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SEMINAR PAPER IKEA Business Strategy in India

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Abstract

IKEA is known globally for its low prices and innovatively designed furniture. In India, it ran into several problems, such as Foreign Direct Investments (FDI) and setting up the physical stores in the large country like India. This case study analyses how IKEA adapted its strategies to enter in India and how it can expand in the country. IKEA has considered doing business in India for years, having first established a presence in 2007, only to run into a raft of regulations limiting foreign investment in the country’s retail sector. This paper aims to capture the essence of India as a marketplace and consumer psychology analysis, the growing purchasing power and rising influence of social media have enabled Indian consumers, making India an aspiring emerging market for global businesses. Survey titled “What is the biggest barrier in doing business in the world market” figured out eight problems which include “law, price competition, information, language, delivery, foreign currency, time differences, and cultural differences”. In this paper we shall analyse most of these factors along the lines of business strategies for IKEA collaborating with the macro enviornment, and over all industry in India. IKEA has been quite successful with its “one design-suits-all” global expansion strategy in many markets. Anders Dahlvig, former CEO of IKEA, had once said, "whether we are in China, Russia, Manhattan, or London, people buy the same things. We don't adapt to local markets." Operating in a country with the culture base different from the corporate culture could bring many challenges to new emerging markets. IKEA, with the opening of its first store in India (in Hyderabad) has paved way for a completely new experience in furniture market for Indian consumers. The purpose is to reflect on how IKEA fits into the Indian consumer market, where future growth is likely to emerge.
SEMINAR PAPER
IKEA Business Strategy in India
Submitted at:
FH JOANNEUM University of Applied Siences
Business Development and International Marketing
Submitted by:
Shuporna GHOSH
2 Seminar Paper BDIM January 2020
Table of Contents
TABLE OF CONTENTS ...................................................................................................... 2
1. Executive Summary .................................................................................................................. 3
2. IKEA Overview ........................................................................................................................... 4
2.1. IKEA Vision ............................................................................................................................ 4
2.2. IKEA Corporate Culture ...................................................................................................... 4
3. Overview of Furniture market in INDIA ................................................................................. 5
4. IKEA in India ............................................................................................................................... 7
4.1. PESTEL Analysis.................................................................................................................. 7
4.2. Porter’s Five Forces .......................................................................................................... 12
5. Global Business Analysis Why India?............................................................................. 15
5.1. CAGE Framework Analysis .............................................................................................. 15
5.2. Blue Ocean Strategy .......................................................................................................... 18
5.3. Porter’s Diamond ............................................................................................................... 20
6. IKEA Strategy in India ............................................................................................................ 20
7. Conclusion ............................................................................................................................... 22
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1. Executive Summary
IKEA is known globally for its low prices and innovatively designed furniture. In India, it
ran into several problems, such as Foreign Direct Investments (FDI) and setting up the
physical stores in the large country like India. This case study analyses how IKEA
adapted its strategies to enter in India and how it can expand in the country.
IKEA has considered doing business in India for years, having first established a
presence in 2007, only to run into a raft of regulations limiting foreign investment in the
country’s retail sector. This paper aims to capture the essence of India as a marketplace
and consumer psychology analysis, the growing purchasing power and rising influence
of social media have enabled Indian consumers, making India an aspiring emerging
market for global businesses.
Survey titled “What is the biggest barrier in doing business in the world market” figured
out eight problems which include “law, price competition, information, language, delivery,
foreign currency, time differences, and cultural differences”. In this paper we shall
analyse most of these factors along the lines of business strategies for IKEA
collaborating with the macro enviornment, and over all industry in India.
IKEA has been quite successful with its “one design-suits-all” global expansion strategy
in many markets. Anders Dahlvig, former CEO of IKEA, had once said, "whether we are
in China, Russia, Manhattan, or London, people buy the same things. We don't adapt to
local markets." Operating in a country with the culture base different from the corporate
culture could bring many challenges to new emerging markets.
IKEA, with the opening of its first store in India (in Hyderabad) has paved way for a
completely new experience in furniture market for Indian consumers. The purpose is to
reflect on how IKEA fits into the Indian consumer market, where future growth is likely to
emerge.
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2. IKEA Overview
Founded by Ingvar Kamprad in 1943 as a tiny Swedish mail-order catalogue business,
today IKEA is world’s largest furniture retailer, known for its reasonably priced functional
furniture.
Ikea has over 360 stores spread out over roughly 50 countries. 2013 was a record year
for profits, with global sales coming in at almost 28 billion euros. While Europe makes up
most of the market for IKEA, the company has seen strong growth in North American,
China and Russia. The company is looking to expand further afield into new geographic
locations in the search for even more growth. IKEA wants to approximately double sales
by 2020 and one logical area to find new opportunities is in emerging markets.
In India, while the potential for over 1 billion new customers is attractive, there is also a
whole host of serious challenges that the company must face.
2.1. IKEA Vision
“To create a better everyday life for the many people“ with the vision of IKEA and the
business idea “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”,
the company prides itself for working hard to achieve quality at affordable prices for its
customers through optimising their entire value chain, by building long-term supplier
relationships, investing in highly automated production and producing large volumes,
beyond home furnishing.
2.2. IKEA Corporate Culture
Globally IKEA’s policies and cultures are standardized. The strategic decisions are
centralized, they train their co-workers as per their policies. IKEA prefers communication
skills and organization’s ethics instead of academic qualifications. IKEA’s standard
values are - humbleness, equality and simplicity.
IKEA trained managers act as missionaries and spread the cultural values to coworkers.
There are more women than men working on the IKEA sales floors, and while the share
of women is slowly increasing in some management categories, the balance is far a far
fledged goal for them.
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The characteristics of IKEA’s culture can be witnessed, where people often wear the
same uniform or casual dress instead of suits. Titles which shown the position are not
used in the name badge or in the way IKEA’s people call each other. They prefer the
word “co-workers” instead. Responsibilities were the key for distinguishing co-workers;
an evaluation system based on personalized yearly goals and broad guidelines is used
to evaluate employees’ performance.
IKEA people are encouraged to be independent, willing to learn, willing to listen to others
and know how to transfer and share their knowledge to others while not feeling they are
any better than anyone else. In exchange, they are offered by IKEA a pleasant working
environment; job security and a caring attitude to employees IKEA believe in each
person’s ability to develop and grow both personally and professionally.
Diversity and inclusion are essential for IKEA business success - meeting customers,
developing co-workers, and cooperating with their global business partners. IKEA culture
promotes togetherness and encourages an individual to add value to the team and to
trust their people and treat equally.
3. Overview of Furniture market in INDIA
Global Furniture Market
Revenue in the Furniture market amounts to US$205,395m in 2020.
The market is expected to grow annually by 5.1% (CAGR 2020-2023).
In global comparison, most revenue is generated in the United States
(US$261,496m in 2020).
In relation to total population figures, per person revenues of
US$148.84 are generated in 2020.
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According to a study by World Bank, India’s organized furniture industry is expected to
grow 20% per annum over the next few years and is projected to cross $32 billion by
2019. Online home décor market in India is projected to grow at a CAGR of 50.42% in
revenue and the luxury furniture market is expected to garner $27.01 billion.
India’s home furnishings market is largely served by informal mom-and-pop outfits, so
called unorganised retailers. However, gradually bigger companies are increasingly
gaining share.
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4. IKEA in India
India is the 37th entrant amonsgt the countries IKEA is doing business with. While IKEA
operates through owning the stores in 24 countries, the rest are franchised or owned by
other business entities. However, given the complexities of setting up business in India,
as an emerging market, it was not wise to replicate the business model of other countries
to India. As the potential for over 1 billion new customers is attractive, there is also a
whole host of serious challenges that the company must face, this market.
The macro enviornment consists of broad enviornment factors that impact to a greater
or lesser extent many organisations, industries and sectors. Likewise, It is critical to study
the macro enviornment for IKEA in case of its presence in a country like India, which
comes with its own share of challenges and opportunities.
Each country is a strategic business unit in IKEA as they are all a part of the organisation
but for which there is a distinct external market for goods or services and distinct
competitors that is different from another SBU.
4.1. PESTEL Analysis
With PESTEL Analysis, which is a strategic analytical tool used to assess the impact of
external factors on businesses, we shall now asses the potential competitive advantage
of IKEA in India. There have six external factors that may impact theperformance
and affect the strategic development of the organisation.
PESTEL
Political
Economi
c
Social
Techno-
logy
Enviorn-
ment
Legal
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Political
i. FDI Limitations
IKEA tried to enter the country several times, but its attempts were thwarted by India’s
stringent Foreign Direct Investment (FDI) regulations. Until 2011, FDI in multi-brand retail
was forbidden by the Indian government and FDI in single-brand retail was permitted
only up to 51%. IKEA lobbied hard to persuade the Indian government for easing the FDI
rules in 2008, but the company failed as IKEA was clear that it would only enter India
when 100% FDI would be allowed.
In January 2012, India allowed 100% FDI in single-brand retail on the condition that the
retailer should mandatorily source 30% of their goods from India’s micro, small, and
medium enterprises (MSMEs).
ii. Bureaucracy and Corruption
With Corruption Perception Index (CPI) of India ranking 78, IKEA had to steer through
long and bureaucratic paper work for the sanction of the business in India.
iii. High cost of real estate, challenge in availability of retail space
Further, given the size and magnitude of IKEA stores other countries globally, in India
the entity struggled to establish its stores with the availability of retail space and its cost.
Economic
i. GDP and PPP
India recorded GDP (Gross Domestic Product) per capita of 2,717bn USD (ranking 7th)
with an impressive PPP (Purchasing Power Parity) of 10,505 bn USD, by the end of
2018, making it an attractive market for IKEA. The growing size of the middle class in
India implies that there will be an increasing need of IKEA’s products.
ii. Price Sensitive market
Given Company’s core proposition "value-for-money furniture and home accessories
to cater to the cost-conscious Indian consumers, IKEA had to cut cost of its products.
Around 1,000 items in the Hyderabad store are priced below Rs200 (2 Euro) each, which
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Ikea hopes will mean something for everyone. Their cheapest item is a set of four,
brightly-coloured reusable plastic spoons for just Rs15. And, for those intimidated by self-
assembly of the famous flat-pack designs, Ikea in India has tied up with local carpenters
and delivery services.
Social
i. Population
India is the 7th biggest country regarding country size and India is the 2nd most
populated country (with about 1.3 billion people) in the World with a median age of 28
years, making it an extremely lucrative market for IKEA to make presence. The fact that
the new emerging middle class are more aware of their home design which presents an
opportunity for IKEA to expand.
ii. Different culture and beliefs resulting in difference in lifestyle
Instead of Swedish meatballs, IKEA diners at the 1,000-seat restaurant replaced it with
chicken or veggie balls, dal and rice, or biriyani.
Textiles on sale in India, have brighter colors and busier patterns than in Ikeas
elsewhere.
iii. DIY (Do-it-Yourself) not a concept for consumers
Indian Consumers are intimidated by self-assembly of the famous flat-pack designs.
Hence, Ikea in India has tied up with local carpenters and delivery services.
Technology
i. On-line Sales
Given the long distances in the country, IKEA has plans to offer its goods online. Hence
it has tie-ups with Amazon and its own website.
India, having the 2nd most smartphone users across the globe, IKEA stands a huge
potential to tap the Indian customers online.
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Ecological
i. Electricity Disruptions
IKEA’s 2006 initiative of 100% renewable energy usage required its stores to be supplied
with either wind power or energy from solar panels. Its stores in Germany, France,
Sweden, and at forty more places used either power from their own wind turbines or from
solar panels.
Legal
i. Tariff and Tax laws
In the last year, the Indian government has reversed two decades of steady tariff-cutting
and raised import duties on a wide range of items. With IKEA’s heavy dependence on
imported goods, this is a additional potential vulnerability.
ii. Cheap Workforce and Minimum Wage for employees
There is No Restriction or limitation of minimum wages for employees. With the stipulated
amount of funds reserved for workforce they can employee more as there are educated
and competent workforce available in cheap.
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Forecast
IKEA was very clear on its strategy to enter India with the allowance of 100% foreign
direct investment (FDI) in single-brand retail, it didnt want to go down the joint venture
route. The emergence and rapid growth of e-commerce is all-the-more reason for IKEA
to see more of an opportunity in India. On one hand IKEA has to compromise on price
Opportunities
No inteference from
Government - 100% ownership
in the country
2nd most populous country
with the median age of 28
years. Young population
High PPP, showcasing high
buying potential of the
consumers in the market
Enviornment friend Power
generation approach by IKEA
Availability of Cheap and
competent Labour/ workforce
Availability of Cheap Labour
Threats
Price Sensitive Market - Price
over Quality
No exposure or experience to
DIY (Do-it-yourself) amidst
customers. hence tie-up with
aseembers and delivery entities
making the products expensive.
Modification of products
required due to difference in
culture ethnicity and beliefs
Corruption
Electricity Disruptions
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of the product on the other hand, it is will benefit by availability of cheap labour and
competent labour.
Since well-travelled Indians have known IKEA for a while now, with thriving Furniture
market in India, it is a promising business venture. India is a large and growing market
with the furniture industry worth $32 billion and projected to be double to $61 billion by
2023. Ikea has a huge potential to capitalize on this. But in the meantime, other Indian
players (such as Pepperfry and other unorganized furniture vendors) have effectively
held their ground by leveraging local knowledge and addressing the country’s
infrastructure challenges.
4.2. Porter’s Five Forces
Further to analysing the macro environment for IKEA in India now, It is imperative to
analyse the key determinant of profitability by scrutinizing the extent of competition and
the strength of buyers and suppliers. Porter’s Five Forces Framework will help us
analyze and identify the attractiveness of the market for IKEA in terms of Five competitive
Forces
i. extent of rivalry between competitors
ii. threat of entry
iii. threat of substitutes
iv. power of buyers
v. power of suppliers
Rivalry among existing firms [HIGH]
IKEA faces stiff local competition from Pepperfry, India’s existing, largest online furniture
retailer and many local retailers like Future Group (Home Town), Landmark (Home
Centre), and Shoppers Stop (Home Stop) with Indian customer base. With the entry of
IKEA, there is hope that small and medium retail furniture market will get a standardized
structure and shape. The other already existing players may not be as big as IKEA but,
these players understand Indian customers very well simply by the virtue of being in
Indian market for long. Having developed trust factor amidst Indian consumers, the
existing furniture brands have a strong hold due to low cost of the furnitures,
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understanding of consumers and traditional designs and most importantly, have the
ability to deliver hasslefree ready-to use furniture at the doorstep of the consumers.
Threat of the New Entrant [LOW]
Emergence of new entrant to compete with IKEA in not as significant as, the new market
entrants would not be able to benefit from the economies of scale to the same extent as
IKEA, at least during the initial stages of operations.
Bargaining Power of buyers [HIGH]
Bargaining power of buyers in furniture and home appliances manufacturing industry is
huge. Indian customers are price sensitive and have a stickiness towards the vendors
having long lasting trust association. The competition is intense and as such, there is a
long list of furniture retailers’ people can buy from, that too with an advantage of
hasslefree, ready-to use furniture.
Bargaining Power of Suppliers [LOW]
While Ikea has sourced cushion covers, rugs and other textiles from India since the
1970s, the country accounted for just 3 per cent of the company’s global supply chain in
2012. Traditionally, India has been supplying textiles, rugs and carpets to IKEA and
already had 48 suppliers in India. The company is getting carpets, pillows, mattresses
and even some of its popular Ektorp sofas from local manufacturers, which are also
being exported to Ikea stores elsewhere in Asia and the Middle East. Globally, Indian
suppliers sell about $400 million of goods a year to Ikea, primarily textiles.
Now the company is looking at new categories such as mattress, sofa and other furniture.
And it has already signed up sofa and mattress suppliers who have started exporting
India-made IKEA products to stores around the world. In terms of products, IKEA is now
looking at sourcing new materials from India namely Ceramics, Glassware, Wood,
Natural Fibres, Bamboo, Acacia, Eucalyptus, Metal etc.
There is strong government push to fulfill the condition to comply
with local sourcing requirements, which mandate that within five years, 30 per cent of all
goods sold in IKEA‘s Indian stores be made in the country.
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Threat of Substitute Products [LOW]
IKEA is instead substituting furniture of latest trends in India. Through simplicity of design
and innovative technology, IKEA can follow any new style fairly well. IKEA also has
entered the Indian market after well-research and has many space saving innovative
furniture capabilities for Indian consumers, in much affordable prices.
Government Supports
100% ownership of
IKEA in India
No competitor as big as
IKEA existing in India
IKEA already has good
network of suppliers
which is intended to go
up
IKEA makes benefit
through economies of
scale being the global
giant
Competition delivers
ready-to-use furnitures at
the customer doorstep at
their convenience
Customised furniture
available
Trust factor of the
consumer is high on local
vendors
Stregths
Underlying Factors
Fixed Cost
IKEA is having huge setup only
servicing Furniture and Lifestyle
products where as other
competitors have small set-up
Competition
Indian consumers prefer local
retailers or trusted carpenters.
IKEA is a global player with deep
pockets however, the competitors
already have earned the trust of
the customers
Differentiation
The major differentiation is DIY.
The furniture industry in India is
offering customised ready-to-use
furniture to its customers.
Industry Growth Rate
Indian Furniture Industry in 2020
is 2nd highest in the globe after
US, USD 205bn forecast in
section (3)
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5. Global Business Analysis Why India?
Despite ‘globalisation’ being the most commonly used word in the business environment,
it is also one of the most loosely used word, perhaps they overlook the challenges and
pressures for the business being local and regional at the same time.
There are substantial differences in customer needs and in economic, regulative/
administrative, political and cultural institutions that make Indian market more or less
attractive. While PESTEL framework for environmental analysis and Porter’s FIVE
FORCE industry analysis help identify the factors affecting the business, there are
specific determinants of market attractiveness that need to be considered in
internationalization strategy.
It is important to evaluate how initial estimates of country attractiveness can be modified
by considering institutional voids and various measures of distance.
Ghemawat’s CAGE framework measures the match between INDIA and IKEA according
to four dimensions of distance. CAGE framework emphasizes the importance of Culture,
Administrative, Geographical and Economic distance.
5.1. CAGE Framework Analysis
Cultural
Distance
Administrative
Distance
Geographical
Distance
Economical
Distance
DIY (Do It Yourself)
concept in India NOT
existing
Difference in Attitude
and Taste of furniture
Adaptation to
Lifestyles of Indian
customer i.e. culture,
Values and Beliefs
Usability Differences
due to demography,
climate and ethnicity
Absence of share
monetary or political
association
No existence of
political hostility
between India and
Sweden
Corruption Issue
Physical distance
from Sweden to India
Weak Transport links
between countries
Cost and time savings
of IKEA makes use of
local resources
Large Country, with
challenges in
customer accessibility
to the physical stores
Income Inequality of
the consumers
Large economic size
and low per capita
income
Cost Vs. Quality
compromise
Need for local
customization and
standardized products
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5.1.1. Competitive Characteristics
a. Market Attractiveness
India is a culturally diverse country, home to over 1.2 billion people. Its dynamic economy
is projected to have real annual growth of almost 5.7% (at current rates, the country is
expected to Top 5 economies in the world). Strong economic development over the past
decade has increased living standards and created a vibrant middle class that is hungry
for consumer goods (there are almost 30 million Indians with a disposable income of
over US$30,000).
The retail industry is an extremely important part of the Indian economy, responsible for
approximately 10% of GDP and employing almost 8% of the population.
- The Indian retail market is valued at $600bn (£460bn)
- Home furnishing segment of the market valued at $20bn and growing fast
- IKEA has pledged to invest over $1.5bn (£1.2bn) in India over the next 10 years
b. Institutional Voids
i. Solution for Indian Customers IKEA operates on a do-it-yourself model,
where users assemble their own furniture. In India, however, IKEA is
customising for the market and is building assistance for furniture assembly,
by tying up with Indian Startup- UrbanClapp. As part of this collaboration,
consumers purchasing a select range of IKEA furniture from the store will be
able to book furniture assembly services via the UrbanClap app or website.
ii. Low Price IKEA is selling a product in India for less than it charges
elsewhere. Given India’s lower income levels, the store features hundreds of
products from dolls to spice jars priced at less than 100 rupees i.e 1.2
Euro
iii. Tailoring to local tastes For example, most Indians do not use knives to eat
and primarily want spoons, so the company ditched its children’s plastic
cutlery packs and instead sells four spoons for 15 rupees, i.e. 18 cents
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iv. Plugging the Cultural Differences through product adaptation IKEA
conducted visits to about 1,000 homes in various cities to understand how
people lived and what they needed. Indian families spend a lot of time
together, with relatives frequently popping in, so the company added more
folding chairs and stools that could serve as flexible seating.
And with children often sleeping in the same room as their parents until they
are in elementary school, its model bedroom squeezes in a child’s bed amid
all the other furniture.
Even the cafeteria caters to Indian tastes, with biryani, samosas and chicken
instead of beef Swedish meatballs (due to religious belief) on the menu and
1,000 available seats, more than any other Ikea in the world, to accommodate
the more leisurely dining style of Indian families.
Product range here is less of heavy wood and the collection itself is very
colourful.
Ikea has introduced collection of home accessories such as bedsheet,
bedcovers etc in Indian patterns. The company has brought in innovation into
the manufacture of handmade carpets with a new “punja" loom (Indian
weave).
v. Adapting to Indian ethnic group and climate Indian women are also
shorter than Europeans and Americans, so the company decided to
showcase some cabinets and countertops at lower heights.
c. Expectations of Competitor Retaliation
The Nearest competitor of IKEA, in India such as PepperFry is having a wide reach
and has an omni-channel framework to reach out to the last mile customer.
a. Shifting the Gear to Digitalisation To be readily accessible to many people,
IKEA adopted a true omni-channel approach. This means the big stores and
small formats in the big cities of Mumbai, Delhi and Bengaluru and then also
having an online approach.
b. Due to globalization and more and more people exchanging/ travelling across
the world, the brand awareness of IKEA is not unknown. Conversely, IKEA’s
reputation in India is perceived as average, but at the cusp of being strong
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and within the margin of error of its global score. This will offer edge to IKEA
over it’s competitors.
5.1.2. Conclusion
IKEA is global brand, and needs to considers its opportunities and deal with its threats
to take advantage in this competitive market. In the Indian market it needs to face its
barriers but maintain pricing strategy 'technology' innovations as they can drive out from
these barriers (Robinson R, 2005). By considering both micro and macro factors IKEA is
able to generate the strong growth and keep hold on a strong identity in the market.
5.2. Blue Ocean Strategy
IKEA’s main domestic competition will be the thousands of tiny furniture shops and
roadside carpenters who build-to-order. There are only a few national furniture brands
and websites, in the country. The furniture market in India is largely (85%) dominated by
the unorganised sector, office furniture segment is one of the major revenue generators
of the overall furniture market in India, due to low cost, possibility of customisation and
long drawn trust among the customers.
PepperFry, is one of India’s leading online furniture retailing firms, which is one of the
fastest growing furniture companies in India. In this paper, hence, we shall now analyze
blue ocean strategy for IKEA India in comparision to the unorganised Furniture Market
in India and PepperFry, on the following parameters.
- Price
- DIY (Do-it-Yourself)
- Traditional Designs
- Contemporary and Modern Design
- Ease of Buying i.e. Online
- Availability of accessories
- Speed of availability
- Quality
- Brand Image
- Offering an experience such as Food
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Strategy Canvas of IKEA in India
Four Action Framework for IKEA India
Strategy Canvas of IKEA India
UFM PepperFry IKEA
HIGH
LOW
CREATE
Traditional Design
Ready- to- Use Furniture
Acquiring small competitors
utilizing infrastructure and workforce
ELIMINATE
DIY
REDUCE
DIY (Do-it-yourself)
Price
REDUCE
Experience
DIY Workshops
Awareness
Online Presence
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5.3. Porter’s Diamond
To analyze the overall competitive advantage of IKEA in India, we now will analyze
through Porter’s Diamond Model.
*To ensure manufacturing of carpets in India globally competitive, IKEA has
empowered the handloom workers technologically
6. IKEA Strategy in India
Basis the above evaluations through business tools, below is the suggested PoA (plan
of Action), for IKEA in India. Here are the 6 P’s for IKEA in India
i. Mode of Entry Sole ownership 100% FDI
Broad Competitive Advantage
Low Cost and High Quality
Producing in India (local)- cost
effective
Good Brand Image - Leading the
social cause for women and children in
the country
Introducing DIY concept in the Indian
Market
1.2 bn population with a median age of
28 years (young)
Rising Middle class population
Demand for cheap and contemporary
furniture
Involvement of local suppliers even before
entering the country
Technology support for environment
friendly initiatives
Optimizing the production process in India
trough technology*
Availability of Cheap and competent
labour
Government support allowance of
100% fully owned entity
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ii. Place
Locating themselves in Metro cities in India
Instead of concentration on large stores. The small and many stores strategy
adapted
iii. People
Middle Class- high incomes working class people, bachelors, young couples
etc
Offer products to Hostels, educational institutes, Offices etc
Knowledgeable and friendly staff, advice and assistance department
iv. Product
Quality and Design
Traditional Indian design combined with contemporary scandanavian design
Availability of assembling Service
v. Price
Low Prices- Cost concious people and low labour cost
vi. Process
Product exchange/ Return policy
Home Delivery
On-line Buying option
Efficient staff and customer service
vii. Promotions
Moderate awareness about the brand already existing in the country
Advertisemnet through all retail channels TV, Radio, Newspaper and
magazine
Going Forward- IKEA Strategy
I. Acquiring an existing competitor such as Godrej Interio, Home Town or
PepperFry to capitalize of their knowledge of the Indian consumer base.
II. Replacing Home Centre or other home Furnishing brand with IKEA Products.
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Advantages
I. Well trained and aware Labour Force. Just train them as per IKEA culture
II. Scaling down the Competitor
III. Gaining the trust of the consumers
IV. Accesibility to Ready-use-infrastructure
7. Conclusion
IKEA is currently standing as the leading brand name in furniture through their constant
innovations across the globe, which in itself is a crowd puller in a market like India, as
Indian masses are easily attracted by popular foreign brands in consumer goods and
retail segment. In addition, focus on expanding their omni-channel distribution strategy
which caters to the convenience factor of the Indian market along with positive publicity
to retain customers’ loyalty. This will aid increasing IKEA‘s customer baselines and help
them grab the larger pie in the Indian market. Most of the above recommended strategies
are undergoing implementation by the entity which may bear the positive results in long
run. Further, with the above strategies discussed, the standing of IKEA in the business
market would be heightened to a whole new level.
23 Seminar Paper BDIM January 2020
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abgerufen
Research
Full-text available
A critical analysis of IKEAs expansion into India with a focus on the external environment, strategy & key resources, ethical issues and the success of the expansion.
  • Tarriff Tax
  • Law
Tax and Tarriff and Law. a. (2019). https://www.ft.com/content/c85e2ca6-9ed7-11e8-85da-eeb7a9ce36e4. Von Financial Times: https://www.ft.com/content/c85e2ca6-9ed7-11e8-85da-eeb7a9ce36e4