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The Global Expansion Process Is Quite Challenge For The Companies

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Question:

Discuss About the Global Expansion Process Is Quite Challenge For the Companies?

 

Answer:

Introducation:

The global expansion process is somewhat quite challenging for the companies. IKEA, the furniture manufacturing company has captured the strengthened position in the market by offering the high quality furniture products at low prices. This Sweden Company has acquired the extensive knowledge to expand the business in international countries. The company has ensured several fruitful approaches to expand globally. These approaches are as follows:

  • The company is widely known for the low price of the furniture products. The company is using the cost leadership strategy to keep the prices lower in the international market.
  • The exclusive furniture designs and the quality of the products are much demanding for the Swedish customers (Chen and Ritzer 2015). The product features are demonstrated in the international market to gather the maximum market share and establish the customer base.
  • The yellow and blue trademark is used for the IKEA products in order to establish the brand identity in the global market.
  • The target market for IKEA is middle class and young people who seek the trendy furniture for their houses at lower prices (Glückler and Panitz 2016). Therefore, the stylish furniture of IKEA is much affordable for the people from diverse income level in the global countries.
  • The remarkable supply chain and distribution channels were also quite profitable for the company to expand the business in the international market Management.

The company has focused on these specific approaches for expanding the market globally. Furthermore, the investments of the sufficient capital amount for the business expansion are also much commendable for IKEA.

 

How does it vary in China

Despite of the competency levels established by IKEA in expanding the business globally, the strategies are different in the Chinese market. The global expansion process of IKEA varies in China due to following reasons

  • The cost of the raw materials in China is lower than the average price.
  • The technological advancements in China are quite beneficial for the company to keep the price lower while keeping the quality higher (Li and Zhang 2016).
  • The supportive Chinese Government is encouraging the favorable policies towards consumer lending and retailing process (Prange 2016). Therefore, the labour market is quite accessible for the product distribution process.
  • Majority of the Chinese consumers have their personal transport to take the furniture home. Hence, the shipping costs are also saved.
  • Chinese customers are fond of visiting the social venue of IKEA that enhances the brand identity.

The above reasons are differentiating the Chinese market to other global market. In fact, it can be predicted that the company will be able to generate more revenues in the Chinese market than the other global countries.

 

References

Chen, C.C. and Ritzer, G., 2015. Globalization and Consumption. The Wiley Blackwell Encyclopedia of Consumption and Consumer Studies.

Glückler, J. and Panitz, R., 2016. Relational upgrading in global Management value networks. Journal of Economic Geography, 16(6), pp.1161-1185.

Li, J. and Zhang, Y., 2016. Chinese Consumers’ Attitudes toward Experiential Marketing: The Case of IKEA.

Prange, C. ed., 2016. Market Entry in China: Case Studies on Strategy, Marketing, and Branding. Springer

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