Company Background

IKEA is a multinational group of companies that designs and sells ready to assemble
furniture, appliances, small motor vehicles and home accessories. As of January 2008,
it is the world's largest furniture retailer. Founded in Sweden in 1943. (Ikea.com,
2015) As of December 2014, IKEA owns and operates 351 stores in 46 countries, out
of which Malaysia is one of them and we are part of the Malaysia's management
team. IKEA Malaysia is a value-driven company with a passion for life at home.
Every product we create is our idea for making home a better place. Our vision is "To
create a better everyday life for the many people". Our business idea is to offer a
wide range of well-designed, functional home furnishing products at prices so low
that as many people as possible will be able to afford them. We work hard to achieve
quality at affordable prices for our customers through optimizing our entire value
chain, by building long-term supplier relationships, investing in highly automated
production and producing large volumes. Our vision also goes beyond home
furnishing. We want to create a better everyday for all people impacted by our
business. The main financial principle of IKEA is to grow by using our own
resources. In other words, we earn our money before we spend it. This makes it
possible for us to make long-term investments for the future. The IKEA vision is the
foundation for our growth. We want to make sure that IKEA is accessible, so that
more people can create a better everyday life at home. We re-invest a majority of our
profits in existing and new IKEA stores, as well as in product development,
sustainable solutions and by continuously lowering prices to our customers.
Why go International?
As already mentioned above IKEA is already a multinational company for many years
now but IKEA Malaysia is given the opportunity to expand their IKEA business
overseas. IKEA Malaysia has few reasons why they want to go international and few
of them will be discused here. The international marketplace offers a world of
business opportunities for IKEA Malaysia seeking to sell or source products
worldwide. Not only can you tap into a world marketplace of 7 billion people, but
according to business.gov, companies that do international business grow faster and
fail less often than companies that don't. IKEA Malaysia wants go Internaitonal for
increasing sales, improving profits. IKEA Malaysia will gain short-term security that
is they will be less vulnarable to periodic fluctuations and downturns in the Malaysian

economy and marketplace. Innovation will be increased as well as extending our

customer base internatonally can help us finance new product development. Exporting
is an excellent way to expand our business with products that are more widely
accepted around the world. Internationalization can help us achieve greater scales of
economy. Eventhough our main aim to iimprove our financial position, we also want
to learn. Lastly, one of the important reasons would be government incentives. It
always good for a country's economy when exports are more than imports, therefore
governments always aids and supports exporters. Malaysia would do the same when
we will start exporting as well. On the other hand even if we don't export and choose
to set up a factory in the slected country; then the host country's government will
provide incentives as the chost country will be receiving foreign direct investment and
alot of their local workers will be employed.

Choice of Host Country and Why?

The choosen host country to expand IKEA Malysia is Bangladesh. We want to set up
an IKEA store there in Dhaka the capital city of Bangladesh. First of all, there are
more IKEA stores outside ASIA than it is in ASIA, so the host country had to be in
ASIA so we can grab the ASIAN market more strongly. Secondly, we wanted to
choose a totally new country where IKEA does not have any store yet so that the new
host country can experince the products of IKEA for the first time. Bangladesh's
economy has grown roughly 6% per year since 1996. Bangladesh's industrial
production growth rate is 8.4% (2014). Their labor force is 80.27 million. (Cia.gov,
2015) Commercial bank lending rate is 13%. Bangladesh already has a good
relationship with Mayalasia as Bangladesh exports labor force to Malaysia and
Malaysia exports foodstuffs to Bangladesh. Bangladesh has the 6th highest labour
force in the whole world and 4th highest is Asia whereas Malaysia in ranked in
number 40 in the world. Bangladesh is also known for their very cheap labor, to be
precise, its only $0.23 per hour and it is ranked as the 2nd cheapest labor in the world
whereas Malaysia is not there in the top 10 cheapest laborforce countries in the world.
There are two main sectors in the furniture Industry of Banglades; the local
manufactured and the imported. 90% of the imported furniture in Bangladesh is from
China; therfore our aim will be to compete with the Imported furniture sector of

Bangladesh. Furniture from China is cheap and good looking but not of the best
quality. We will aim to provide Bangladesh with similar pricing furniture with similar
good looks but at a bettery quality from the furniture of China. There is a problem
with Bangladesh which will be a good advantage of us which os rich people in
Bangladesh will are getting richer by the day whereas the poor are getting poorer by
the day. We do not encourage that but as a matter of fact this will help us in a sense
that people will money will defeniteyl try out purchasing new and different furnitures
rathan than purchasin the same old China furnitures. This is where we will come in
and fullfill their need. There is also a tendancy of Bangladeshi people of buying
foreign products rather than local products which will be a advantage for us as well.
Above are all the reasons why we think Bangladesh is the appropriate country where
we would like to expand business into .

References
Cia.gov, (2015). Welcome to the CIA Web Site Central Intelligence Agency. [online]
Available at: https://www.cia.gov/index.html [Accessed 9 Jun. 2015].
Ikea.com, (2015). Well-Designed Affordable Home Furnishings - IKEA. [online]
Available at: http://www.ikea.com/my/en/ [Accessed 9 Jun. 2015].