz marketing campaign, in the radius of 15 kilometers of the new stores. For its first store, IKEA converted a street in the main shopping district of Tokyo into an open air exhibition. IKEA displayed fourteen rooms, each of the size 4.5 tatami or 6 tatami...
What Lies Ahead
For the year 2008, IKEA planned to open three more stores at Kobe, Osaka, and Saitama and also open a distribution center at Yatomi Aichi. The distribution center, located in central Japan, was chosen as IKEA had plans of expanding its stores from Kanto to Kansai. IKEA planned to open around 12 stores by 2011 in Japan. In the long term, it planned to open 46 stores in the country...
Exhibits
Exhibit I: IKEA - International Expansion
Exhibit II: IKEA'S Ownership Structure
Exhibit III: An Indicative List of Names of IKEA's Products
Exhibit IV: Housing in Japan and Purchasing Habits of Japanese
Exhibit V: Image of How to Shop at IKEA
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