Exam. Nr. 281912
BA thesis summary
15.04.2009
BA-MMC
Summary
Ikea is a furniture retail company established in 1943 in Sweden. Nowadays, Ikea is the major retail
company that is present in 36 countries around the world.
Being not able to grow domestically any more due to the small market size in the home county, Ikea
started exploring the global market by internationalizing in the nearby countries such as Norway,
Denmark and Germany. During Ikea’s expansion on the international market Japan was the first
country in Asia and outside Europe that Ikea considered to enter in the 1970’s. The differences
between culture, lifestyle and behavior made Ikea face the failure. Japan is different from other
European countries that Ikea was already present in so it was difficult to pursue success in the same
way. In 1986 Ikea had to withdraw their store out of Japan because of difficulties and then, twenty
years later, they decided to re-enter Japanese market for one more time. At the moment, there are
six Ikea stores in Japan, last of which was opened in 2009.
Having entered only five European countries by the time Ikea decided to internationalize in Japan,
Ikea’s international experience was rather poor. The thesis aims to understand reasons why Ikea
chose to internationalize in a cultural distant country as Japan at the given time and identify factors
in Ikea’s internationalization strategy in Japan that influenced the failure on the Japanese market in
the first round but success in the second round.
The research is based on theories covering internationalization process and marketing strategies.
The Uppsala internationalization process model and the concept of psychic distance are
implemented to analyze the role of knowledge in Ikea’s choice to internationalize in a culturally
distant country as Japan at an early stage and its consequences. Moreover, they are used to discuss
why Ikea decided to re-enter the Japanese market twenty years later and what made it change the
marketing strategy. Geert Hofstede’s cultural dimensions and background information on Japanese
lifestyles are used to reveal the cultural differences between Sweden, the nearest European countries
and Japan. Then, the concept of standardized and adapted marketing approach is made use of to
analyze to what extend Ikea should adapt their marketing strategy to the local market and what
advantages and disadvantages the strategies chosen in the first and in the second round possessed.
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Exam. Nr. 281912
BA thesis summary
15.04.2009
BA-MMC
The information was mainly gained from the articles describing Ikea in Japan and a TV commercial
launched on Japanese television.
After conducting the research it was found that the factors in Ikea’s internationalization strategy that
influenced Ikea’s failure on the Japanese market in the first round and success in the second round
could be summed up to, namely, psychic distance, market knowledge and learning, entry time and
strategy, and degree of adaptation. Firstly, psychic distance creates barriers for Ikea to enter the
Japanese market. When entering Japan for the first time in 1974 Ikea underestimated the
significance of cultural differences and due to the lack of experiential and market specific
knowledge perceived the level of uncertainty as low and the time as right to enter the Japanese
market, which led to failure. Secondly, by the time of the first entry research, and thus market based
knowledge, which is a platform for building the right marketing strategy, was missing. Thirdly, due
to the lack of market specific knowledge, there was too little degree of adaptation in the marketing
strategy and as a result the Japanese consumers could not relate to the concept.
Though Ikea did not succeed in expanding on the Japanese market in 1970’s, in the second round
Ikea made use of learning and past international experience. Before entering the market for the
second time Ikea, realising that the level of psychic distance between the Swedish and the Japanese
is high, spent five years on research in order to understand the cultural differences and get more
market specific knowledge reducing in that way the level of uncertainty. The gained market specific
knowledge contributed to understanding of consumers’ lifestyles and needs, which led to a
conclusion that a higher degree of adaptation is needed on the Japanese market. Remaining a global
brand and using a rather standardized approach worldwide, Ikea adapted the marketing mix to the
special features of Japanese market and consumers. It made the marketing program relevant for the
Japanese and contributed to the success.
It can be concluded, that internationalization on the Japanese market was a big challenge for Ikea.
Learning from this experience and acquiring the international know-how from satisfying ones of the
most demanding customers in the world, Ikea gained extra skills to conquer other distant markets in
world.
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