The very best method to look for viable alternative entry strategies is to see the mistakes IKEA made and the issues they had by getting in the Russian market. But first there are a number of business associated characteristics to mention. IKEA is a business which is extremely associated with their Swedish tradition and origin as this is an essentially part of their marketing method and corporate identity. Many individuals are linking IKEA’s Swedish image with the method IKEA is communicating their item range: Inexpensive, simple and yet trusted and trendy.
Due to the fact that of these conditions given, IKEA is forced to make sure that they have the ability to move these elements of their business idea into the Russian market. Of course there constantly are a little differences from country to country in the method IKEA communicates to their customers, however adoptions should be restricted to executive marketing choices and not interfere with IKEA’s basic service idea.
These previous points are strongly restricting any kind of indirect entry technique.
IKEA requires to keep the conceptional distinctions between their home markets and the Russian points of sale as small as possible. That indicates as further the space is between the original shops and the ones in Russia, the larger is the opportunity of a flawed identity. Therefore entry techniques like franchising, licensing and indirect export over all might not be an opportunity to get in the Russian market. The reason is basic: It will get rather tough to discover a Russian entrepreneur who recognizes enough with Swedish culture.
The franchise guidelines IKEA would be required to provide would most likely fill countless pages and even then, Russian IKEA franchise businesses would interact anything else but Swedish household piece to their consumers. IKEA remains facing the more feasible entry strategies of a direct export in terms of opening their own stores in Russia as they did, or to begin an alliance as a tactically collaboration or joint endeavor.
The major problem they IKEA faced by choosing the direct export as an entry strategy was the missing knowledge and experience about the Russian market, its further development, the people and the Russian culture as well as Russian living conditions. The arrangement and adaption of the communication strategy and the product range took place steadily and needed time. Therefore, even if the Russian market potential was still growing and expanding IKEA lost market share and sales power because of wasted resources and by performing a not optimally adjusted marketing strategy. A solution to face these problems from the start of the market entry would have been to search for a Russian partner company that is capable of IKEA’s missing knowledge. The different opportunities in here are based in the shaping and the form of alliance.
IKEA can be sure that they have got a very well working business model. They don’t want to share their success even if a deeper alliance would probably allow them to share loss as well in case of failure. IKEA wants to keep control of the company as it is still private hold and they want to keep it that way in Russia. In addition a joint venture alliance usually is kind of a long term relationship. IKEA indeed just needs a partner to get started in the market Russia. Once they catch on they might want to quickly quit former alliances. In my opinion the best solution would have been a strategic alliance with a possibly quite small partner as the object of trade for IKEA is just knowledge.
A small, traditional company that enables IKEA the transfer and arrangement of their culture and company politics into the Russian market by providing all the information IKEA needs to prevent the above-mentioned mistakes. The partner company is not needed to perform in any physical goods business as their relationship to IKEA will only be based on information access. After the successful market entry, the strategic, information based alliance could be quit quickly and easy or getting changed into a usual business relationship, depending on the need of future information supply of IKEA.
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