Paper Topic:

Strategy Management

STRATEGY MANAGEMENT

2006

Strategy Management

I . Introduction

There are so many reasons why we witness multinational enterprises (MNEs ) emerge in recent years . The fast development of information technology and the Internet has encouraged MNEs to expand into new markets that are economically having great potential for the MNEs business

However , it is found that many start-up firms that experience the downfall is then wondering what the cause is . Stacey says in to prevent a start-ups firm or a company in a new market from downfall they had better manage

their risk with an extra touch of integrity and a carefully considered risk plan (2001 . This is imperative since the decision to enter new market poses challenge since the companies face uncertainties that takes more than just market knowledge , skills , and patience . It certainly takes a lot of energy and focus to handle risk that we know as risk management

In to minimize the risk , it had better those MNEs pore over the appropriate marketing strategy for a specific market in to meet local taste . According to S . Carter (1997 , marketing is defined as a process of building lasting relationships through planning , executing and controlling the conception , pricing , promotion and distribution of ideas , goods and services to create mutual exchange that satisfy individual and organizational needs and objectives

Concerning the issue , this will discuss about IKEA 's , a Sweden-originated multinational company that provides modern style furniture and accessories , business opportunities and restrictions when the company intends to enter furniture and accessories market in Central and Eastern Europe (Inter IKEA Systems B .V , 2006 . The discussion includes challenges that Central and Eastern Europe pose to MNEs , like IKEA and identification of several strategic options for IKEA as an MNE to relocate in Central and Eastern Europe

II . IKEA Expansion into Central and Eastern Europe

II .1 Challenge of Entering into Central and Eastern Europe : Country Risk Analysis

By definition , country risk is defined as as a broader measure of risk than political risk , as the former encompasses political risk , credit risk and other economic performance (Eun and Resnick , 2004 ,

. 370

The consideration of a country analysis is important for any corporation when it decides to enter a market in foreign countries since it might have adverse impact of a country 's environment on a Multinational Company Cash Flows (Madura , 2003 ,

. 476

Therefore , a country risk analysis deals with uncertainty of a particular country in to find out the business environment in that country . Country Risk Analysis commonly used by multinational company to expand into new market in foreign countries

Concerning the country risk analysis of entering countries in Central and Eastern Europe , it is found that each country has different level of risks . However , in general , people often associate these regions as places of disdain , indifference , frustration , and reacted with ignorance , hubris , cruelty , and discrimination . This is because within the past two decades , these two regions experienced several terrifying situation such as Serb-Albanian wars and...

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