The internationalization of IKEA into China

The internationalization of IKEA into China Introduction When dealing with international marketing is one of the key points you should consider whether the product or marketing to be standardized or adapted to each local market. The question is one of the most debated in the international marketing literature by authors such as (XXXXXXXXXX, XXXXXXXXXX, XXXXXXXX). The focal point of this task is the issue between standardization and adaptation in the international campaign. First reviewed a theoretical perspective on the issue, based on Levitts controversial and much omdoskiterede article from XXXXX, XXXXX, followed by an outline of the criticism has been against Levitt and the whole theory about standardization. A critical evaluation of the whole issue of standardizing versus adaptation follows then And finally rounded off with conclusions and further reading. Teoretiske koncepter standadisering versus adaption According to Levitt the most radical of the proponents of standardization thinking there is much in favor of a standardization strategy. In Theodore Levitts article from 1983 (FIND XXXX Overview about Globalization Thoughts Fra pdf med GlobaliseringXXXXX), where he discusses the globalization of markets and the standardization of products and production processes, Levitt stated, Only global companies will achieve long-term success by concentrating on what everyone wants in rather than worrying about the details of what everyone thinks they like His basic idea was to show the need for standardization in industry processes and products to be able to increase the relative quality of falling costs and so the price per item . This idea was founded by awareness of globalization and the coupled development of subsequent homogenization of consumers and their needs. In his book from 1995 The Globalization of Markets in Global Marketing Management. Cases and Readings Levitt argues, first, that markets the world over converge and as a follow consumer preferences worldwide becoming more more uniform. A global demand pattern emerges which can be satisfied through a global and standardized XXXXXudbudXXXXX. Second, a standardization of products and marketing provides an opportunity to achieve economies of scale in production and lower costs. This leads to low price of the products thus freeing resources to product development. Standardization implies that you refrain from accommodating local preferences, and instead concentrate on developing the core qualities of the product. Whatever the preferences in a given time might be for a local custom product, consumers will end up prefer global, standardized products, because of their basic quality and cheap price. If companies want to succeed in the global competition, they should assume that the needs arou nd the world are basically alike. Theodore Levits article in Harvard Business Review in 1983, XXXXX The Globalization of Markets XXXXX since it was created was one of the most controversial marketing hypotheses. Most of the discussion has gone on the accuracy of the Levite central idea, namely that the most successful, future business strategy will be the completely standardized, which takes no account of what is regarded as superficial differences between world markets. Rather than being paralyzed by differences in individual markets to develop global business opportunities to see the similarities between consumers across various markets. Faced with this view highlights the supporters of an increased focus on locating and individual market adjustment that supporters of globalization, including working from an unrealistic understanding of globalization pace where the marketing function apparently globalizing at a faster pace than the consumers, it postulates that turn tilXXXXX Usunier, Jean-Claude, 1997: Marketing Across Cultures, Prentice Hall XXXXX The cultural differences between markets are weighted more heavily than the proponents of globalization expresses particular in connection with marketing communication. The differences between markets outweigh the similarities. Nobody and nothing is solved culture. Both products and consumers should be seen and understood in their cultural context XXXXX Mooij, Marieke those, 1998: Global Marketing and A dvertising: Understanding Cultural Paradoxes, Sage. XXXXX . For example, the companys marketing communication contains a number of standardization immediately obvious benefits of resource characteristics. The idea of one global theme for the companys marketing communication is tempting, but may pose a risk to cultural and linguistic differences between the markets examined. Several brands have thus different image to different markets. Thus connected instance Honda with properties like reliability and quality in the U.S. while the Japanese market, where these properties are considered self-evident, see Honda as an expression of speed, youth and energy XXXXX Aaker, David A. and Joachimsthaler, Erich, The Lure of Global Branding , Harvard Business Review, Vol 77, No. 2, 1999. XXXXX A sales argument would not necessarily have the same appeal in all markets, simply because the text is translated into the language market. Theories that argue against Levitts thoughts on globalization illustrate that standards in general do not meet consumer needs and lifestyles. These theories imply that consumers are becoming more diverse globally, which means that products and services must change with the adjustment and use of standards in the direction of regional segments. The critics of global marketing mean that cultural, political, and economic differences in different countries call for an adaption to local markets XXXXX (Boddewyn, Soehl and Picard 1986; Hill and Still 1984; Quelch and Hoff 1986; Sorenson and Wiechmann 1975; Wind 1986). XXXXX The thought of standadisation is an oversimplification of reality. There are variations between different countries in terms of consumer needs, purchasing power, commercial infrastructure, culture and traditions, laws and regulations, and technological progress. These factors are still to different from country to country so its necessary to adjust the marketing strategy for each market XXXXX (Terpstra Sarathy, 2000) (Standardization versus adaptation of international marketing strategy: an integrative assessment of the empirical research)). XXXXX Common to the authors, highlighting the limitations of standardization strategy is that they point to the cultural differences as one of the key barriers to a standardization strategy. The key concept that has been used to describe the importance of culture in marketing strategy is cultural bind. This suggests that products can be more or less tied to the cultures they consumed, and that the degree of cultural bonding determines whether they can be standardized or not. Food and clothing should therefore be strongly culture-bound products, which are difficult to standardize, while industrial goods are kulturfri, and therefore easier to standardize. In between you place the consumer durables, which more than kulturfri eg food but more culture bound than industrial goods XXXXX (Usunier 1993). XXXXX The classic debate on standardization versus adaptation is increasingly proving to be based on some outdated terms. Culture is the habits and ways of thinking, we take for granted. This is also the understanding of culture that underlie the traditional debate on the Levites point: to what extent can something fit into the existing culture. This papers argument is that it is not so much a question of whether the market is (or marketing) is substantially different from the culture, it must fit in. What matters is rather whether it can operate in different discourses on cultural identity in local markets. Cultural Understanding yesterday to predict the problems and potential misunderstandings arising from different cultural backgrounds. Furthermore, the fundamental question of the relationship between marketing and culture in this perspective, to what extent an individual, current marketing strategy or tactic is applicable in another cultural context. The main problem with the Levites argument is that the globalization process basic viewed as driven by demand. This is summarized in the following lines: The uniformity of preferences will inevitably lead to standardization of products of industrial and commercial and business enterprises XXXXX Levitt, Theodore (1983), The Globalization of Markets, Harvard Business Review (May-June) , 92-102. pp 93, XXXXX. But, as we have seen, there is both a strong tendency towards standardization and perhaps even more likely that globalization is carried forward by competitive supply rather than demand side, and that those in each case are not independent of each other. This has opened Levits argument for a critique from various scientists, whereas Levits lack of understanding of the concept of culture and persistent cultural differences in the globalizing world. Yet other theorists XXXXX Robertson, Roland (1992), Globalization: Social Theory and Global Culture, London: Sage. XXXXX Robertson, Roland (1995), Glocalization: Time-Space and Homogeneity-Heterogeneity, M. Featherstone, S. Lash R. Robertson, eds, Global Modernities, London: Sage, 25-44. XXXXX has tried to move beyond this dichotomous debate a counterpart to the debate that has been conveyed in marketing literature on standardized or customized wine promotion (see Wind Douglas comment XXXXX Wind, Yoram and Susan P. Douglas (1988), The Myth of Globalization , Columbia Journal of World Business, Vol 12 (Winter). XXXXX to Levite thesis). Here it is suggested that you talk about glocalisation since both homogenizing (globalizing) and heterogeniserende (localising) processes is an essential part of globalization. Robertson emphasizes this when he sees the local (and location) as a fundamental rather than a conflicting part of globalization. Thus in one sense, such as Levitt argues a homogenization of demand but it is a demand for differences rather than according to uniform, standardized Western products. Levite mistake is to have considered culture as something that exists independently of the market, an external factor, whose consequences (special preferences, etc.) could and would be overcome by so-called objective product qualities. Rather, it shows above that culture is something that is demanded and also very much created the market. In the following we will therefore argue that culture is not such a market external factor, but something that is reflexive. This means that culture is not something that can be taken for granted as if it had an unchanging essence Critical assessment XXXXXXX Contingency Theory: from Product and Promotion adaption in Export Ventures XXXXXXX The term globalization is the last decade become one of the most used and abused buzzword. Just within the marketing area is the concept of globalization somewhat more advanced in years, since it was used by a discipline of great old masters in a seminal article as long as 20 years ago. We refer of course to Theodore Levits article in Harvard Business Review in 1983, The Globalization of Markets XXXXX Levitt, Theodore (1983), The Globalization of Markets, Harvard Business Review (May-June), 92-102. XXXXX This has since been one of the most controversial marketing hypotheses. Most of the discussion has gone on the accuracy of the Levite central idea, namely that the most successful, future business strategy will be the completely standardized, which takes no account of what is regarded as superficial differences between world markets. XXXXX Bauman, Zygmunt (1999), Culture as Praxis, 2nd edition, London: Sage XXXXX Levite argument is the idea that companies can gain competitive advantage by exploiting economies of scale XXXXX Levitt, Theodore (1983), The Globalization of Markets, Harvard Business Review (May-June), 92-102. pp 92]. XXXXX On the one hand it is true that globalization leads to new market conditions, where such is impossible for companies to sit international market development ignored, though they only operate domestically. On the other hand, it has demonstrated how local companies can push their global competitors precisely by emphasizing their local roots. The fact that the local should be a quality in itself, completely overlooked by Levitt XXXXX Ger, Gà ¼liz and Russell W. Belk (1996), Id Like to Buy the World a Coke: Consumption-scapes of the Less Affluent World , Journal of Consumer Policy, 19 (3), 1-34. XXXXX The usual argument for standardization is still out on that brand names and products have a defined meaning which affects the customer when he / she meets these products or brands. But as so aptly demonstrated, is even Coca-Cola (king of global brands) importance universe subject to local interpretations. And even Coca-Colas management has said it is a multi-local rather than a global product XXXXXAskegaard, Soren Fabian Csaba (2001), The Good, the Bad and the Jolly: Taste, Image and Symbolic Resistance To The Coca-Colonization of New Zealand , S. Brown A. Patterson, eds, Imagining Marketing, London: Routledge, 124-140 .. XXXXX also express statement that Coca-Cola is welcomed by alle XXXXX Levitt, Theodore (1983), The Globalization of Markets, Harvard Business Review (May-June), 92-102. pp 93, a XXXXX oversight of the global on Coca-Cola are both preference for and resistance to brand as expressed through the concept of Coca-Colonization which conceals the fact that the American / western lifestyle brand represents, not welcomed by everyone. Neither or Stadardisation and adaption à ¤r tvà ¥ Extremes in marketing. I sin article Kelloggs Internationalisation versus globaliseringen of the marketing mix (2001) Claudio Vignali cites Terpstra, V. and Sarathy, R. (1994) for writing att nà ¤r adopting a helt localized marketing strategy only coincidental ligheder EXIST. Completely standardised marketing is identical in all markets. Neither extreme in Usually used. I wish to give some examples of how various multinational companies engaged in or have used the global market. The examples are taken from international journals, and gives each of them an insight into situations that underpins kompleksitetetn in a global markedsfà ¦rinbgs maneuver. First beskrivesd viorksomheder and products briefly, then Objectives, Strategies, and challenges etableret and encounters and Endelig the responses, resultater, og er rekommendationer Collected. The two cases chosen are, respectively, McDonalds and IKEA. These cases are particularly interesting b ecause it has two large viorksomheder whose basic concept is tight concept management and standardizing for obtaining econmicies of scale in both marketing, sales and production. These descriptions provide examples of how, despite that we have a standardization strategy must adapt to local markets because of culture. Foreign Markets: An Integrated Approach Research shows that standardization of marketing solutions determines the use of the same marketing mix in throughout the global marketplace, but standardization is often not used to companies due to differences in language, culture, consumer preferences, laws and regulations, marketing infrastructure and competition structure in various countries. Complete adaptation of marketing solutions are not suitable because in this case, companies can not use the advantages of scale economics, marketing knowledge and information acquired in other markets. But adaptation helps companies to evaluate and effectively use cultural differences foreign markets and different products, their properties and potential use. Recent research shows that changes in the global market affected by globalization has changed also solutions of international marketing: looking for a successful international performance companies do not have to choose one end, and companies that can combine multiple options to meet consumer needs in the global market and to pursue their goals more effectively. The purpose of the global m arketing strategy is to find an optimal combination of integration and rationalization of operations and settlement systems in a global market. Standardization in International Retailing: Transferring Storebrand Image Salmon and Tordjman (1989) introduced one of the most recognized classifications of international sales strategies. This classification can be viewed in terms of global / multinational strategies and the implications for standardization or adaptation of marketing activities and the seat of decision making for the international distributor. The authors define a global strategy that faithful replication of a notion abroad, which corresponds to a formula already established in the country. According to the authors, a company that has decided to choose this strategy is a homogeneous consumer audience with similar lifestyles and expectations. These companies were seen as McDonalds and IKEA. The means to achieve such a strategy is to use a standardized marketing lists. This implies that companies use a standardized or similar retail mix in each of the foreign markets they have entered. Specific product range and stor e format, services, marketing and advertising strategies, pricing policies and store layout is more or less standardized, in whatever country they operate. But as the authors note, are global retailers over the two controversies. The first is the need to adapt to local markets and thus satisfy consumer expectations, and the second is to utilize their corporate resources in order to benefit from the economies of scale derived from a standardization strategy. The authors state that the original concept or the uniqueness and distinctiveness of a product, combined with business acumen, is the competitive advantage for global retailers succeed. Besides this, these products have a long life, thus reducing the risk associated with them as fashion items. McDonalds is the world, aos largest fast-food restaurant chain. It has more than 30,000 restaurants in over 100 countries. McDonalds Corporation is the worlds largest seller of hamburgers and other fast foods. Although largely an American operation, and one of the best known American symbols, most of income from activities outside the USA. In its 2000 annual report XXXXXXXX, states that 62 percent of their annual revenue is allocated to operations outside America. This provides an interesting situation for a company that has built his empire out from doing all the food produced the same. Hamburg They have exactly the same size, the same amount of pickles are put on each bun, and milkshakes are measured with extreme precision. McDonalds business model is basically the same regardless of which country it goes to, but there are local differences, the company may face. The case of McDonalds ice dircribed pà ¥ article McDonalds: Think global, act local the marketing mix (Vignali XXXXXXXX. McDonalds expand globally mens Adjusting sina local communities. McDonalds er standadised in large scale, men de har allso adapted to the local Markets fordi of Religious Laws, Costume eller kultur. In Israel two mà ¸der Kosher Tradition Big Macs gà ¥r utan cheeseburger served two separate Meat and Diary products. In India de har serve Vegetablke McNuggets Mutton-based Maharaja Mac (Big Mac) as Hindus do not eat meat. Muslims Do Not eat pork and McDonalds ice rewarded med halal certificate att sometimes advocates total Absence of pork pà ¥ muxlim lande. In its 2000 annual report is based on three elements: A) Adding restaurants, B) Improve revenue and profit existing restaurants, and C) to improve international profitabi lity in a culturally sensitive way. This implies that a McDonalds opening in a foreign country does more than just change its menus. It adapts its operating manual for the convenience of the local franchisee. Quote from report: Maximizing sales and profits at existing restaurants will be done through better management, reinvestment, product development and refinement of effective marketing and lower development and operating costs. Improved international profitability will be realized as economies of scale are achieved in different markets, and since it is covered by the global infrastructure. .. Another case of a largely standadised company is IKEA. I artiklen A standardized approach to the world? IKEA in China,( Johannson, U. and Thelander, A., 2009), giver forfatterne et indblik i de udfordringer IKEA har haft med global markedsfà ¸ring i en casebeskrivelse af deres introduktion og markedsfà ¸ring i Kina. IKEA har med stor succes standardiseret al markedsfà ¸ring og roll out i store dele af verden, men Kina blev en speciel udfordring, hvor standadiseringskonceptet ikke var gangbar pga. markedets, isà ¦r, kulturelle forskelle. IKEA expanded to China in 1998. The main target group are women, because they were considered those who make decisions at home. IKEA believes its core customer to be around 30 years old. This target group are the generation born under the one child policy and they are believed to be impulsive, easy to influence, very social and committed to leading international consumer brands. In most countries image of IKEA is a company with low prices. In China the opposite is true. The main strategy has been to reduce prices and make the IKEA in China for the low cost concept (roughly) as known ra worldwide. IKEA stores in China is closer to town than stores in other parts of the world where they are usually located well outside city centers. In China, consumers have less access to cars and butikkernw have to be public transport routes. Nevertheless, IKEA built 700 parking spaces under a shop in Shanghai in anticipation of that shopping patterns will change. In China there is not a DIY culture Chinas consumers are using the store as social venues. For them it is a pleasant environment and a completely removed from other furnishings stores in China where you do not have permission to feel and touch the product. People in Shanghai shop may still be seen apparently sleeping in beds and on sofas and read a book with their feet on the tables. Rather than address the issue, IKEA staff hopes that these same people will later return as customers. While IKEA is often seen as a model for standardization among retailers, it is clear that it has had to make significant adjustments in China. Offers an attractive and unusual product was never alone will be enough. IKEA claims that the worst is now getting established in China, and that experience will stand it in good Instead, as it expands into other culturally-different markets. IKEA will argue that it has adapted, while remaining true to its business concept. But its experience also shows that there are limits to how far a company can go with standardization, and how far along this road consumers are willing to be taken. XXXXXStandardization / Adaptation of Marketing Solutions in Companies Operating in Foreign Markets: An Integrated ApproachXXXXXX Research shows that standardization of marketing solutions is crucial for applying the same marketing mix throughout the global marketplace, but standardization is often no use to companies because of differences in language, culture, consumer preferences, laws and regulations, marketing infrastructure and competition structure in different countries. Complete adaptation of marketing solutions is also not useful because in that case, firms can not use the benefits of scale economics, marketing knowledge and information acquired in other markets. But adaptation helps companies to evaluate and effectively use cultural differences foreign markets as well as separate products, their properties and potential use. Recent research shows that changes in the global market affected by globalization has changed also solutions of international marketing: looking for a successful international performance companies need not select one end, and companies that can combine multiple options to meet consumer needs for global market and pursue its goals more effectively. The objectives of the global marketing strategy is to find an optimal combination of integration and rationalization of operations and settlement systems in a global market. Standardization versus adaptation of international marketing strategy: an integrative assessment of the research empirisk To overcome the above polarization, a third group of researchers offer a contingency perspective on the standardization / adaptation debate. In their view: (a) standardization or adaptation should not be viewed in isolation from each other, but as two ends of the same continuum, where the degree of corporate marketing strategy standardization / adaptation can vary between them (b) the decision to standardize or adapt marketing strategy is tailored to the specific situation and this should be the result of a thorough analysis and assessment of relevant contingency factors prevailing in a particular market at a given time and (c) the appropriateness of the chosen level of strategy standardization / adaptation shall be assessed on the basis of its impact on company performance in international markets (Quelch Hoff, 1986; Onkvisit Shaw, 1987, Jain, 1989; Cavusgil Zou, 1994) . Therefore, the challenge for the international firm is to determine what specific elements of the strategy is possible or desirable to standardize or adapt the conditions under which and to what extent. Konklusion og videre là ¦sning Konklutionen I To what extent should a consumei goods multinational corporation vary its marketing from country to countryl Konklusion à ¢Ã¢â€š ¬Ã‚ ¢ Should marketers attempt to standardize their products and marketing communications so as to minimize the costs of doing business internationally? Or should they adapt their products and messages depending on the market in which they wish to operate? XXXXXInternational markedskommunikation XXXXXStandardization/Adaptation of Marketing Solutions in Companies Operating in Foreign Markets: An Integrated ApproachXXXXXX I denne artikel har vi prà ¸vet at efterkomme opfordringen til at komme ud over at  »pjaske rundt pà ¥ overfladen af sà ¸en «, nà ¥r det drejer sig om at studere relationen mellem marketing og kultur [11].Inden for marketing er indstillingen til kultur, mà ¥ske ikke overraskende, dybt forankret i den vestlige modernismes tendens til at  »Ãƒ ¦ndre forskel til essens « [20: 80]. Imidlertid minder  »skaberne « (etnoskaber, teknoskaber osv.) os om, at kultur praktiseres og konstitueres ud fra praksis [1]; [12]; [20: 81]. Endvidere bliver vi mindet om marketings rolle som et globalt system, der frembringer forskellige identitetsrum: livsstil, kultur, subkultur, etnicitet, hybridisering, kreolisering osv. I lyset af dette bliver markedsfà ¸rte varer til materielle manifestationer af ideen om kultur, af  »det kulturelle ideoskab «, som vist ved eksemplet med belizisk madkultur [36]. Dette bà ¸r ikke lede os til at forveksle và ¦sentliggà ¸relse med và ¦sen. Det er ikke, fordi mange forbrugere enten sà ¸ger efter eller har en opfattelse af deres egen faste kulturelle identitet, at vi som forskere kan konkludere, at en sà ¥dan eksisterer, og markedsanalytikere har hidtil và ¦ret tilbà ¸jelige til at ignorere de indviklede forhold, der gà ¦lder inden for kulturelle udviklingsprocesser.  »Sà ¥ là ¦nge kulturel mangfoldighed bliver forstà ¥et som en mangfoldighed af kulturer, kan kulturstuderende kun se tvà ¦rkulturel kommunikation og tvà ¦rkulturel sammenligning som et af deres centrale problemer « [6: xlv] . For et marketing- og forbrugerforskningsmiljà ¸, der interesserer sig for den kulturelle dimension i international marketing, betyder dette, at komparativ analyse ikke là ¦ngere er det mest indlysende mà ¥l for forskningsaktiviteter, men snarere et udgangspunkt. Kultur, snarere end en forklarende struktur af và ¦sentlige trà ¦k, bliver et paradigme, pà ¥ basis af hvilket marketingpraktikeres og forbrugeres praksis og tilgang fà ¥r betydning for forskerne. Kultur er ikke et studieobjekt, men et nà ¸dvendigt perspektiv for at fà ¥ indsigt i det menneskelige samfunds struktur og forandringsprocesser. Referencer