Choose a Country where IKEA is not in and answer the following questions:
1. Should IKEA enter a new country ……BRAZIL………?
Yes, it could enter a new country. They are a very big company and do not have stores
in many parts of the world such as Latin America
2. What type of entry should it undertake: exporting, licensing, direct investments,
management contracts, other arrangements?
It would be smart to expand first thing in south america to brazil. Be it for the
manufacturing (sourcing) part of it. Brazil has low labor costs and it is also a big
furniture producer.
3. What are the opportunities/risks of getting into …Brazil… with the previous mentioned
entry mode?
Opportunities:
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●
●
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Expand to south america
Low labor costs for manufacturing
High quality wood in brazil
Brazil exports a lot to other south american companies, so it would be easier for
ikea to continue expanding in south america
Risks:
● brazil has very high taxes for imported goods, around 75% or greater over FOB
cost
● Local furniture companies such as MadeiraMadeira
4. Should the firm expand its existing plants, undertake new investments, make
acquisitions?
If they are planning to expand to a new country/market, such as entering the latin
american market they would have to make new investments and acquisitions.
5. In what region or countries and when should the company expand its international
commitments in funds, technology, management, know-how, and personnel?
In the south-east of brazil because thats where its economic center is at. It is also a
great choice because brazil is the biggest country in latin america and has borders with
many countries.
6. What should the company do about exchange risks, political vulnerability, and
adverse governmental controls and regulations?
One of the reasons that ikea has not entered this market yet is because of the tax prices
7. Should the firm go into joint ventures with other private firms or government
enterprises abroad, and under what conditions?
It could, with big local companies such as madeira madeira, thus making it easier for
them to enter this new market
9. What product adaptations should it make and what new products should it introduce
in this country?
It has been researched that in brazil, people often buy bigger pieces of furniture, even
bigger than in the USA
10. To what extent should it change its marketing and product mixes in this country?
Working relationships in Brazil are built on trust. The most common form of doing
business in Brazil is through incorporated subsidiaries, branches are very difficult to
operate. It is essential to establish a network of connections with the public sector in
Brazil. The culture in Brazil relies heavily on favors and ‘who you know’. As in any latino
country