IKEA's Expansion into Indian Market

This assignment requires an analysis of IKEA's expansion into the Indian market, considering various factors such as research, effective strategies, and understanding local bureaucratic and political needs. It involves a critical examination of the challenges that IKEA may face in establishing its business in India and proposes potential solutions to overcome these obstacles.

Case Study Of Globalisation
Of Ikea

Table of Contents
INTRODUCTION...........................................................................................................................2
ANALYSIS OF GROWTH AND PERFORMANCE ....................................................................4
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................8
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INTRODUCTION
In the modern era, every organisation required to create better strategies and action plans
for growing business and attain sustainability. There are number of organisations who focus on
adopting different strategies for the purpose of expanding and diversifying business at global
level in adequate manner. Globalisation can be considered as biggest factors which support in
creating interaction among various organisation and individual at international level. It is
essential in serving different activities that facilitates in better business growth, communication,
increasing economy or finance conditions as well. Therefore, many of companies are grabbing
such opportunities and focusing on expanding business at different countries so that they can
maximise the size and wealth of organisation to get higher profits (Hitt, and Ireland, 2012). Ikea
firm which is a Swedish-founded multinational group that deals in design and sell various
furnitures, kitchen appliances and home accessories etc. They are considering the Indian market
for the purpose of business expansions. It was founded by Ingvar Kamprad in the year of 1943.
this firm generally provide eco-friendly products that is beneficial for expanding business in
another countries. Therefore, it is necessary to find the actual market conditions, customers and
analyse competitors before business expansions so that particular products and services can be
sold in the new market place. Ikea has around 415 stores in 49 countries and they are trying to
capture international market by expanding business in various countries with an appropriate
manner. For entering into new marketplace, company have to identify number of factors that can
affect on the business including government, competitors, customers choices and demands.
Therefore, IKEA firm has required to analyse these forces while entering in Indian market. This
report is highlighted business growth and performance strategy in order to grabbing desired
growth from Indian market.
There are defined some globalisation drivers in detailed form such as:
Drivers of globalisation for Ikea
Technological drivers: It is most important factors that has major impact in the
organisation so there is necessary to consider technologies changes and adopt best one for
making entire work in smooth manner (Hoskisson, 2012). These are essentials for business
organisation in making proper modifications and alterations within firm as per the requirements.
IKEA has strong brand reputation in the market so they have to consider such factors and make
changes in their technologies in time to time. Company can consider new innovation in their
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particular products and digitalisation so that competitive advantages can be sustained. These
activities are beneficial in creating new innovative ideas, thoughts as well as creativity that
support to attracts number of customers and achieve better outcomes. As per the market study of
India, it can be analysed that Indian customers prefer higher quality of products with affordable
costs. Every customers has different demands or desires towards products or services, therefore it
is necessary to examine the consumer behaviours and their needs with adequate manner.
Company can serve better quality of products such as designed furnitures, kitchen appliances and
home accessories to the right customers as per the their choices and behaviours. Advanced
technologies must be adopted by the IKEA for better business expansions as they can consider
the online services for staying connect with various customers at wide level (Hirst, and
Thompson, 2015). It is essentials in producing different products or services where costs are to
be minimised during manufacturing so company must undertake new advanced and modern
technology to achieve future growth. Ikea can expand business with well manner by creating E-
commerce websites for trading at different places. On the basis of these technological
advancement, Ikea can build direct and strong connection with international customers. These
activities assist in expanding business on international boundaries on the basis of digital
technology. In India, customers are more likely to purchase their products and services through
online mode, so for Ikea it can be a beneficial move to working in their business on digital
platform.
Political drivers : In this defined the various rules and regulation that formed by
government for leading in new market. These terms, policies and legal rules must be analysed
while entering into new country because it is required to have sufficient knowledge regarding
legal rules so that better outcomes can be achieved. IKEA has to focus on governmental rules
regarding foreign direct investments for the purpose of diversifying business with adequate
manner. WTO (World Trade Organisation) is define as authority that operate all global
organisations as well as provide financial support to them so that business can be diversified in
an efficient way. WTO help to the various organisation who deals in international market as they
provide opportunities like free trade agreements and fair trade policies that facilitates in reducing
the costs and changes with better manner (Bromley, 2015). For IKEA firm, it is necessary to
identify and analyse entire regulation of India regarding running business in the new market. For
example, government of India consider the ethical trade and formulated rules regarding new
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business entries. Therefore, each and every company have to obey such regulation during
business operations.
Market drivers : For a business firms, it is required to examine particular market before
entering. It is necessary for Ikea in order to increasing sales and business growth in effective
way. With the help of marketing analysis, company can find customers demands, choices and
tastes towards particular products or services. It is beneficial for every business organisation as
they can build their own market image and strong reputation among competitors. Company can
attracts number of customers by providing them effective goods or services so that they can
satisfied their demands and needs as well. IKEA has required to study about the market of India
where they can find competitors, customers, trends, fashions, market situations and many more.
It is helpful in creating demands and producing effective goods and services so that customers
can be attracted. It has major contribution in increasing economy and develop business in the
new market. Market study play an significant role in building good brand image with the help of
analysing customers needs, tastes and preferences so IKEA can also expand their business in
Indian market. On the basis of these practices, Ikea can build positive relationship with their new
customers to getting long term benefits from new market.
Cost drivers : This is very important for every business organisation that to consider the
cost effective procedure which support in attracting number of customers towards goods or
services and also reach at potential targets audiences (Baylis, and Smith, 2017). It assist to IKEA
in developing business with the help of formulation of different strategies and correct action plan
with adequate manner. In this, company has required to analyse and determine current market
conditions and various similar products that are to be provided by competitors at different price.
This will support to firm in making favourable decision regarding production and setting price at
lower level for the purpose of attracting more customers towards firm. Therefore, Ikea can make
strategies for reducing costs by using digital technology.
Competitive drivers : In the present scenario, every organisation need to identify their
competitors ion the market who are selling same products at different price. This is helpful in
making better strategies regarding adoption of better strategies as well as actions plans so that
predetermined goals or objectives can be attained. IKEA firm can consider the transformation
techniques for the purpose of getting better outcomes.
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ANALYSIS OF GROWTH AND PERFORMANCE
There is necessary to create better plans and effective strategies before entering into new
market. It can be possible by determining the market conditions of different countries where
company analyse the actual situations and then make strategies to run business operations. Every
company required proper licence while expanding business in another market (Owens, 2017).
Therefore, there are number of factors that can affects on the organisation and its strategies
including marketing procedures, products as well as costs. Here are define some marketing
strategies that can be considered by IKEA company such as:
Buying a company – It can be a monopoly approach of firm in which a business
organisation acquire a small scale firm in order to maximise their business structure easily
(Baker and Savaşoglu, 2014). For Ikea it can be a beneficial move if they buying small
businesses of their own industry in order to raising profit rates easily.
Licensing – As per the views of David Polatseck, 2009 Licensing considered as ethical
term for which an organisation needs to take permission of government authorities. In the terms
of a business it can be uses to transfer authorities to other organisations within a legal scenario.
In order to adopt such kind of techniques, Ikea requires to take approval through licensing.
Joint venture – It is a concept of business organisation in which two or more individuals
share similar objective in order to attaining target goal (Fujita, and Thisse, 2013). For this, they
needs to share responsibilities, capital, profits and loss on the basis of a legal agreement by the
mutual understanding (Killing, 2013).
Direct exporting - This process determine idea and strategy of a business organisation
in order to generating maximum profit with less efforts. For Ikea it can be a helpful approach to
provide their products and services to different distributors in order to direct selling within
different countries. This is a profitable move that assist to expand business structure in several
countries easily.
Franchising – This is a most common method that assist to expanding business
successfully at different locations (Nijmeijer, Fabbricotti and Huijsman, 2014). For this Ikea
needs to manage their services properly in order to getting direct benefits by impressive
servicing. In this process, firm needs to build direct connection with their customers on the basis
of their products and services for earning effective growth.
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Wholly-owned subsidiary route – In this process, organisation can expand their
business on the basis of new subsidiaries (Dunning, 2014). Ikea needs to implement such kind of
strategy in their business in order to make effective command in Indian market through different
subsidiaries.
Operational – For the operational approaches of Wholly-owned subsidiary route, Ikea
requires to provide several authority to their subsidiaries to execute their strategy in new market.
 Advantages – This process assist to make positive changes in business activities to earn
higher income.
 Disadvantages – This process can be more risk while diversifying in new country with
new strategies.
Strategic – In this process, subsidiaries of firm execute their strategies in business operations in
order to create goodwill in new market.
 Advantages - Strategic approaches assist to making new ideas and creativity for business
expansion (Pieterse, 2015).
 Disadvantages – It can be lengthy and time consuming process.
Ikea stores is a well known furniture stores who provides kitchen and home appliances to
their customers. Organisation implement new strategy for market expansion. Target market of
organisation id Indian market because they found that customers of India are more likely to
purchase these things.
Strong branding – Ikea represent strong branding in UK market therefore thy supply
quality products at numerous locations. In order to manage similar goodwill at new location,
management of Ikea needs to paid their maximum attention towards promotional approaches.
Through this they can build direct interaction with target audience by representing their goods
and services.
Supply chain management – This is a most specific concept of an organisation in which
they determine concept of product sakes. Through this, management of Ikea can create strong
relations with new customers by managing supply chain services.
CONCLUSION
There are several bureaucratic and political challenges which may be faced by IKEA
during entering in the market of INDIA. As different country has their rules and regulation that
must be followed by the every firm in running business operations. As per the relationship of
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bureaucratic and political that are branch of government, there are analysed some arguable issues
in the process of administration. There are defined various challenges that can be faced by IKEA
while entering intro INIDAN market such as:
TAX Policy : Every country has different tax policies as per their government rules and
regulation and each organisation required to follow such legal regulations for running business
venture. Tax policy may be considered as the revenue which is used by government for
developing country (Vegh and Vuletin, 2015). There is necessary to follow tax structure by
companies as per legal requirements.
Economic trade : There are various challenges that can be occurred while running
business at global level like economic trade. Government generally fluctuate its tax policies or its
rates as per the economic crises as well as changes environment in which included import and
export (Thakor, 2014). Government of India generally focus on exporting rather than importing
of goods and services. Therefore, it is necessary to have effective structure regarding economy
that facilitate in attaining long term objectives and higher returns.
There are defined different solutions of particular issues that company can consider for
overcoming and attain better outcomes. IKEA can undertake the tax policy and economic trade
which support in minimising major effects and help to enter in new market with appropriate
manner.
Recommendation
There is required various things while entering into new marketplace as IKEA company have to
undertake several challenges that may have to face during entry in Indian market such as:
 IKEA should undertake an appropriate research that must be conducted before
establishing branch at another country.
 There must be effective strategies and actions plan that will assist in facing different
types of circumstances in an efficient manner.
 IKEA has required to understand the concept of bureaucratic and political needs for the
purpose of expanding business in well manner.
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REFERENCES
Books and Journals
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Baylis, J., Smith, S. and Owens, P. eds., 2017. The globalization of world politics: an
introduction to international relations. Oxford University Press.
Fujita, M. and Thisse, J.F., 2013. Economics of agglomeration: cities, industrial location, and
globalization. Cambridge university press.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Burbules, N.C. and Torres, C.A., 2013. Globalization and education: Critical perspectives.
Routledge.
Kraidy, M., 2017. Hybridity, or the cultural logic of globalization. Temple University Press.
Dunning, J.H., 2014. The Globalization of Business (Routledge Revivals): The Challenge of the
1990s. Routledge.
Pieterse, J.N., 2015. Globalization and culture: Global mélange. Rowman & Littlefield.
Cronin, M., 2013. Translation and globalization. Routledge.
Papastergiadis, N., 2018. The turbulence of migration: Globalization, deterritorialization and
hybridity. John Wiley & Sons.
Baker, M. and Savaşoglu, S., 2014. Limited arbitrage in mergers and acquisitions. Journal of
Financial Economics. 64(1). pp.91-115.
Killing, P., 2013. Strategies for joint venture success (RLE international business). Routledge.
Nijmeijer, K.J., Fabbricotti, I.N. and Huijsman, R., 2014. Making franchising work: A
framework based on a systematic review. International Journal of Management
Reviews. 16(1). pp.62-83.
Vegh, C.A. and Vuletin, G., 2015. How is tax policy conducted over the business cycle?.
American Economic Journal: Economic Policy. 7(3). pp.327-70.
Thakor, A.V., 2014. Bank capital and financial stability: An economic trade-off or a Faustian
bargain?. Annu. Rev. Financ. Econ.. 6(1). pp.185-223.
Online
Why You Need a Business License. 2009. [Online]. Available
through<https://www.legalzoom.com/articles/why-you-need-a-business-license>
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