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Ikea Market Entry Strategy for Pakistan

Autor:   •  March 28, 2011  •  Essay  •  294 Words (2 Pages)  •  1,700 Views

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IKEA's market entry strategy for Pakistan should be the same format they use in relatively small and high risk markets, i.e. franchising. The only difference is that while franchising in Pakistan they have to keep in the mind that usually IKEA sells its product through the fact that customers take the product home and then assemble it themselves meaning the consumers add to the value of the product but in countries such as Pakistan a major problem that can be over looked is the literacy rate of the general consumer. Since illiteracy is high in Pakistan and other developing nations it would be more prudent that IKEA should assemble the product and then sell it to the consumer as opposed to the semi assembled form, as the technical skill and the know how required to assemble the product by themselves would not be available to the consumers.

But another problem IKEA will face in Pakistan is the country's ability to produce cheaper imitations of the original product. Hence for IKEA to enter the market effectively the biggest hurdle will be to brand its product in such a way so that companies already present within the country will not be able to legally produce imitations of IKEA's products.

While in China, IKEA cannot enter the market through its usual format of opening up retail IKEA stores franchised by Inter IKEA Systems B.V. This is because China is a vast market with a relatively high number of competing firms in the furniture market, thus IKEA should adopt joint ventures with Chinese companies. Another reason for joint ventures would be because of the government's policy of equality and mutual benefit. Furthermore China's literacy rate is 93.3%, thus IKEA would not face the problem it does in the Pakistani Market.

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