The data used in the identification of the internal and external factors was obtained from a report by the Korean Government and internal analysis by IKEA on its profitability and strengths. This internal-external analysis of factors is provided in full in the appendix section of the paper with close references in the body of the report. The researcher’s indebtedness to foreign literature and ideas is shown in the text (in text citations) and in full in the bibliography section of the study.
Direct exporting forms the most basic mode of exporting that IKEA can use in the entry of its products into the Korean market (Doole & Lowe, 2008). Based on the strong financial performance of the company in the previous year, IKEA can successfully enjoy from reduced costs due to economies of scale from concentrated production in the home country by directly exporting its products into the Korean market and subsequently enjoying control of the distribution chains. The company can either use sales representatives or importing distributors in the Korean market. The sales representatives will be comprised of foreign suppliers and manufactures of the IKEA products in the Korean market working for an established commission of sales (Lymbersky, 2008). This will be advantageous to IKEA as the sales representatives will provide support services in the foreign country. Importing distributors can be used by the company to purchase the products directly from IKEA in their own right and resell these products in the Korean market as wholesalers, retailer or a mix of both. These importing distributors are best suited for entry of products that are carried in inventory such as the appliances and furniture products manufactured by IKEA.
A franchising agreement is a system in which a semi-independent business owner (franchisee) pays royalties and fees to a parent company (franchiser) in return for the right of identification of the franchisee to the trademark, sale of goods and use ...Show more