Introduction

Full name: Nguyen Phuong Linh
Student ID: 2012520024
MID-TERM REPORT
I. INTRODUCTION
Vietnam has become a potential market with plenty of opportunities for foreign business
to launch a new entry, hence, to help them accelerate their process, this report aims to
identify the internal and external factor involved in construction and operation in case
study of IKEA then giving suggestion for Vietnam market afterwards. Essentially, it
explains IKEA’s further market entry plan.
There are five parts in this report, starting with internal analysis focusing on SWOT
matrix, then external factors adapting PESTEL model; and come to market entry mode.
II. INTERNAL ANALYSIS
A. METHODOLOGY- SWOT Model (by Albert Humphrey) - evaluate a IKEA’s
competitive, and to develop strategic planning. SWOT analysis assesses internal and
external factors, as well as current and future potential in furniture industry.
STRENGTH (S) WEAKNESS (W)

-Brand recognition Difficult to enter some sophisticated
-Low price product market that requires high level of
-Simple product localization
-Large customer data
OPPORTUNITIES (O) THREATS (T)
-Customers are becoming environmentally -Severe competitors
friendly -Locating resources in emerging
-Many potential new markets: Online countries
sales
-Expansion in developing countries
III. ADAPATION ON VIETNAM MARKET
Make use of Strength in gain more Opportunities:
+ Strong brand reputation can gain safety market entry strategy as they gain more trust
compared to newbie in the same industry
+ Large consumer data would be beneficial in online retail in the long run plan: Firms
doing good in their digital touch points for customers can have a big plus in the Vietnam
+ Firms could be able to adapt “green marketing” in the Vietnam market even at the very
early stage, given the strong advantage in cost-reduction and the image of environmentally
friendly
Turn weakness into strength: Western-styled furniture has already penetrated the Vietnam
market => optimize the standardized strategy which is still working for Vietnam.
Make use of Strength to tackle Threat: Even Vietnamese customers tend to use furniture for
long-run, sophisticated customer knowledge and listening of firm could find more hidden
needs of Vietnamese customers that are untouched => Firms could likely find more
sources of revenue.
IV. EXTERNAL ANALYSIS
A. METHODOLOGY – PESTEL (Political, Economical, Social,Technological, Legal,
Environmental) Model (by Francis Aguilar) – an overall promising picture for IKEA in
Vietnam
Political: one of the most politically stable countries in Southeast Asia, which its stability
index was ranked higher than 50% of the countries in the world.
Economical: Nearly 36 million more consumers may join Vietnam’s consuming class
Household income is planned to rate 8.2% (CAGR). Adjusted capital and share purchases
by foreign investors reached 31.15 billion USD.
Social: Western furniture products have been increasingly trendy in Vietnam, especially
among youngsters who would be target customers of IKEA when they enter the Vietnam
market.
Technological: IKEA can take this to their advantage of thriving digital market in
Vietnam as they have years of experience of online sales.
Legal: Allow and encourage foreign companies’ investment and operation:
+ Receive preferential income tax rates
+ Eligible for exemption or reduction of land usage fees and land leases
Environmental: People are more aware and serious about the environment
V. ADAPTATION ON VIETNAM
Under Vietnamese laws, firms may see favorable opportunities for expanding operation
with support from authority
Multinationals as IKEA has a whole advantage of production lines in Vietnam, from
locating manufacturing facilities since there are numbers of local manufactures all over
Vietnam, with safety regulation for firms. With advanced technology and government
effort to cut down logistic cost to 16% in GDP, firms may experience logistic
advantages to rural areas. At the same time, Firms need to corporate with shopping
centers and ecommerce platform to meet high demand for medium price plus western
style with good quality
VI. MARKET ENTRY
A. ENTRY MODE: Franchising
There are reasons to choose franchising in Vietnam market. Firstly, IKEA has applied
franchise as main entering strategy for foreign market (429/430 stores are by franchisee).
Then, they have well-conducted franchise system, IKEA Franchise system has been planned
and developed since early 80s following IKEA owner. Furthermore, it would be better income
under Franchise system, revenue from products sales, annual revenue for trademark fee. Also, its
a good way to maximize the local resources and knowledge of local franchises so that saves
the mother company’s resources.There are many potential franchise partners to
collaborate,hence,firms can collaborate with 1 reputable firm in Vietnam to go quicker, be
stronger and prevent new entries. Another thing is franchising is well-known developed in
Vietnam in many industries such as F&B, Coffee, Retail, Health & Beauty, Education,...( more
than 235 franchising business in 2020).
Hybrid Strategy (combine standardizing and localizing) should be implemented in foreign

firms. For IKEA, it has to maintain its standardization of its Scandinavian style product and its
store operation, while it aslo need to do research and pay attention to the room layout.
VII. CONCLUSION
When entering a new market, a firm should carefully study the market, the opportunities and
challenges when entering the market, and then analyze the internal factors. Choosing an
appropriate entry mode and strategy that can both take advantage of the internal resources and
opportunities besides tackle the weaknesses and challenges of the market.
REFERENCE
1. Delteil, B. et al., 2022. The New Faces of the Vietnamese consumer. McKinsey
&Company.[online] Available at:
https://www.mckinsey.com/featured-insights/future-of-asia/the-new-faces-of-the-
vietnamese-consumer
2. Free Essays - PhDessay.com. 2022. IKEA Case analysis; Hill ; Jones - PHDessay.com.
[online] Available at: <https://phdessay.com/ikea-case-analysis-hill-jones/>.
3. Khuong,Vu.,2014. The Institutional Root Causes of the Challenges to Vietnam's Long-
Term Economic Growth.Asian Economic Papers ,13, p.159-189
4. The IKEA franchise system, IKEA.com, [online] Availble at:
https://about.ikea.com/en/about-us/the-ikea-franchise-system

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Full name: Nguyen Phuong Linh

Student ID: 2012520024

STRENGTH (S) WEAKNESS (W)

Hybrid Strategy (combine standardizing and localizing) should be implemented in foreign

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