Explain the need for IKEA to strike a balance between globalization

International Business

 

Explain the need for IKEA to strike a balance between globalization

 

Case Studies

CASE STUDY (20 Marks)

The case discusses about Sweden based IKEA’s globalization strategies and its foray in the Chinese furniture market. The basic assumption behind IKEA’s global strategy was ‘onedesignsuitsall,’ which meant that the company did not adapt to the local markets. In China IKEA was forced to change some of the elements of its global strategy in the culturally diverse Chinese market. It highlights the importance of striking a balance between the implementation of global polices and the need for higher degree of localization for IKEA to be successful in markets like China. The interrelationship between IKEA’s culture, structure, strategy and its responsiveness to the needs of local markets also matter.

Answer the following question.

Q1. Explain the need for IKEA to strike a balance between globalization (integration) and national responsiveness (differentiation) in China

CASE STUDY (20 Marks)

It’s tough to be the little guy, especially when one of the big guys becomes your direct competition. But at Hangers Cleaners, an offbeat image and good customer service helped them pull through when P&G opened eco friendly dry cleaners in the same town. Hangers differentiated itself through van delivery service, funny t shirts and hangers, as well as social networking. The company also spent time connecting with the community by partnering with local businesses and charities. Instead of out pricing or outspending P&G, Hangers embraced its personality and adopted a culture of excellent service that customers found value in. As a result, Hangers has experienced growth while other local dry cleaners have reported flat or declining revenues.

Answer the following question.

Q1. How the Hangers Cleaners survived despite competition from big competitor?

Q2. Give an overview of the case..

CASE STUDY (20 Marks)

The case discusses the entry of the Germany based electronics retailer Media Market into China and its subsequent exit from the country. Media Market entered China in 2010 after performing a feasibility study. Media Market opened a huge store in Shanghai in November 2010 to mark its entry into China. The store, spread over five floors, displayed and sold a wide range of electronic appliances of various brands. The products came with price tags attached. The store gained huge popularity and experienced high traffic. In China, electronic retail stores usually consisted of vendor representatives who promoted their own products. Customers could bargain and get the product at a lower price. This led to a highly chaotic environment in the stores. Media Market refrained from using this model and positioned itself differently from the local vendors. It did away with the vendor representatives and had its own salespeople manning the stores. The salespeople did not interfere with the customers and provided assistance only when askedfor. To keep up the momentum, Media Market planned to open a second store in Shanghai. It inaugurated this store just a couple of days after the exit of US based electronics retailer Best Buy from China. Though Media Market’s first two stores were successful, it could not sustain the momentum. It could not open stores as rapidly as it planned to. Though customers appreciated the modern shopping experience at Media Market, they still preferred to shop at local stores as they could bargain and buy products at a lower price. Faced with high competition and high costs of operations, Media Market decided to exit the Chinese market in March 2013.

Answer the following question.

Q1. Discuss the nature of problems faced by retailers like Media Market in emerging markets like China.

Q2. Analyze Media Market’s pre entry and entry strategies.

Q3. Examine the reasons that prompted Media Market to exit the market.

Q4. Analyze the retail industry in China.

CASE STUDY (20 Marks)

The case looks at Germany based automobile manufacturer Audi’s successful run of 25 years in China, and some of the factors that were responsible for its success. Audi entered China in 1986 through a joint venture with a Chinese company First Automobile Works Group Corp (FAW). From 1988, it started manufacturing and selling cars in China. Over the years, the company introduced several of its popular models in China and also made changes to its vehicles to suit the needs of Chinese customers. The company developed a huge distribution network in the country, which also contributed to its success. By 2011, China had become Audi’s largest market. Audi gained popularity in the country as a vehicle for bureaucrats and government servants. But the changes in government policy that encouraged the use of vehicles manufactured by the local manufacturers to give a boost to the local automobile industry could impact Audi adversely. Over the years, the use of Audi’s cars by bureaucrats gave it the image of a vehicle for the wealthy and the old. Audi therefore needed to revamp its image in order to appeal to the youth and youngsters. Though Audi took several steps in this direction, it remains to be seen whether it will be able to appeal to this segment, and continue its successful run in China.

Answer the following question.

Q1. Discuss the strategies followed by companies from developed countries when they enter developing countries and emerging economies.

Q2. Explain the issues and challenges confronted by established companies in the face of changing market conditions and customer demands.

Q3. Analyze how political and bureaucratic decisions can influence the strategies of companies.

Q4. Give an overview of the case.

 

Explain the need for IKEA to strike a balance between globalization

 

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