Discuss About The Journal For Business And Entrepreneurship.
Ikea is a Swedish organization which was established in the year 1943 and has been able to become the world’s biggest retailer based on furniture products. The founder of the company was Ingvar Kamprad. The first store of the company was established in Almhult, Sweden in the year 1958. The internationalization process of Ikea started after this. Ikea has been successful in becoming the biggest furniture retailer and had established more than 200 stores in 35 countries of the world. The success of Ikea is mainly related to the experience that the organization has in the retail market. The organization is also considered to be one of the most successful retailing organizations which has its operations in various countries (IKEA 2018). The organization has been under private ownership from the start of its operations. The stores of Ikea contain more than 12,000 products within the entire product range that is offered to the customers. The strategy of Ikea related to internationalization of Ikea has always been controlled and operated from the headquarters of the organization (IKEA 2018). The owner of the company Kamprad mainly believes in the theories of simplicity and common sense which are able to affect the strategies of Ikea in the international markets. The culture of Ike mainly represents low cost and efficiency in all the aspects of its operations. The company has also been successful in improving its value chain by focussing on the customers and the suppliers (Albino Pimentel and Dussauge 2014).
Ikea has its operations and stores in many different countries of the world. The company therefore needs to take care of the needs of people who belong to different cultural backgrounds. The differences in cultures have further forced the company to devise strategies which can be helpful in responding to the changing needs of the people. The suppliers of the organization are selected based on the raw materials that they can produce at low cost. The suppliers are provided with technical assistance from the headquarters of the organization and their work process is also controlled by the top management. The stores of Ikea that are present in the various international locations offer products that are a part of the basic and internationally accepted product range of the organization. The internationalization policy of the company was also based on the quality of services and products that are offered to the customers (Alonso and Manuel 2017). The internationalization policy of Ikea also comprises of the cost leadership related strategy that has been implemented by the organization. The company has been able to build a strategy in such a manner so that they are able to provide high quality products within low prices.
Ikea can implement the policy of transnational organization and regional headquarters so that they are able to meet the needs of the customers who belong to different cultures and countries. The concept of transnational organization is related to the structure which the companies to achieve efficiency in their operations in the different countries. The transnational organizations mainly set up their business operations in such a manner so that is can be based several dimensions like, product, geographic and the functional levels. The organizations try to adopt a structure which can be helpful meeting the needs of the business and the customers. The transnational organizations have different types of managers who are able to manage the activities of the employees in the various regions where they have the operations (Ang, Benischke and Hooi 2018). Ikea can adopt the transnational organizational structure so that they are able to meet the different needs of people belonging to different countries. The transnational style of organization can be built by Ikea by opening its regional headquarters in the various countries where it operates. The managers of these regional headquarters will formulate strategies in such a manner so that they are able to fulfil the needs and demands of the local citizens. This will be helpful for Ikea to manage the organizational activities in an easier manner as compared to the centralised system that is currently used by the organization. Ikea will be able to increase its revenues in all the areas of its operations and the managers will be easily able to coordinate the functions of the company (Bannà and Trento 2016). The managers of Ikea will have the responsibility to oversee the customers in the specific counties and decide on their behaviour towards the products. On the other hand, the functions of the organization can also be analysed by the managers and the changes that need to implemented in the functions will be communicated to the headquarters of the company. This structure will be helpful for Ikea to maintain its operations in the various regions or countries in an effective manner. The local shops and the customers will be served in a more effective manner if the regional headquarters are opened in all the countries (Bende-Nabende 2017). The consumers of the different countries and their demands further require the opening of regional headquarters which will be able to control the operations of Ikea in that area. Ikea will be successful in increasing the revenues in the various countries with the help of the regional headquarters and the managers who oversee the operations. The complex structure of transnational organizations can however be an issue for the successful operations of Ikea in the various international market areas. The company needs to take care of this issue by formulating effective strategies to assign specific tasks to the appropriate employees. The regional headquarters and the transnational organizational structure will be therefore helpful for Ikea to expand its operations in the most successful manner (Bortoluzzi et al. 2018).
The internationalisation strategy that has been used by Ikea is mainly related towards establishing a link with the suppliers so that they are able to gain information about the various political, economic, social, technological, legal and environmental factors of the external environment. The major opportunities and the threats that are provided by the environment are also analysed by the suppliers and the information is used by the organization in a successful manner. The company has been expending its operations in the various countries with the help of franchising and opening their own stores. Ikea provides franchisee to the various applicants by researching about their capabilities and the financial backing. The head office of the organization is involved actively in the franchisee based decisions that are taken by Ikea (Boso, Oghazi and Hultman 2017). The franchisees of the organization are free to decide the strategy that they wish to implement in the areas or regions where they have the operations. The basic products of Ikea however need to be displayed in all the franchisee stores of the company. The central head office of Ikea is however involved in an active manner in the various organizational processes. The franchise owners are provided with extensive training and development related opportunities and their performance is audited by the company on a regular basis. The company further aims at maintaining the quality of service that they provide to the customers of different regions of its operations (Brondoni 2014). The promotional activities and the advertising of the franchises are also controlled by the headquarters of Ikea. The franchises of the company are mainly used as a vehicle for achieving the strategy of Ikea.
Ikea can also use the process of strategic alliances and joint ventures for the purpose of entering the new market areas. The strategic alliance process is related to the agreement that is made between two organizations when they agree upon a set of objectives, although they operate frequently in an independent manner. This type of cooperation is mainly related to the acquisitions and mergers that are formed between the different companies. Strategic alliances can also be developed by outsourcing various activities which can reduce the cost of the companies. The joint ventures on the other hand is also created between two or more organizations which are characterised by the shared ownership, shared risks and shared returns (Brondoni 2015). The organizations share the various resources that they own among themselves. In case of a joint venture the two companies work together to complete various projects and duties with the help of the expertise and the resources These two processes of entering foreign market can be cheaper for the organizations which are planning to enter a new market area. Ikea can also implement these two strategies to enter the market areas where it does have its operations. This will help the company to expand faster and increase its presence in the international market. Ikea will be successful in increasing the awareness of its brand among the citizens of the various countries with the help of internationalization within a short span of time (Cavusgil et al. 2014). The central structure of the organization has been posing major challenges to balance between the factors of the different countries and the intervention from the headquarters. The implementation of the two mentioned internalization strategies will help Ikea to address the issues that are faced by the company. The company will also be able to compete with the local organizations in an effective manner by penetrating the markets in a cost-effective manner (Cheng, Johansen and Hu 2015).
The natural environment of Southern Brazil has been able to provide huge number of resources from the millions of hectares that are based on forests. These resources have been helpful for the production of furniture in the country. The market of the country has been receiving more and more profits from exports of their furniture products. The government of the country has also been investing huge amounts in the furniture industry to take advantage of the export related demands. The investments are however comparatively lower as compared that of Germany and United States. The furniture industry however requires imports of various equipments and machineries for production related purposes. The firms that operate in this industry are family owned and have smaller operations (Cuervo-Cazurra 2016). The manufacturers of furniture are however high in the Southern parts of Brazil. The crisis in the Asian and the Russian markets have affected the economy of Brazil in a huge manner. The currency of the country had also fallen in the year 1999. The imports of the furniture related products have also affected as a result of this crisis. Brazil has been importing furniture that are required by offices and other purposes from the US and the imports are expected to further increase in the following years.
Ikea can take advantage of this situation and start its operations in Brazil with the help of joint venture with the small family owned firms that are already operating in the Brazilian market. The operations of Ikea in Brazil will be facilitated by the extensive natural resources that are present in the country. Ikea is well-known for the new technologies that is uses in the manufacture of the furniture. The organization will be able to implement new technologies in the country and improve the situation that is faced by the furniture industry in Brazil. The different segments of customers will also be a major opportunity that is related to the growth of Ikea in Brazil (Denicolai et al. 2016). The technical capabilities and assistance are given utmost importance in Brazil and Ikea needs to take care of this issue by employing appropriate strategies and employees who are able to manage the issues of the consumers. The positive retail environment in Brazil will also help Ikea in operating successfully in the country. The economy of the country is however unstable in nature which can be major disadvantage for the operations of Ikea. The country has huge potential for growth as it consists of more than 80 million consumers belonging to different segments of the market. Ikea therefore needs to adapt its operations to the local conditions that are present in Brazil so that it is able to succeed in its operations (Dinu 2016).
The import related climate of Brazil is based on various ranges of tariffs. The import related tariffs are levied on the basis of the insurance, freight and cost related values. The taxes related to furniture in Brazil range from 5 to 10%. A federal tax is also levied on the imported and the domestic products which is known as industrial products tax. The rates of taxes vary based on the products that are being manufactured. The rates of interest have decreased in Brazil from the year 2008 to the year 2010. The funds that are required for business related purposes are provided by banks like, National Bank for Economic and Social Development or BNDES. Ikea can use the concept of strategic sourcing for setting up its business in the country. The strategic sourcing concept can be used by Ikea at all the levels of the organizations which include, raw materials, labour, equipments (Fornes et al. 2016). This concept will be used by the supply chain managers to create a suitable network of manufacture and distribution of the products in the country. Brazil has a huge base of natural resources and this can help in the supply of raw materials that are required for the purposes of furniture production. The raw materials are exported from the country to many other areas in the world. However, the set-up of a popular furniture based organization like Ikea will help in improving the market of Brazil. The import of equipments that are required for manufacture of furniture need to be imported in Brazil. Ikea needs to set the entire operations in Brazil along with the equipments so that the import related costs are decreased (Gaur, Kumar and Singh 2014). The economy of Brazil has been affected by the crisis that has occurred in the year 1999. The country had shown huge growth in the year 2002 to 2013. However, the economy was hit by the worst recession in the year 2015. This had caused huge economic crisis in the country. The growth of the country is currently driven by the agricultural industry which has shown a growth of 14.5%. The rates of unemployment had increased after the huge recession period in Brazil. The entry of Ikea in the market can help in increasing the unemployment related issues in Brazil. The labour of the organization will be therefore sourced from the local area and training will be provided regarding the work process (Hao and Friar 2017). The distribution network will be built in an effective manner so that the company can provide its products to the various areas of the country in a successful manner. The political condition of Brazil has also become quite stable in nature and this will help the organization to enter the market easily. The corruption related issues in Brazil can however can cause some issues for the operations of Ikea in the country (Harding 2015).
The Bajaj Group is considered to be among the top 10 business organizations in India. The business operations of the organization stretches across various areas including automobiles, iron and steel, lighting, travel, finance and insurance. The flagship company of the business house is Bajaj Auto Ltd. which holds the rank of the fourth largest manufacturer of two-wheelers and three-wheelers in the world. Bajaj is a well-known brand in areas like, Africa, Latin America, Middle East and South East Asia. Bajaj was established in the year 1945 and has been growing in size and revenues since the time of its inception (Bajajauto.com 2018). Bajaj had to face huge competition in the Indian market from other major organizations which belonged to the Italian and the Japanese sectors. The company also went through many mergers in the course of its operations in the Indian market from the year 1993 (Bajajauto.com 2018). The world market for two-wheelers or motorbikes had developed in the 1950s. The motorcycle in the world can be divided into two different parts which are, the market where motorcycles are considered to be pleasure vehicles which include the countries like, Japan, US and Western Europe (Hilmersson et al. 2017). The second part is related to the market where the motorcycles are considered to be work or family vehicles which include the markets like, Asia Pacific, Africa and Latin America. The current motorcycle industry is dominated by organizations like, Kawasaki, Yamaha, Suzuki and Honda. The premium or high quality market of motorcycles is dominated by organizations like, Harley Davidson, Triumph and BMW. Bajaj holds the fourth position in the entire motorcycle industry of the world and India is considered to be the second largest market for motorcycles in the whole world. The major international markets for the production of Bajaj are, Sri Lanka and Bangladesh on South Asia, Thailand, Indonesia and Philippines in South East Asia, Nigeria and Iran in Africa and Columbia and Central America in Latin America (Hoffman, Munemo and Watson 2016). The distribution network of Bajaj covers more than 50 countries. The presence of the company is dominant in Colombia, Central America, Egypt, Peru. The OLI model of internationalization is the most suitable for the global expansion related policy that has been implemented by Bajaj in its international operations. The OLI framework can also be termed as the eclectic paradigm which is related to development of the internationalization theory. The OLI framework can be divided into three parts which include, ownership advantages, location advantages and internationalization advantages. The ownership advantages are related the specific competitive factors that are related to the development of the organizations which are thinking of foreign direct investment (Homann and Koslowski 2016). The high competitive advantage in a particular area further relates to the high production of the company in the foreign areas. Bajaj has selected markets which will be able to provide the highest levels of competitive advantage to the company based on the products that they offer in the market. The needs of the consumers in these countries are similar to the products that are offered by Bajaj. The location advantages are related to the countries or the regions which can help to add value to the organizational processes of multinational enterprises (Jones and Kierzkowski 2018). The various countries where Bajaj operates are heavily dominated by the products of the organization which helps in increasing the revenues. Internationalization advantages are related to the exploitation of the core competencies of Bajaj. The core competencies of the organization are mainly based on the various types of products that are offered to the customers based on their specific needs (Kaufmann and Panhans 2017).
A focus market strategy can be defined as the ways by which an organization aims at concentrating its resources on a specific narrow market or segment of the entire industry. The focus strategy is mainly employed when an organization knows the segment of the market in an effective manner and has the products which are competitive in nature. Market focus strategy is considered to be one of the generic strategies which are described by Porter. The focus based strategy of the company is always based on a small segment of the entire market. Bajaj has also employed this strategy to focus on its internationalisation related activities. Bajaj has only planned its expansion in those markets about which it has enough knowledge so that its marketing objectives are fulfilled in a successful manner (Khojastehpour 2015). The organization has expanded its operations in areas that are somewhat similar to its own home country India. The demands of the consumers and their needs are also known by the organization. This has helped Bajaj in expanding its operations in the countries in a successful manner. The main strategy of the company has always been top stay closer to the markets in which it has its operations (Krugman 2017).
The genetic strategies always provide some advantages and disadvantages to the firms by which they are employed. The focus on differentiation is the major advantage that is provided by the focussed strategies. The company can charge high prices from the consumers for the various products that are offered to them. Another advantage that is provided by focus strategy is related to the expertise that is developed by the firms about the services and the products that they are offering in the market. Bajaj has been able to take full advantage of the situation that it has faced in the markets where it has its international operations (Mohr and Batsakis 2017). The company is totally successful in gaining huge amounts of revenues from the consumers of the international areas. Bajaj has totally captured the market of these areas by offering the consumers with products that they require and understanding their needs in an appropriate manner. The strong distribution network of the company has also been created with the help of the focus strategies and by giving the entire attention in the international area of operations. The company has also built its sales offices in countries like, Sri Lanka and Mexico so it is able to stay close to its major areas of operations (Monaghan, Tippmann and Reuber 2017).
The focus strategy is also helpful for an organization to gain competitive advantage in the market. This strategy is helpful for the companies to identify areas where they will be able to compete in an effective manner. The characteristics of the market are matched with the competitive advantages of the company and a market is selected where the resources of the company can help in increasing the revenues of the company. Bajaj has selected its market areas based on the ways by which the organization is able to serve the markets with the help of the various products that are a part of the product line. The quality of the products that are offered by various organizations also holds huge importance for the consumers (Papadopoulos, Gulanowski and Plante 2018). They are sometimes willing to pay more amount for the high quality products. Bajaj has also aimed at offering high quality products to the consumers present in the various international areas of the company. The resources of Bajaj have been implemented in a successful manner in the countries where it has its international operations. This has helped Bajaj in ruling the markets of various countries like, Sri Lanka, Bangladesh, Colombia, Egypt, Peru and Central America (Ratajczak-Mrozek 2017).
The focus strategies however have some significant disadvantages that are related to the limited demand of the products that are offered by the company. The niche market of products can put pressure on the revenues of the company. The awareness related to the brand in the market can also decrease due to the focus on a small area. The growth related ambitions of the firm are also not fulfilled due to the implementation of these niche strategies in its operations. The focussed markets of the company are also under huge pressure to be taken over by other bigger organizations at any point of time (Sukumaran, Gupta and Jithendranathan 2015). Bajaj also faces this threat due to its operations in the smaller market areas. The organization still lacks the amount of awareness that is required to successfully continue its operations in the larger market areas where it has huge chances of growth. The lack of awareness can further create advantages for the competitors of the company and ways by which it can create its competitive advantage. Bajaj may also have to face stiff attacks from the larger organizations in the market. The smaller organizations in the international areas are also able to provide enough competition to the operations of Baja in the countries where it has its dominance (Tsang and Yamanoi 2016). The North American market is mainly dominated by the consumers who consider the motorcycles as a luxury product. The market mainly belongs to the industrialised triad where the consumers already own more than one motorcycles. The Western European market is also a part of this industrialised triad and the consumers prefer the premium or the powerful bikes rather than the economic ones. The North American motorcycle market is dominated by Harley Davidson which is known in the industry for producing high quality and high priced products (Verbeke, Amin Zargarzadeh and Osiyevskyy 2014). Harley Davidson has captured almost 52% of the entire motorcycle based market share of USA. The other companies which follow Harley Davidson in US are Polaris, Honda, Kawasaki, Yamaha and BMW. The consumers in this area are thereby fond of motorcycles which can become a part of their status and style statement (Weaver et al. 2014).
The motorcycle market in Western Europe mainly consists of consumers who are adventurous in nature and are also quite tech savvy as well. The Japanese organizations have been dominated the market of motorcycles in the Western European areas. The motorcycle industry of the country is quite booming in nature and the local organizations have also taken advantage of the entire situation (Zander, McDougall-Covin and Rose 2015). The European manufacturers have now started providing tough competition to the Japanese organizations by manufacturing high quality and premium level products. The European manufacturers are now developing products that capable, desirable and technologically advanced in nature.
Bajaj can thereby plan for its expansion in these two market areas by improving the line of products that are being offered by the company. The products of Bajaj and the consumers who are a part of the company are not a part of premium range. Bajaj has to compete with the giants of the motorcycle industry who are known for the production of premium motorcycles. The competition for the organization in the market of Europe and North America are companies like, BMW, Honda, Harley Davidson and many more. Bajaj thereby requires a huge amount capital back up to face the competition in an effective manner and become profitable in the market. The products that are already offered by Bajaj in the various in which it has its operations are, Bajaj Pulsar, Baja Avenger, Bajaj Discover, Bajaj Platina, Bajaj Dominar and many more. These products cater to the needs of the people who consider motorcycles as their daily requirement and those who consider this as a luxury product. The organization will however need to add more innovative and premium offerings in its product line. Bajaj will be able to gain a considerable share of the market in these two areas as there are huge opportunities related to growth and the market is suitable for the future expansion of the company. Bajaj can also consider the option of collaborating its operations with other organizations in the markets to gain a hold of the entire market operations. The areas will provide huge challenges to the company, however, it will also be able to increase the presence and the awareness of the brand in the entire world. The revenues and the profitability of Bajaj will also increase to a huge extent in the motorcycle industry. This is the major reason regarding the suitability of the two markets for the expansion of operations of Bajaj.
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