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Ikea Marketing Case

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IKEA MARKETING CASE

1. 1. Until now IKEA international marketing strategy has been tightly and centrally controlled by corporate headquarters. However, high local' pressures emerging due to demographic and cultural differences might force the local IKEA shops to take strategic initiatives to respond to local market needs. In this connection discuss the regional headquarters and transnational organization (presented in Chapter 12) as hierarchical 'entry mode' alternatives to the very centralised strategy emanating from IKEA's headquarters.

The advantages of having regional headquarters ( feature of divisional structure) are : flexible reaction to local conditions, accountability and be more competitive.
However, this implementation could face some problems: strategic focus, economies of scale, loss of efficiency and costs, and finally large commitments.

If they pass from regional headquaters to a transnational organization they will obtain differents advantages related to focus on global integration: efficient resource allocation, knowledge Exchange, economies of scale, local focus.
But some disadvantges would appear like corporate identity and complexity of the process.

2. IKEA has not yet explored joint venture and strategic alliances strategies. Evaluate the pros and cons regarding these two entry strategies versus the traditional IKEA entry mode of franchising.

As we know, strategic alliances appear when parterships between firms where their resources and capabilities are combined to pursue mutual interests to develop, manufacture and distribute goods and services. The main advantages to Ikea of a strategic alliances with other firm would be:
·share the cost/risks
·access to new markets and technologies
·getting closer to economics of scales

However, disadvantages has to be taken into account:
·conflicts resulting from different culture...

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