Export IKEA furniture products to Egypt
Instructor: Bonnie Heineman Wolfe
MBA 617: Import Export Management
Pinarath Sinluksanathip
Munkh Orgil Zorigoo
Funmi Ogunwale
Nasser Madini
Samuel Sandeep
Trang Huynh
December 3, 2012

CONTENT I. Executive Summary II. Introduction III. Product background analysis IV. Egypt Overview V. Barrier to trade of Egypt VI. Market Analysis VII. Marketing Effort VIII. Logistic and Supply Chain analysis 1. Logistic Strength in Egypt: 2. Egypt Facts from Logistics Perspective 3. Creating a Supply Chain and Logistics Strategy a. Determining the Store Location and Capacity b. Transportation and Storage c. Logistic partnerships d. Logistic Enterprise and Measurement 4. Risk Management Plan for Supply Chain and Logistics IX. IKEA Distribution Process to Egypt X. General document requirement for exporting

I. Executive Summary
IKEA is a home furnishing company with a fully integrated supply chain, including its own industrial groups – Swedwood and Swedspan. The IKEA Group, directly or indirectly, also owns retail centers, always with an IKEA store as unique anchor tenant. The IKEA Group works in four basic areas: range strategy & product development, production, supply and retail. The parent company of the IKEA Group of Companies, INGKA Holding B.V. is owned by Stichting INGKA Foundation in the Netherlands (The case of IKEA, 2004)
At IKEA, the core vision is to create a better everyday life for the many people. IKEA business idea supports this vision by offering 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. This is in addition to the Stichting IKEA Foundation’s main funded programs that are designed to improve the rights of children and youth in the developing world to enable them to create a better future for themselves and their families. Examples of these programs include holistic initiatives addressing health, education and livelihood development in rural areas in India, Pakistan and Bangladesh. In addition, the foundation is actively involved in global emergency relief work and also supports initiatives to promote architecture and design.
The product range is the core of the IKEA business, developed to inspire and to provide solutions to everyday home furnishing needs. When we develop products, our starting point is the idea that, even with a thin wallet, people should be able to create a beautiful home with well-designed, functional, safe and healthy products. The key to the success of IKEA understands the different living situations and needs of people all over the world. Thorough analysis helps product developers and designers choose what functions, styles and materials to use for a new product so it has the right combination of design, function and quality – all at the lowest price possible.
To achieve its goal and mission of global expansion, this group project will narrate how Ikea may assess its external and competitive environment, determine the key opportunities and threats which face it, and align its strengths and weaknesses to best counter the weak consumer market, and thus generate the strong growth it needs to remain a strong brand and presence in its chosen markets. II. Introduction
As an international retailer of home products, IKEA is a privately held retailer chain that sells flat pack furniture, bathroom and kitchen accessories all over the world. Founded in 1943, IKEA is an acronym. The name IKEA is derived from the initials of its founder Ingvar Kamprad, the farm where Ingvar grew up and the home country of Ingvar. IKEA is however owned by a foundation, which is Dutch-registered and is owned by the Kamprad family. Since 1943, Ikea has expanded its operations steadily in many countries with most of the stores of the company concentrated in Europe, USA, Canada, Asia and Australia (IKEA, 2012)
The IKEA Group, one of the world’s top furniture retailers, has emerged as the fastest-growing furniture retailer in the world. To become one of the leading furniture retailers in such huge and promising market, it has set an ambitious goal to have several stores in both developing and developed countries by 2013. For this reason, expanding to a new country such as Egypt will not be of challenge because Egyptian shoppers would have had a considerable experience of IKEA’s products through its online presence. Such new market opportunities make exporting IKEA’s products to new countries only an export challenge. In addressing to these challenges, IKEA is known to apply market leader strategy in expanding its total market size, defending and developing its market share to achieve this goal.
This group project, which is a partial fulfillment of the requirements of VIU MBA617, will discuss the Exporting IKEA Furniture Products to Egypt and why furniture was selected among its variety of products. Without an already existing store in Egypt, the project team will draw from informational resources available from IKEA archives and other relevant sources from IKEA’s stores in existence in Israel, Middle East, U.S.A and Europe. The purpose of selecting “Furniture Products” is based on the fact that IKEA originally started by selling picture frames, wallets, pens, watches, table runners, jewelry, and nylon stockings etc. Furniture was first added in the year 1948 and IKEA started manufacturing its own furniture since 1955, providing furniture that could be self- assembled at relatively low cost. Since then, the name has been synonymous with self-assembled furniture.
With pivotal focus on the export and import aspects of getting IKEA Furniture Products to Egypt’s marketplace, our team will examine Ikea’s external and internal industry environments, company and product background analysis, target country analysis, market analysis, action steps, letter of credit and required documentation for export purposes.

III. Product background analysis IKEA, founded in 1943, is the world’s largest furniture retailer. It operates more than 300 stores in 35 countries throughout the world from Europe, the U.S., to Asia (IKEA, 2012). This famous Swedish retailer specializes in self-assembly furniture where consumers are not just the builders but also often the means of out-bound logistics; responsible for picking up and transporting the products they buy to their home. The company’s business concept is based on offering 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. This is called Ikea Concept.
That concept supports Ikea vision: to create a better everyday life for the many people (Ikea Business Idea, 2011). It is the heart of everything Ikea follows to achieve, from product development and purchases to how it sells the products in Ikea stores globally.
To the Ikea’s mission, it is to “to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them” It is likely that anyone can make the product with good quality for high price or a poor quality for low price. However, how to make a good product at low or affordable a price is not impossible, that needs to develop methods combining both cost-effective and innovative. This has been the focus of Ikea since its beginnings in Småland, Sweden. Maximizing the use of raw materials and production adaptation to meet people's needs and preferences has meant that the costs are low. The Ikea way of doing things is to pass these cost savings on to the customers so it makes customers want to buy products from Ikea. The low price strategy is coupled with a style designed, functional products. Ikea concerns about every lifestyle as well as life stage of its customers who come from all age groups and types of households. This is vital in times when the retail sector is depressed, as it increases Ikea’s potential market.
The product range of the company includes furniture and accessories, for bathrooms and kitchens at its retail stores. Ikea stores also facilitate its products in room settings and self-service areas. The company operates 31 distribution centers and 11 customer distribution centers in 16 countries. Ikea also has 45 trading service offices in 31 countries. (Bharat.com 2011) The amount of raw materials that Ikea demands is exceeding the capacity of any county that can provide by itself. As a result of this fact, Ikea has thousands of suppliers from a number of different countries. India, Pakistan, and Bangladesh are the main cotton suppliers, while Russia, China, and Eastern Europe are the primary timber suppliers. Thus, the logistics and supply chain are fundamentally essential factors at every stage of Ikea’s operations. It enables the company to operate its business to reach strategic objectives, avoid unduly costs, and acquire a responsive concept in terms of customer service.

IV. Egypt Overview * Culture The Geert Hofstede states that the Egyptian culture through the five dimensions of 5-D Model, revealed a good overview of the deep drivers of its culture relative to other world cultures. To begin with the power distance, Egyptian accepts a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting integral dissimilarities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a generous autocrat. Second, the individualism or collectivist, Egypt is considered a collectivistic society. This is manifest in a close long-term commitment to the member 'group', be that a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules and regulations. The society fosters strong relationships where everyone takes responsibility for fellow members of their group. In collectivist societies offence leads to shame and loss of face, employer/employee relationships are perceived in moral terms hiring and promotion decisions take account of the employee’s in-group, management is the management of groups.
Furthermore, the uncertainty avoidance, Egypt has a high preference for avoiding uncertainty. Countries exhibiting high uncertainty avoidance maintain rigid codes of belief and behavior and are intolerant of unconventional behavior and ideas. In these cultures there is an emotional need for rules time is money, people have an inner urge to be busy and work hard, precision and punctuality are the norm, innovation may be resisted, security is an important element in individual motivation (Egyptian culture, n.d.). * Political
In October 1981 Hosni Mubarak assumed power after President Sadat's assassination by Islamist extremists. He was re-elected on 7 September 2005 for his fifth successive term. This was the first contested presidential election in Egypt, following a change to the constitution in May 2005. Presidential elections are due to be held this year (2011). The Parliamentary elections in November/ December 2010 returned a majority of NDP candidates and saw a decrease in the number of opposition and independent parliamentary candidates in the People’s Assembly. In late January 2011 large scale demonstrations in Cairo began against President Mubarak. One of the key demands of protesters was to an end of the state of emergency, which has existed since 1981 alongside other issues such as human rights and employment. The focus of the protests was on Tahrir Square in Cairo where protesters numbered in the 1000’s. Social media sites such as Twitter and Facebook played an important role in organizing the protests.
Protests continued and on 11 February 2011, President Mubarak resigned and left Cairo. Vice President Omar Suleiman announced that President Mubarak had stepped down and that the Egyptian military would assume control of the nation's affairs in the short term.
Field Marshall Tantawi, Head of the Supreme Council of the Armed Forces (SCAF) currently heads the de facto Government. The SCAf have announced that Presidential elections will take place within six months. The Parliament is currently dissolved; therefore, it is stable and upright to export product to Egypt. * Legal Mixed legal system based on Napoleonic civil law and Islamic religious law; judicial review by Supreme Court and Council of State. The legal system is based on Islamic law and civil law. Egypt attained independence from the Ottoman Empire in matters of administration of law and the judiciary in 1874 (Wahab, 2012). A reformist movement developed in the late 19th century, led by such prominent thinkers and commentators as the Grand Mufti Muhammad, Abduh, Rashid Rida, and Qasim Amin. Changes in the interpretation and application of family law were an important part of the reformists’ agenda. The reform of the judicial administration began in 1875, leading to the establishment of Mukhtalatat and Ahli courts.
As Egypt increasingly came under foreign influence, the legal system began resembling European systems to a greater extent. New legislation relating to penal, commercial and maritime law also reflected the growing influence of Europe, but personal law remained unreformed until 1920. The sharia courts were integrated into the National Courts in 1956. There are judges trained in sharia presiding over family law cases within the National Courts (Egypt Judicial system, n.d.).
From 1920 to the early 1950s, on the basis of recommendations made by several committees, the Egyptian legislature enacted a number of laws effecting important changes in legal principles relating to family law and succession. These included the Law of Maintenance and Personal Status, a law regulating minimum marriage age, a Law of Personal Status on the dissolution of marriage and family disputes, the Civil Code of 1931, the Law of Inheritance, and the Law of Bequest. In 1976, a new law established rules for the enforcement of court orders for payment of maintenance to wives, ex-wives, children and parents. Through the 1960s and 1970s, despite various reports and proposals relating to legal reform, political events time and again pre-empted the enactment of new laws in this area. Finally, in 1979, after failing to achieve any consensus on matters of family law, Sadat unilaterally issued an emergency decree passing one of the proposals into law in 1979. Law no. 44/1979 was popularly referred to as Jihans Law or Jijis Law. This controversial amendment introduced extensive changes to the two Egyptian Laws of Personal Status of 1920 and 1929, drawing from the interpretations of scholars of all four Sunni schools of law (Wahab, 2012).
In May 1985, the 1979 law was struck down by the High Constitutional Court of Egypt on technical grounds and declared ultra vires the Egyptian Constitution; the initial emergency decree issued by Sadat had been issued in the absence of a true state of emergency and so was deemed invalid. A few months after the verdict, a Personal Status Law was enacted to revise the 1920 and 1929 Laws on Personal Status. A number of the changes made by the 1979 law were reintroduced as well as some new provisions added. One element that was conspicuous by its absence in the 1985 legislation was the wife automatic right to a divorce from her husband if he married polygamous.
As a concession to religious conservatives, the presumption of injury occasioned by a polygamous marriage was removed, requiring the wife to establish that she has suffered harm from her husbands polygamous union if she wishes to divorce. Thus, the ground for divorce was no longer automatic but was left up to the discretion of the courts, as being the wife of a polygamous husband was no longer automatically equated with harm.
The second compromise related to the requirement that the divorced wife in custody of minor children had exclusive rights to the rented marital home for as long as she retained custody. While the requirement to provide accommodation for the custodial mother was retained in the 1985 legislation, the former husband was given exclusive rights over his unrented dwelling. The Law of Personal Status was again amended in January 2000, giving women more options for divorce. * Economic
Following the statistics provided by Central Intelligent Agency, in 2011, the Gross Domestic Product (GDP) of purchasing power parity (PPP) estimate total about 525.6 billion dollars and per capita about 6,600 dollars (Egypt GDP purchasing power parity and per capita, n.d.). The GDP of real growth rate estimate total about 1.8% (Egypt GDP real growth rate, n.d.). Moreover, the euro monitor in 2012 reported that the Egypt annual gross income comparing with US$ million is 193,510.1 and the Egypt annual disposable income comparing with US$ million is 186,262.6. World Bank stated that the economy and the living standards for the vast majority of the population improved, although in an uneven manner. While 18% of the Egyptian population still lives below the national poverty line, this figure goes up to 40% in rural Upper Egypt. An additional 20% of the population has experienced poverty at one point during the last decade (Egypt the world bank, 2011).

V. Barrier to trade of Egypt * Import tariff: In 2004, the Egyptian government reduced the number of ad valorem tariff bands from 27 to 6, and later down to 5. The government also dismantled tariff inconsistencies, rationalized national sub-headings above the six-digit level of the Harmonized System (HS), and eliminated service fees and import surcharges ranging from 1 percent to 4 percent. The government reduced its 13,000-line tariff structure to less than 6,000 tariffs lines. These and other changes have significantly reduced requests for customs arbitration over the past six years. For the household tariff rate is up to 43 percent (Wetzel, 2003, Oct). * Customs valuation: Customs procedures, designed to eliminate trading loopholes, are still burdensome and rigid in areas such as duty rates. They are subjective when it comes to identifying whether a commodity fits in one tariff category or another. Tariff valuation is based on either the worldwide price list received annually from foreign producers/distributors, or if that is not available, they take the highest price available in the local market. However, Importers have the right to take legal action against Custom Authorities in the event of a dispute regarding appropriate valuation, including arbitration that takes fifteen days or more. During that time, the disputed shipments are withheld and the importer has to pay fees as deposit until arbitration is over (Wetzel, 2003, Oct). * Import taxes: Egypt's General Sales Tax was converted to a true value-added tax effective July 2001. To counterbalance a reduction in tariffs, the government levies a service fees on the value of imported shipments in return for inspection, listing, classification and reexamination of shipments. A fee of 1% on commodities with a customs rate up to 4%; 2% on commodities with a customs rate between 5% and 30%; and 3% on commodities with a customs rate above 30%. The 4% charge for inspection has now been abolished. In addition to the customs tariff, imports are subject to sales tax ranging from 5% to 25% (Wetzel, 2003, Oct).

VI. Market Analysis * Geographic
Egypt, officially name is the Arab Republic of Egypt, is a country mainly in North Africa, one of the most populous countries in Africa and the Middle East. Covering an area of about 1,001,450 square kilometers, Egypt is bordered by the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula.
The capital city is Cairo. Most of the population of Egypt is concentrated along the narrow Nile Valley (notably Cairo and Alexandria), and Delta, meaning that about 99% of the population uses only about 5.5% of the total land area (Egypt geography, 2012). * Demographics
According to US Department of State publishing, the population of the Republic in July 2011 reaches about 83,688,814. The majority of Egypt's population is Egyptian, accounts for about 99.6%, and others around 0.4%. Approximately 91% of the population is Muslim (mostly Sunni) and most of the rest is Christian, primarily the Coptic Orthodox denomination. The official language of the Republic is Modern Standard Arabic. Radio and television impose the Cairo-spoken language as the standard dialect of Egypt. Egyptian cultural influence is transmitted to the rest of the Arabic-speaking world in the Cairo dialect. The most common foreign language spoken is English, and followed by French (Egypt demographic, 2012)
The level of education is improving. The literacy rate in Egypt is 71 percent as of 2005 which includes 59 percent of females and 83 percent of males. (World Bank, Statistics Database). There is special attention given by the government and other NGOs to reduce gender disparity in education and to achieve the 2015 MDG of universal primary education.
The country was host to many different communities during the colonial period, including Greeks, Italians, Syrians, Jews and Armenians, though most either left or were compelled to leave after political developments in the 1950s. The country still hosts some 90,000 refugees and asylum seekers, mostly Palestinians and Sudanese. * Customer Profile
Population: 80,471,869 as per July 2010 (N0. 16 in country comparison to world)
Age structure: 0 – 14 years : 32.8 percent 15 – 64 years : 62.8 percent 65 years and older : 4.4 percent
People in Egypt are interested in furniture and jewelry since ancient times. Furniture stores like Zoya and Divano have served many consumers by delivering quality furniture to their homes and living spaces. Divano and Zoya are two different entities who sell modern and classic furniture respectively. And, both the entities have been successful in the market since the 2000’s. This concludes that there certain people who like modern and certain people who like classic furniture depending on the demographic of the country.

* Market Size
With a unique mix of demographics and commercial links to the broader world, Egypt has been a potentially attractive market for U.S companies. Its population of over 80 million makes it the largest Arab country and its location at the gateway trade commerce for different countries made it a potential destination for U.S companies seeking to do business in Egypt. Egypt remains fourth largest export market for U.S products and services in the Middle East. Globally, Egypt is the 33rd largest export market for investors. (Doing Business in Egypt, 2012) The furniture industry is estimated to be 60 percent of the production share in few parts of the country. 75 percent of Egypt’s furniture is exported to different countries in addition to the U.S. Egypt has about 200,000 furniture-oriented establishments, with one million workforce – 600,000 direct and 400,000 indirect. (Ezzat, 2011) * Competitor
Analysis on Divano Furniture:
Strengths:
Wide selection of modern furniture
Unique services
Well established in the furniture market
Imports from Turkey which is considered first furniture exported to Europe
Weaknesses:
No imports from any other country than Turkey
Expensive products
All the furniture is imported from Turkey but not made in Egypt.
Opportunities:
Can work on dominating the market in selling modern furniture
People might prefer more variety and modernization
Threats:
Consumers might prefer cheaper products
Analysis on Zoya Interiors:
Strengths:
Wide selection of classic furniture
Established in the year 2000 and well settled in the furniture market
Export products to Lebanon, Dubai, Saudi Arabia, and Kuwait
Antique collection
Manufactured in Egypt
Weaknesses:
No imports from any country
Expensive products
Made in Egypt
Opportunities:
Can dominate the furniture market in selling classic and antique furniture
Egyptian people might want more classic furniture than modern ones
Threats:
Consumers might prefer cheaper products and good quality
Consumers might also prefer an imported brand
No imports from any country VII. Marketing efforts * Target the right customers: the youth, and family * Display built sample products in front of the store for customer to view and try * Door to door flyer to resident’s house or apartment * Use catalog to present all the Ikea product and publish it in the entire country with local language * IKEA also offers a low competitive price because of the economies of scale (30% lower than competitors) * IKEA innovates with always new products, new styles, each year a catalogue where all the products are presented is launched, and the innovation is also for the marketing strategy, tools, with recently TV advertisement in Europe for instance. * The TV advertising campaign initiated by IKEA overcome the entry barrier of high advertising

VIII. Logistic and Supply Chain analysis 1. Egypt Facts from Logistics Perspective * Egypt has a number of advantages: located just next to the Mediterranean and Red Sea. * Three key sea port destinations: Alexandria, Port Said, and Suez. * Infrastructure is not developed (highways, road services, storing, handling etc.). * Accidents take place often on the motorways (trucker is not liable). * No strong competition in transportation industry. * War insurance gone up since Egyptian Revolution for shipping and airline companies. * There are only four large road transportation companies, many other small ones. * Lack of transparency at customs and borders. * Unpleasant attitude of custom officials and ambiguous charges for the import goods. * Five – seven day of delays at ports because of the slow clearance progress. 2. Creating a Supply Chain and Logistics Strategy In Egypt there are a number of pitfalls for a supply chain and logistics network as stated above. Therefore, considering those challenges is a must in order to have a sound logistics structure. a. Determining the Store Location and Capacity Ikea products have a few features in common; they are mostly packaged, uniquely designed with modern style, and affordable (although meaning of “affordable” differs market to market). Ikea stores, too, have unique features in common; the size, the showroom-warehouse section, and restaurant. They are built larger than average size of Wal-Mart stores. Every store has the showroom, where customer can see the products assembled and organized like a real home or office. The warehouse section is the place. Where customer picks the packaged products and put into the big cart. Last common feature of Ikea stores is that they accommodate restaurants. It is observed that the business concept of Ikea and its content can be described as large scale retailing, that is to say, vast store capacity, large quantities of products and varieties as well as constantly changing product range. Therefore, the location of Ikea store in Egypt will be in such a populous area that will attract sufficient number of customers to have a profitable operating level. Second indicator, end user profile should fit in Ikea concept; a marketplace that has consumer portfolio, who is interested in stylish, functional, and affordable products. Last, but not least, major indicator is the eligibility of transportation. Because supply chain is a key mechanism for Ikea and every gear of that mechanism must work properly to obtain positive results. Admittedly, there is no meaning of strong brand, product quality, or profitable market where the journey of a product from supply to delivery is unreliable. CAIRO | Population | 17 Million (capital also the largest city of the country) | Transportation Availability | Air, Water, Motorway and Railway | Number of Alternative Routes from Seaports | From Adabiya; 6, From Port Said; 6, From Suez; 8 (all are highway routes) | In the light of these analyses, in Egypt, Cairo fits best for Ikea store. A population of 17 million, its diverse society, and city’s development and infrastructure level compare to other cities, it is concluded that Ikea will have a bright business future, fairly dependable logistics operations. Transportation and storage subjects are other elements, which will be studied in the next chapter.

b. Transportation and Storage As stated earlier, the unreliable and insufficient road transportation is the main challenge for both inland and cross-border transportation. For instance, there is no single entity in Egypt that has a capacity of transporting 50 TEU (Twenty Foot Equivalent Unit) within one single operation. In addition to that, delays on the road and during the custom processes also affect the efficiency of logistics operations. There are, however, some foreign companies, particularly Turkish and Israeli, which handle their operations well because of their long time presence in the country and strong connections and relationships with government agencies and other critical competent authorities. Some of these companies have also relations with Ikea (as a supplier, buyer etc.). Ikea can take advantage of these relations to overcome any potential transportation issues. Using different ports is also another way to create alternatives, as Alexandria and Port Said are advantageous sea ports for the products that are freighted from Europe and Russia, while Suez is a major destination for the imports from China, India and Bangladesh. Storage capacity takes a crucial role throughout the Ikea’s retail operations. In the case of Egypt it is even more important due to weak transportation, infrastructure, and slow custom process. It is concluded that creating a cushion by building a storage capacity slightly more than what is actually needed will allow the company to avoid severe results that could occur out of external factors, such as customs and accidents on the motorways. This will also help Ikea to adopt seasonal changes on its demand. The drawback of this strategy, on the other hand, will be its cost. Nonetheless, the authors of this paper agreed upon the inference that operation flow and demand consistency are inherently more important and worth to endure additional costs, so long business provides long term profit and leads the company to meet its strategic objectives. c. Logistic partnerships IKEA and TNT SAB Express Saudi Arabia have the strong long term partnership over the last twelve years because they have the same focus on improving their services and the same aim to place the customer in the heart of everything they do, said by David Country Customer Relation Manager. TNT SAB express is one of the world’s leading express delivery services providers. It delivers 4.7 million parcels, documents and pieces of freight a week to over 200 countries using its network of 2,653 depots, hubs and sorting centers. The company operates 30,239 road vehicles, 50 aircraft and has the biggest door-to-door air and road express delivery infrastructure in Europe. It has successfully managed the distribution and delivery of IKEA products. For example, it delivered a significant number of pieces of furniture utilizing 37 dedicated vehicles in 2011. Thus, when Ikea expands in Egypt; Ikea still decides to cooperate with this company. It is one of the main partnerships for Ikea to achieve the new goal in this market. Another company that Ikea will have the partnership with is the Al-Futtaim Group. It’s established in the 1930 as a trading business and headquartered in Dubai, United Arab Emirates. It operates through more than 65 companies and maintains a decentralized approach, giving individual businesses flexibility and versatility to maintain a competitive stance across sectors as diverse as commerce, industry, and services across the UAE, Bahrain, Kuwait, Qatar, Oman, Egypt, Syria, Pakistan, and Europe. As Ikea team knows, Egyptian market was largely based on the high demand for modern home furnishings that can be bought at affordable prices so IKEA needs the professional and efficient company to take part as investor to introducing and managing IKEA in Egypt. Al-Futtaim group has successes that purposes in other countries such as the UAE, Qatar, and others.
In addition, Ikea intends to use Cairo as the first city to enter the market so Ikea see that IAl-Futtaim group cooperates with the AFGRE as an official partnership to conduct retail deal and to be the host of IKEA in the Egyptian market in the Cairo Festival City's Festival Center with a 10 year lease contract that can be renewed for another 10 years. IKEA in the Cairo city will be provide a full range of house hold furnish over two floors, the store will focus on flat packed furnishes that require self-assembly, and allow IKEA to offer more reasonable consumer prices. Besides, IKEA will offer 3 levels of car parking space, a dedicated customized children's play area as well as their trade mark IKEA restaurant, giving Egyptians a taste of traditional Swedish delicacies. The customers will not be only the Cairo Festival City's residents, but also the large residential communities surrounding the development, and expect to grow the needs to the middle class. d. Logistic Enterprise and Measurement With the changing in business environment, most companies have to adapt it by changing business processes or giving the right strategies. Changes in business processes need to adjust enterprise information flow. Ikea recognizes that point because of large customer demand day by day. Ikea Logistics Company contracts the Egypt’s logistics and distribution services and then it is seen as a distribution to end customer service links into the whole management system. All of the business process and information feedback must be meet the requirements of IKEA at the same time. Ikea applies the Enterprise resource planning (ERP) that is suitable with IKEA production. This ERP integrates the key business information including financial, manufacturing, sales, service, and other, across the organization by the computer software.

The measurement is one of most important process to ensure that the company outcome is observe the goal setting of the company so the company should use the suitable measurement. For IKEA, KPI is suitable with the company logistic process to evaluate its success or the success of a particular activity in which it is engaged. KPI stands for key performance indicator and this is how every company measures its profitability-and other performance metrics-in units that are essential and relevant to each department. For example, in outsourced contact centers, the main driver of performance is average handling time. The shorter the duration of a call represent the more efficient the service is. If the call is ended short, the next caller waiting in line is going to be served faster. Thus, the lesser time it took the call, the higher the service level is. And if the service level is higher, it means more customers are being served. These numbers, in turn, show a manager how profitable a business can be, especially if the company is paid by the call. Or, the KPI for the transport that IKEA will approach can be dividing into 5 categories. Firstly, on-time receiving that evaluate on the time that spent from order to delivery and customer feedback including number of complaints and customers coming back with problems. Second, on-time shipping and delivery that base on on-time delivery to request and customer feedback were including number of complaints and customers coming back with problems. Third, order accuracy that focuses on error rate (Number of customers order dispatched per day) and customer feedback including number of complaints and customers coming back with problems. Fourth, inventory accuracy that focuses on checking stock on shelf or storage area, how many reworks that overstaff but not increase benefit to the company, and error rate. Finally, returns in cycle time evaluate on average time to complete an order and lost time due to injuries. 3. Risk Management Plan for Supply Chain and Logistics Risk management is one of the essential aspects of Ikea’s operations. Because the company’s supply chain network is spread throughout the world various risks are involved, such as extreme weather conditions, unexpected delays at custom points, unpredictable government regulations, and exchange currency fluctuations. In order to obtain a steady supply chain flow, Ikea team identified these risks and classified them in terms of priorities and severities.

Content of Risk | Priority | Severity | Type of Risk | Government Regulations | P1 | S3 | External | War Threat | P1 | S1 | External | Natural Disasters | P2 | S2 | External | Bad Weather | P3 | S3 | External | Strike | P1 | S2 | Internal | Devaluation | P2 | S2 | External | Custom Delays | P3 | S3 | External | Motorway Transp. Delays | P4 | S4 | Internal | Defected Mass Production | P2 | S3 | Internal | Termination of Contract w/Suppliers | P1 | S2 | Internal | Legal Claims Against Company | P2 | S3 | Internal or External | As the table indicates, there are different types of risks that possess different type of priorities. Government regulations, in sufficient motorway transportation, lack of safety in land transportation due to poor infrastructure and uneducated drivers, and pending containers at custom points are the most challenging drawbacks in Egypt. The Ikea team concluded a strategy for each of these challenges, and those are: * Action for government regulations and laws: Consultation from a third party such as local logistics companies that has a vast experience in the region. Also, there are industrial free zones that are located near the major ports. Ikea can take advantage of the regulation about these zones to find the good strategy to enter the market with the reasonable price for its products. * Insufficient motorway transportation: government now is seeking $ 3 billion to reconstruct the road network. To deal with the current situation, Ikea has been looking for the experience logistic companies that can adapt this transportation. * Poor infrastructure: Double wrapping process for certain products to prevent them from breaking down. IX. IKEA Distribution Process to Egypt:

X. Export process in general XI. General document requirement for exporting * Export Quotation Worksheet * Shipper’s letter of instruction * Pro-forma Invoice * Commercial Invoice * Bill of Lading * Certificate of Origin * SED * Packing-list * Letter of Credit

Reference * Divano Furniture. (2012). Retrieved Nov 25, 2012, from Divanoegypt.com: http://www.divanoegypt.com/index.php?action=page&id=2 * Doing Business in Egypt. (2012). Retrieved Nov 19, 2012, from Export.gov: http://export.gov/egypt/doingbusinessinegypt/index.asp * Egypt. (n.d.). Retrieved on November 21, 2012 from http://www.everyculture.com/Cr-Ga/Egypt.html#ixzz1lkazhFFc * IKEA business idea. Retrieved on November 21, 2012 from http://www.ikea.com/ms/en_AA/about_ikea/the_ikea_way/our_business_idea/index.html * Egyptian culture. (n.d.). Retrieved on November 28, 2012 from http://www.venividitravel.com/egypt/egyptian-culture.html * Egypt demographic. (2012, July 19). CIA world factbook. Retrieved on November 28,
2012 from http://www.indexmundi.com/egypt/demographics_profile.html * Egypt Geography. (2012, July 19). CIA world factbook. Retrieved on November 28, 2012 from http://www.indexmundi.com/egypt/geography_profile.html * Egypt Judicial system. (n.d.). Retrieved on November 21, 2012 from http://www.nationsencyclopedia.com/Africa/Egypt-JUDICIAL-SYSTEM.html#b * Egypt purchasing power and per capita. (n.d.). Retrieved on November 30, 2012 from http://www.indexmundi.com/egypt/gdp_(purchasing_power_parity).html * Egypt real growth rate. (n.d.). Retrieved on November 30, 2012 from http://www.indexmundi.com/egypt/gdp_real_growth_rate.html * Egypt the world bank. (2011). Retrieved on November 21, 2012 from http://www.worldbank.org/en/country/egypt * Egypt - People. (2008, Nov 04). Retrieved Nov 19, 2012, from Alibaba.com: http://news.alibaba.com/article/detail/country-profiles%2523egypt/100019713-1-egypt-people.html * Egyptian Pound. (2012, Nov 30). Retrieved Nov 30, 2012, from Fx-rate: http://fx-rate.net/EGP/ * Ezzat, M. (2011). Egyptian Furniture Marching Ahead. Retrieved Nov 25, 2012, from
AHK: http://www.ahkmena.com/node/337 * IKEA. (2012, July). Wikipedia: The free encyclopedia. Retrieved on November 21, 2012 from http://en.wikipedia.org/wiki/IKEA * The case of IKEA. (2004). Retrieved on November 21, 2012 from http://www.imit.se/pdf/reports/2003_131.pdf

* Wahab, Mohemed S.E. Abdel. (2012, Oct). Retrieved on November 21, 2012 from http://www.nyulawglobal.org/Globalex/Egypt1.htm#_The_Egyptian_Legal

* Wetzel, H. (2003, Oct). Trade barrier and tariff rate. Retrieved on December 1, 2012 from http://www.buyusainfo.net/info.cfm?id=121535&keyx=FE0E6D68506D3D06AEF931F1F4A9BC45&dbf=ccg1&loadnav=no * Wetzel, H. (2003, Oct). Custom valuation. Retrieved on December 1, 2012 from http://www.buyusainfo.net/info.cfm?id=121535&keyx=FE0E6D68506D3D06AEF931F1F4A9BC45&dbf=ccg1&loadnav=no * Wetzel, H. (2003, Oct). Import taxes. Retrieved on December 1, 2012 from http://www.buyusainfo.net/info.cfm?id=121535&keyx=FE0E6D68506D3D06AEF931F1F4A9BC45&dbf=ccg1&loadnav=no * Zoya Interiors. (2012). Retrieved Nov 25, 2012, from zoya-interiors.com:
http://www.zoya-interiors.com/index.php