Cultural Risks In Ikea

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In today’s business, it may happen that organizations do not understand each other because of the many cultural differences. Therefore, communication between one and another can feel uncomfortable or not safe because of misunderstandings. Reasons like this can cause serious losses in businesses. This is called the cross-cultural risks. The cross-cultural risk is one of the internalization risks that could easily be prevented by hiring an employee who understands the values and culture of a particular country or person. See for example how IKEA solved this problem.

‘’At the same time, IKEA had launched a high-profile advertising campaign designed to get Americans to take a more "commitment-free approach to furniture." Josephine Rydberg-Dumont,
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3 - Chapter 5 of the ‘Export Management: A European Perspective book’, explains that selecting an appropriate market entry strategy is an important aspect of export management. Which market entry strategy or strategies does IKEA employ worldwide and why do they use the particular strategy or strategies.
IKEA makes use of the following four market entry strategies; own subsidiaries, franchising, joint venture and strategic alliance.

Subsidiaries
According to the essay on the website of www.termpaperwarehouse.com, we can read that there are two popular market entry strategies that IKEA uses and one of them is making use of their subsidiaries (Global Marketing, 2012). With this approach, they were able to create a goof relationship with their supplier who is based in the country of where you want to operate. This method worked when entering the European and North American market and it worked well to develop the IKEA concept. (Global Marketing, 2012)

Franchising
Franchising was the second favorite approach that IKEA used with entering the market with their market entry strategy. The following figure of our class material will show you the main differences within the company of IKEA between the franchisor and the
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You could imagine that IKEA will lose track of their supply chain when it is going all the way to China. However, you could always send someone or hire someone you trust who can keep track of these steps for you. A Strategic alliance has more freedom than in a subsidiary of franchise as you are able to analyse the market and you need to explore new things. IKEA should therefore let their people find the best possible approach with the most suitable
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