CRITICAL ISSUES IN BUSINESS MANAGEMENT: A Case Study of IKEA's Entry into the Indian Market

CRITICAL ISSUES IN BUSINESS MANAGEMENT
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Contents
Introduction......................................................................................................................................3
LO1 Analyse and discuss the drivers of globalization for IKEA and the reasons for its delayed
entry into the Indian market.............................................................................................................3
LO2 Discuss IKEA’s market entry strategy for the Indian market and set out the advantages and
disadvantages of adopting the wholly-owned subsidiary route for entering the market.................5
LO3 Conclusion...............................................................................................................................7
a. Outline the bureaucratic and political challenges faced by IKEA while gaining approval to
enter India, and how these were overcome?....................................................................................7
b. Set out recommendations if IKEA was to consider entering similar or different markets......8
References:......................................................................................................................................8

Introduction
IKEA is Sweden based multinational organization that basically deals with designing and selling
of ready-to-assemble furniture, kitchen appliances and home accessories. IKEA has been the
world’s largest furniture retailer since the year 2008. IKEA was founded by seventeen year old
Ingvard Kamprad in the year 1943 in Sweden with the money that he got from his father. He
actually used the money given by his father to start a local catalog selling household goods and
that was actually the beginning of IKEA. This small venture by Ingvard was a success and then
he decided to sell furniture at a low price. Due to the good work, Ingvard made a name for
himself for being trustworthy, dependable and selling good quality furniture at a low price. In the
year 1965, Ingvard opened one of the biggest stores of Sweden with people waiting and lined up
outside the door for the store to be opened. Ingvard actually was very successful and expanded
his business globally and in the year 1985 he entered the United States market in Pennsylvania.
LO1 Analyse and discuss the drivers of globalization for IKEA and the reasons for its
delayed entry into the Indian market
India is one of the developing countries and is making tremendous developments in every sector.
it would be great for IKEA to enter the Indian market. India provides IKEA a great opportunity
to flourish. India is one of the largest democracies in the world and has the second largest
population. The only problem with such a huge population is the distribution of income that
ranges from higher class to middle class to the lower middle class whose earnings are very less
and likely to be around one dollar per day (Paul and Bhakar, 2018). The furniture industry in
India consists of .05% of its GDP and this is another reason why IKEA can have a great success
ratio in the Indian market let us discuss the drivers of globalization for IKEA in the Indian
market.
 GDP: India has a rapid growth rate in GDP which provides a great opportunity for
Foreign Direct Investment (FDI). The furniture industry in India consists of .05% of the
country’s GDP. Thus India’s current GDP is one of the key drivers of globalization for
IKEA in India.