Answer no.

3:

Ikea was established in 1943 by a young entrepreneur and since then IKEA is one of the most

recognizable home furniture brands worldwide. Its concept focuses on combining high

functionality with quality and design in its products, while keeping prices as low as possible,

especially by keeping the assembly of the furniture directly at the customer. The IKEA was

established when the country of Sweden was transforming into a society that rich and poor

people was similarly treated alike and their needs were taken care of. This is also the central

theme of the vision of IKEA.

Internationalization or globalization is a process in which a company aims to provide its

product offering to a wider range of audience who are from different countries, regions and

cultures, in order to increase its profits and economy of scales. When Ikea decided to enter

the global market and expand in other countries its main focal point was high quality

furniture readily available in lower prices and sustainable manufacturing model.

1950s Sweden was a fairly poor country that was still struggling through sharp class

differences. Kamprad, who grew up poor during that period, was struck by the notion that

beautiful things should not be limited solely to the well-to-do, but should be available to

everyone. With that appropriately egalitarian sentiment in mind, in 1950 he decided to add a

line of well-designed, functional home furnishings to his list of farm products. And after this

Scandinavian design community embraced Kamprad’s ideals of furniture that is aesthetically

meaningful and available to a wide, non-elite market. But still these Scandinavian designed

furniture was expensive for an average middle class consumer. As a result when other

furniture companies decided to enter international market they failed miserably. But Kampard

still thought that there is a wide range of audience who’s want this furniture if it’s available in

lower prices.
An important step in formulating an international marketing strategy is export market

selection: ‘The process of opportunity evaluation leading to the selection of foreign markets

in which to compete.’ This process requires an appraisal of the fit between a prospective

market’s requirements and a company’s ability to meet those requirements. In addition,

market selection cannot be decided on purely marketing grounds; broader considerations of

the company’s skills, capabilities, and goals require that the market selection process has to

be placed in the context of an overall strategy. Since Ikea wanted to focus on geocentric

approach as it was procuring raw material from different countries as Swedish procurement

was proving to be on higher end for the company. As Ikea’s expansion model was based on

higher quality furniture in lower prices it played around its manufacturing based model and

the machineries it had in order to be cost effective rather than the other way around.

Second decision in marketing strategy, closely related to market selection, is export market

direction. Should the company seek to build, hold, divest or abandon its position in a given

foreign market. Furthermore, the build option often leads to selection of additional export

markets while the end point of the divest option is the dropping of a market altogether.

A major aspect of the market selection process is the sequence of market entry. That is, which

country should be entered first, which one second, etc. This is applicable to a firm’s initial

entry into foreign markets as well as expansion decisions of firms already doing business in

foreign markets. The wrong entry sequence could have a negative effect on the success of

entry. At the very least, it would delay any meaningful profits to be earned; at the extreme, it

could ruin foreign market entry and cause a firm to withdraw from those markets already

entered. Together with strategies for and choices of market entry and operating decisions,

market selection and direction are perhaps the most aggregate of export. marketing issues.

The marketing mix transforms these high level decisions into concrete policies.

Segmentation, positioning, and differentiation are some of the traditional analytical tools
applied in developing the marketing mix. In order to an external analysis of the country the

company wants to enter it majorly analyzes five things. Good economy of a developed nation

thus when entering it to globalization Ikea followed a sequence of entry into countries

European market being the first one as it was a rigid economy and to test the waters European

market was the best option after getting a good response Ikea decided to enter different

countries but in a order of sequence where the prices and the good quality affordable

furniture mattered to people.

But when Ikea entered into America and decided to expand there. There was a huge hurdle

they had to overcome as it was a different culture and they had to make the brand

recognizable. Thus they put in efforts in their marketing mix of placement, positioning and

promotion. The company did there external environment analysis in terms of good market

information the company knew that they majority of the people in America had disposable

income and they would want high quality furniture in lower prices.