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1 Introduction
1.1 Problem definition
At present IKEA has expanded to a large degree merely in Europe, Asia and North
America. Yet they have not entered Mexico. With this paper I intend to investigate whether
or not IKEA is ready to expand into the Mexican market. I will base this upon a thorough
SWOT analysis which will include parts of Hofstede cultural dimensions and the VRIO
framework. The Conclusion and Recommendations will state whether or not IKEA should
initiate business in Mexico.
1.2 Company Background
The founder of IKEA, Ingvar Kamprad, was born 1926 in Sm*ĵland. Starting at a very
young age, Mr. Kamprad was always engaged in some kind of a business and in 1943, he
received a gift from his father that enabled him to establish his own company. The name
IKEA arose from his initials, IK, the farm were he grew up, Elmtaryd, and the city,
Agunnaryd, where he is from. In the beginning IKEA offered pencils, wallets, and clocks.
Kamprad tried to satisfy every need he could find with a product to a low price. In 1947,
the first furniture pieces were introduced to the product line, and they were produced in the
surroundings of Sm*ĵland with excellent response. In 1951, the founder saw a possibility
to become a large-scale low price furniture supplier. Several milestones followed during
the year, one in 1956 when the first flat packages were introduced and another in 1965,
when an IKEA department store in Stockholm was opened and the self-service concept
was launched. After this, IKEA expanded all over the world and by the end of 1999 the
company had become a global network with more than 150 department stores in 30
countries on four continents with 53,000 employees (IKEA, 2005).
The fact that Kamprad is from Sm*ĵland has had a great influence on the concept of
Ikea. Sm*ĵland is a part of the southern Sweden where the soil is very difficult to farm.
The people there are known to be hard working and to always try to accomplish the best
result with limited resources. This philosophy, that everything should be accomplished in
an efficient manner, has become the central thinking in IKEA and has resulted in no
compromises being made between price and quality. Furthermore, Sweden is
internationally known when it comes to safety and quality and the philosophy of IKEA
reflects this. Today, IKEA has a network of 186 department stores in 31 countries,
approximately 76000 employees in 43 countries and 340 million visitors each year (IKEA,
