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Uppsala

In: Business and Management

Submitted By ongphan
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Based on Johanson and Wiedersheim-Paul’s researches and studies of internationalization of four Swedish firms, Johanson and Vahlne (1977) developed the Uppsala internationalization model. This model is base on two assumptions. First, firms want to increase their profits but also want to keep the risk rate at a low level. Second, most firms are lack of knowledge about overseas markets, it is a big obstacle to the development of international firms; and firms can get necessary knowledge mainly through going abroad. Firms will face four aspects when going abroad: market knowledge, market commitment, commitment decisions and current activities. All of them are divided into stage and change aspects interacting with each other in a circle.

Uppsala model defines two perspectives of learning in international activities: general knowledge and market-specific knowledge. General knowledge focuses on marketing method or types of customers while marketing-specific knowledge concerns with business climate, cultural pattern, structure of market system. (Johanson and Vahlne, 1977). IKEA uses Uppsala model to expand its internationalization strategy from 1974, especially in Japanese market and Chinese market.

According to Uppsala internationalization model, “companies appeared to begin their operations abroad in fairly nearby markets and only gradually penetrated more far-flung markets” (Global Marketing, Hollensen, page 63). IKEA started to expand internationally from the nearest countries, such as Norway in 1958, Denmark in 1969, Switzerland in 1973, Germany in 1974 and so on. After entering successfully in those countries, IKEA decided to enter Asia area. Japan was the first country that IKEA entered in 1974 and the internationalization strategy used for Japan was not much different from what is used in its nearest markets. The degree of adaptation was low. IKEA’s small-size

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