Ask AI: consider the OLI advantages to determine which entry mode IKEA should use in Poland?

When considering the OLI (Ownership, Location, and Internalization) advantages framework for determining the suitable entry mode for IKEA in Poland, we can analyze each factor in detail in the context of the Polish market: 1. Ownership advantages: These refer to the competitive strengths, resources, and capabilities possessed by a company. The main ownership advantages for IKEA include: - Strong global brand: IKEA's reputation as an affordable and stylish home furnishings retailer can influence customers' buying decisions in Poland. - Economies of scale: IKEA's large scale and efficient supply chain can potentially allow it to offer lower prices to Polish customers. - Procurement expertise: IKEA's well-established procurement process can help source quality materials at competitive prices and leverage its knowledge of sustainable sourcing. - Established customer base: IKEA has a loyal global customer base, which it can potentially extend to Poland. 2. Location advantages: These refer to the characteristics and advantages of the host country in which a company may operate. - Market potential: Poland has a growing economy, increasing purchasing power, and a demand for affordable and stylish furniture. This creates favorable market conditions for IKEA. - Availability of suppliers: Poland's well-developed furniture industry offers numerous potential suppliers and skilled labor, which can benefit IKEA's supply chain management. - Infrastructure: Poland has a improving infrastructure, including transportation and distribution networks, which can support IKEA's logistical needs. - EU membership: Poland's EU membership can facilitate smoother operations and transactions by complying with standardized regulations and gaining access to a broader European market. 3. Internalization advantages: These refer to the potential benefits and reduced costs a company can achieve by organizing and managing its activities internally rather than relying on external partners. - Control over operations: Setting up wholly-owned stores in Poland allows IKEA to maintain control over its operations, including supply chain management, procurement, and inventory management. - Consistent quality and brand image: By internalizing its activities, IKEA can ensure that its stores in Poland adhere to the company standards in terms of quality, customer experience, and store layout. - Knowledge transfer: IKEA can more easily transfer its business model, operational procedures, and company culture internally rather than relying on external partners. Based on these OLI advantages, it is recommended that IKEA pursues a wholly-owned subsidiary entry mode in Poland, by either setting up new retail stores or through the acquisition of existing furniture retail stores. This approach will allow IKEA to fully leverage its ownership advantages, capitalize on the location advantages offered by the Polish market, and internalize its activities to maintain control and consistency throughout its operations.