IKEA: The Japanese Misadventure and Successful Re-entry

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Case Details:

Case Code : BSTR289
Case Length : 18 Pages
Period : 2002-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : IKEA
Industry : Furniture Retail
Countries : Japan

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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IKEA Gives Japan another Try Contd...

IKEA is one of the largest furniture manufacturers and retailers in the world and is well known for its stylish and innovative furniture designs.7 Almost all IKEA's products can be dismantled and packed in flat packages, making them easy to transport. IKEA began its international forays in the 1960s, and by 2008 it had a presence in around 35 countries8 across the world.

Though IKEA was highly successful in most of its international markets, when it came to Japan, its first venture was unsuccessful. IKEA entered the Japanese market in the 1970s, and exited the country in 1986.

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At that time it had entered the country through a partnership but the venture was not successful.

According to Tommy Kullberg (Kullberg), former president and CEO of IKEA Japan KK (IKEA Japan), "We just were not ready to handle the very demanding Japanese market, and the Japanese customer was not ready for IKEA, and to drive things home and put it together themselves. It was a failure, no doubt about it."9

IKEA decided to re-enter Japan in the early 2000s and after thorough ground work opened its first store in 2006 in Funabashi. The store was highly successful and IKEA opened two more stores, in 2006 and 2008. On re-entering the market Kullberg said, "This time we have done our homework. We have been doing a lot of market research to understand how things work in Japan."10

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7] In addition to furniture, IKEA also sold utility items such as utensils, hooks, clips, stands, etc.
8] Including countries where it operated through franchisees.
9] "IKEA Tries to Furnish Japan, Again,"www.uk.ibtimes.com, April 24, 2006.
10] "Quote of the Day,"Japan Today, April 10, 2006.

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