International Business Culture BD5002

International StrategySuregini, Al-Fayad, Alex and Tarek

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International strategy is a plan that is put together by a business, the plan is a strategy to expand the business on a global level (Morrison, 2011) International strategy covers global, multinational and international strategies The strategy used depends on the business internal and external factors, a business will need to consider the culture of the country they are expanding into in order to effectively expand (Morrison, 2011) A business may decide to use international strategy if they want to export their products globally or expand by opening stores aboard.

International Strategy

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IKEA is a Swedish multinational home furnishing company founded in 1943 by Ingvar Kamprad.

The name is a combination of initials of the IKEA founder and the farm and village he grew up in (Elmtaryd and Agunnaryd).

It has 370 stores in 47 different countries such as Sweden, United Kingdom or China.

IKEA (2016)

About IKEA About IKEA

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Financial Year 2015 (FY15) – total sales of €31.9 billion ( 11.2%)

Turnover from IKEA FOOD - €1.6 billion

771 millions store visits in FY15 ( 7.7%)

IKEA.COM - 1.9 billion visits ( 21%)

9,500 Products of affordable price

155,000 employees called ‘co – workers’ - Europe: 107,400- Americas: 20,000 - Asia & Australia: 15,200 - Russia: 12,400

Total Revenue 2004 - 2015

IKEA (2016)

IKEAs Performance

5INDIA

CHINA

QATAR

UNITED KINGDOM

Make a Chair and take a seat.

Understanding foreign national cultures and adapting to these cultures in the business world depending on two factors:-

Cultural similarities found between the home country's culture and the host country's culture (James and Anoop, 2009)

The managers’ attitudes toward other cultures (James and Anoop,2009)

Culture Differences Adaptations

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Trends & Tastes (IKEA, 2016) Climate difference (IKEA, 2016) Customer Service in store (IKEA, 2016) Religion (About Religion, 2016)

IKEA and Cultural DifferencesUnited Kingdom vs India (First store to be open in 2017)

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• China – 21 stores across china, 8 out of the 10 largest ikea stores are in china (IKEA, 2014)• Visiting ikea is a big fun day in china (IKEA, 2014)• people visit ikea in china just to take a nap• 45 million visitors passed through ideas china locations (Hatton, 2013)• 20 Percent of Ikea’s raw materials are from china. (Levin, 2016)• Fake Ikeas where brought to light in the past in china 10,000 sq. metres with 4 stories which is a yellow and blue building. The layout looks very identical to an original IKEA store. (NTDTV, 2011)• Apartments in china with balcony's• Behaviour of the Chinese public (Levin, 2016)

• The first IKEA in Qatar opened its door on March 11, 2013.• IKEA is open until midnight in Qatar • (IKEA, 2010)• 1.6 million visitors visited Qatar's store between august and July 2016• (Times, 2013)• IKEA offers 12,000 products in total, the Ikea store in Doha (Qatar) offers 7,500 of them 12,000 products.• IKEA had a big set off in the GULF nations by being recognized by leaders very quickly (Team, 2013.

• Qatar religion

• climate change

China and Qatar

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Multi-Domestic Strategy (Localization)

Multi-Domestic Strategy is an extension of the home replication strategy. It focuses on a number of foreign countries/regions, each of which is regarded as a standalone “local” market worthy of significant attention and adaption.(Peng,2009)

Integration Responsiveness Matrix

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IKEA becomes steadier and strong in the national market

Profit Maximisation

Business Growth

Increasing Customer Base

Benefits of IKEA Adapting Localization

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This strategy will be expensive for IKEA in terms of producing different furniture's for multiple countries for their market.

There is potentially too much local autonomy.

Drawbacks of Adapting Localization

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•Support activities

•Primary Activities

The Firm as a Value Chain (Porter, 1985)

R&D Production

The Firm as a Value Chain (Porter, 1985)

64%

3%

33%

China 22%

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R&D Production Marketing &Sales

CustomerServices

Primary Activities

The Firm as a Value Chain (Porter, 1985)

IKEA is a successfully expanding company with many stores around the world and many planned to open.

They experience a constant growth in their total revenue year on year. IKEA is successful as it adapts it’s international strategy depending on the

culture difference of the country they are trading in. IKEA products meets international standard in order to trade in other

countries. Also, they carry out a test assessment for each products they sell to meet customer expectation.

IKEA appropriate strategy they should approach is multi domestic(Localization) strategy.

Conclusion

Reference• Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York • Ikea (2016) About IKEA store. Available at: http://www.ikea.com/ms/en_JP/customer_service/faq/help/about_store/about_stores.html

(Acessed: 18 November 2016).• Marketing teacher (2016) Ikea Marketing Mix. Available at: http://www.marketingteacher.com/ikea-marketing-mix/ (Accessed: 18 November

2016).• Ikea (2016) Customer service. Available at: http://www.ikea.com/gb/en/customer-service/ (Accessed: 18 November 2016).• James, P. and Rai, A. (2009) Basic of International Business. London: Sharpe.• Peng. M. (2009) Global Strategy. 2nd edn. USA: Cengage Learning. • Ikea shoppers in china fall asleep in furniture room displays: In pictures (2014) Available at:

http://www.telegraph.co.uk/news/picturegalleries/worldnews/10950697/Ikea-shoppers-in-China-fall-asleep-in-furniture-room-displays-in-pictures.html (Accessed: 22 November 2016).

• Hatton, C. (2013) Ikea in china: Store or theme park? Available at: http://www.bbc.co.uk/news/world-asia-china-24769669 (Accessed: 22 November 2016).

• Times, G. (2013) Ikea Qatar expects 1.6mn visitors in 1st year of operations. Available at: http://www.gulf-times.com/story/345044/Ikea-Qatar-expects-1-6mn-visitors-in-1st-year-of-o (Accessed: 22 November 2016).

• IKEA Doha store, IKEA stores locations, IKEA locations, IKEA address (2010) Available at: http://www.ikea.com/qa/en/store/qatar/storeInfo (Accessed: 22 November 2016).

Reference• Levin, D. (2016) IKEA in china isn’t just for furniture shopping, it’s also perfect for napping. Available at: http://www.domain.com.au/news/ikea-

in-china-• Levin, D. (2016) IKEA in china isn’t just for furniture shopping, it’s also perfect for napping. Available at: http://www.domain.com.au/news/ikea-

in-china-isnt-just-for-furniture-shopping-its-also-perfect-for-napping-20160830-gr3jzx/ (Accessed: 22 November 2016).• NTDTV (2011) Fake Ikea discovered in china. Available at: https://www.youtube.com/watch?v=Ke3xUjkDaRA (Accessed: 22 November 2016).• Team, b.N. (2013) IKEA Qatar is officially, finally open to the public. Available at: http://dohanews.co/ikea-qatar-is-officially-finally-open-to-the-

public/ (Accessed: 22 November 2016).• Morrison, J. (2011) The global business environment: Meeting the challenges. 3rd edn. Houndmills, Basingstoke, Hampshire, UK: Palgrave

Macmillan.isnt-just-for-furniture-shopping-its-also-perfect-for-napping-20160830-gr3jzx/ (Accessed: 22 November 2016).• IKEA (2016) ‘About us/history’, [Online]. Available at: https://www.ikeafoundation.org/about-us/history/ (Accessed: 21 November 2016).• IKEA (2016) ‘The IKEA Concept’, [Online]. Available at: http://www.ikea.com/gb/en/this-is-ikea/the-ikea-concept/ (Accessed: 21 November

2016).• IKEA (2016) ‘World map’, [Online]. Available at: http://franchisor.ikea.com/worldmap/interactive.html (Accessed: 21 November 2016).• IKEA (2016) ‘Key Figures’, [Online]. Available at: http://www.ikea.com/gb/en/this-is-ikea/about-the-ikea-group/key-figures/ (Accessed: 21

November 2016). • About Religion (2016) Holy Cows: Hinduism's Blessed Bovines. Available at: http://hinduism.about.com/od/vegetarianism/a/holycows.htm

(Accessed:21 November 2016).

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