IKEA in China: Facing Dilemmas in an Emerging Economy

Li-Qun Wei & Canny Zou

This case summarizes the development of IKEA’s China operations since the opening of its first store in Shanghai in 1998. Since then, IKEA had added four retail stores in Shanghai, Beijing and Guangzhou. Nevertheless, IKEA still has not been profitable in China. The case aims to identify the underlying factors that influenced IKEA’s performance in China. The case starts by summarizing IKEA’s history, including its organizational characteristics and the competitive dynamics in the Chinese furniture market. Building on this framework, the strategic challenges of IKEA in China are highlighted. In this regard, the case analyzes the effectiveness of IKEA’s distinct furniture concept, pricing strategy, and market positioning in the Chinese furniture market.  On the whole, the case aims to provide insights for international business development in the Chinese furniture market.


Kamdhenu Dairy

Debasis Pradhan, Shabad Kalra & Sangeeta Srinivas

Kamdhenu Dairy was one of the biggest dairy unions in India that came into being in 1969. Kamdhenu dairy, with an annual sales turnover of Rs. 5250 million, was procuring its milk from the regular suppliers residing in the villages using its own procurement network. The same network was being used to market other dairy products and essential items like fodder and medicine for the cattle to the milk suppliers. The company had recently chosen to sell tea using the same procurement network. The entry of Kamdhenu Dairy into tea marketing was justified as tea was a high margin product and did not require additional resource allocation for marketing in the local rural market. As the marketing of Kamdhenu Dan (cattle feed) and Kamdhenu Ghee had been quite successful, Mr. Samal, the CEO of Kamdhenu, thought the same network could be used to market Kamdhenu tea as well.
 
However, Mr. Samal was worried over the stagnation of tea sales in recent times though initial sales were encouraging. There were already many national and local players who were quite entrenched in the regional tea markets of India. Kamdhenu dairy was neither a national player nor was it a leader in the local market. This forced Mr. Samal to think about the marketing strategy for Kamdhenu tea to achieve success in market penetration in India. Mr. Samal was carefully pondering over possible alternatives to decide how best he can deal with the situation. This case is useful for examining the issues related to market penetration strategy.


Motivating Vietnamese Employees and Managers in an American Joint-Venture: What a Challenge!

Virginia Bodolica

Paul Fierman, an American expatriate, was the General Director of the Vietnamese subsidiary of Chicago Food and Beverage Company (CFB Co.) in Haiphong. His three-year mandate consisted of preparing and executing, in collaboration with the Asia Pacific Regional Director, a strategy of creating synergy among three Asian subsidiaries, which should allow CFB Co. to conquer the three markets. Six months after his arrival, Paul was facing many problems, including a decrease in the sales of non-alcoholic beverages, the general lack of motivation of management in the subsidiary and unrest among the factory workers who wanted better wages and were threatening to unionize. Now, to save the subsidiary and also his career, Paul needed a rapid action plan to put the subsidiary back on track. He had to present and defend such an action plan during his next meeting with the Asia Pacific Regional Director of CFB Co. This case is useful in examining the challenges in managing in a foreign environment.


Leveraging Capabilities at DRL

Anadi S. Pande 

The case discusses the history, growth and prospects of India’s second largest pharmaceutical firm – Dr. Reddy’s Laboratories (DRL). It details the strategies, actions, resources and capabilities of the company since its inception in 1985 to the close of the case in 2003. In the period up to mid 1990s, DRL exploited the Indian process patent regime by leveraging its skills in reverse engineering patented drugs quickly and launching these faster than the rivals in the Indian market. However, the environment changed once India signed the GATT agreement in 1994. Competition in the domestic market had also heated up in mid 1990s. DRL maintained its lead by moving up the value curve and positioned itself in domestic formulations market while simultaneously exploiting its existing capabilities in developed markets by filing Abbreviated New Drug Applications (ANDAs). Realizing that it must quickly build such resources and capabilities that would be valuable in the post-WTO world, it started moving up the value curve into drug discovery for New Chemical Entities (NCEs). It met with some success as some multi-national firms licensed their molecules for clinical research. It was also successful in being the first to launch a generic version of a patented drug, thereby enjoying marketing exclusivity for six months in the US. As the date for India’s integration with the world draws close, DRL was seen to proactively develop resources to thrive in the new post-WTO world. This case is useful in learning about effective responses to deregulation and the post-WTO environment. 


DENA BANK – Competing with Private and Foreign Banks

Amit Sachan, Anwar Ali & Rejen K Gupta

Since 1995 with the increasing importance of the service sector, liberalization policy and information technology revolution, the banking sector as a whole had undergone significant changes in India. The case presents a brief outline of the developments which happened in the Indian banking sector and discusses Dena Bank’s efforts in the last decade in the area of customer service. The case explores how customers interacted with banks, how banks made money, how external environment was changing the core activities and core assets of banks in India and the opportunities and challenges arising out of all these. The case ends with the question on what Dena’s strategy should be in response to the new competition and new technologies. The case is useful in looking at strategic responses to changes. 


Melbourne Pathology

Kannan Sethuraman & Devanath Tirupati

Melbourne Pathology, a subsidiary of Sonic Health Care, provided a comprehensive range of pathology services as an aid in the diagnosis and treatment of patients in Melbourne and Central Victoria. In a capped funding and highly regulated market such as the pathology service market in Australia, the only way in which the sales of a provider could grow was usually at the expense of another provider. To combat this situation, Melbourne Pathology opted to compete by providing higher quality service and faster turnaround time. The recent results of Melbourne Pathology, however, indicated that although the average turnaround time was within the promised targets, significant percentage of jobs in routine category and over 10% of jobs in the urgent category failed to meet the established targets.  The case is primarily intended to illustrate the impact of demand distortions in a service setting that arise due to lack of coordination among various entities in the service value chain and a failure to have an integrated perspective that aligns all departments towards a common goal.  This phenomenon is similar to the bullwhip effect in supply chains of manufactured products which has received considerable attention during the past decade. The case provides opportunities for students to develop corrective actions to mitigate this problem.


Book Review Services Marketing in Asia – A Case Book

Amy Wong



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