In order to reduce the political-economical and social-demographical risks inherent with such regions, IKEA needs to concentrate on diversifying its operations into other markets promptly and efficiently. Moreover, by expanding into other markets, IKEA can also take advantages of opportunities that these new markets offer that current markets no longer do. For example, in the past when China opened-up its policy to FDI, it eventually led to the Chinese economic improvement, the rise in the housing market and subsequently the demand for home furnishings in China. These events have unambiguous allowed IKEA to successfully enter this market.
The current strategy mode that IKEA undertakes when entering a new market is International Franchising whereby products, limited rights, operating systems and the use of IKEA's brand name are sold to the foreign franchisee for a sum fee and share in the profits.
It seems sensible therefore that IKEA continue on expanding into new markets. Nevertheless, before IKEA chooses another market to enter, several analyses (example?) need to be undergone in order to choose the most appropriate market that not only match the Furniture Industry but ultimately complement IKEA as a company.
In this work IKEA's plan will be to further its global expansion into the South American Market, having Brazil as a target. South American has kept strong growth in value, a trend that according to Marketline, 2009 is meant to carry on rising. Brazil is the largest country in South America and according to Datamonitor (2009), it is characterises the most attractive country for the Furnishing Industry. The following analyses have as an aim to critically investigate whether or not IKEA can successfully enter the Brazilian Market and how it should best endeavour it.