An Analysis of IKEA's Competitive Strategies for the Indian Market

This report provides a comprehensive analysis of IKEA's competitive strategies in the Indian market. It begins with an introduction to IKEA, highlighting its global presence and past challenges in entering the Indian market. The report then delves into IKEA's business strategy, focusing on cost leadership as a key competitive advantage. It explores corporate strategies, including growth, stability, and renewal, and examines acquisition and structure options for the Indian market. Furthermore, the report discusses international strategies such as multi-domestic, global, and transactional approaches, along with cooperative strategies like strategic alliances. The analysis emphasizes the importance of adapting strategies to the unique demands of the Indian market to achieve competitive advantage. The report concludes by summarizing the key strategies and their relevance to IKEA's success in India, emphasizing the opportunities for growth in this developing market. The report is a detailed exploration of IKEA's strategic approach to the Indian market, making it a valuable resource for understanding the company's competitive positioning.

Running Head: Competitive Strategy
IKEA
Competitive Strategy

Competitive Strategy 1
Table of Contents
Introduction......................................................................................................................................2
Business Strategy.............................................................................................................................2
Cost leadership strategy...............................................................................................................2
Corporate strategy............................................................................................................................3
Acquisition and structure.................................................................................................................3
International Strategy.......................................................................................................................4
Cooperative Strategy.......................................................................................................................4
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

Competitive Strategy 2
Introduction
IKEA is a multinational Netherland based Swedish Company. It is the largest furniture retailers
across the globe. Company is present in more than 44 countries across the globe including
Russia, US, UK, Japan, China, and Australia. Organization was founded in 1943 by a 17-year-
old Ingvar Kamprad. In relation with this, organization tried to enter into Indian market various
times, but they failed till 2013 despite the fact that company was sourcing from Indian since
1980s. Company has grown and attained success in the international market due to their effective
international strategies. Apart from this, critical success factors of the organization are also
reasons for the organizational rapid growth (Ikea, 2017).
In this report, organizational business, corporate, acquisition and structure, cooperative and
international strategies will be discussed in relevance with setting up an effective position in the
Indian market. IKEA is leading furniture retailer in the international market; thus, their mission
and vision with regards to Indian market are also concerned with attaining competitive
advantage.
Business Strategy
Business strategy is set of systematic approaches for an organization in order to attain desired
goals and objectives. In relation with the IKEA operations, organization has amended its
policies, standards and product offerings as per the target audience in Indian market. With
regards to acquiring effective place in the Indian market, organization has analysed crucial
factors in external and internal business environment so that appropriate business strategies could
be adopted or developed. This will help the organization to develop an effective competitive
strategy along with effective brand positioning in the target market (Hilman & Kaliappen, 2014).
Cost leadership strategy
In terms of business strategy, cost leadership strategy is an effective tool through which
organization could attain competitive advantage by reducing its cost of production or by
lowering its profit margins. This strategy is driven by organizational efficiency, size, scale and
scope. Thus, major motive of cost leadership strategy is to produce high standardised products
and services at one hand and on the hand, it is required for the organization to reduce its cost of

Competitive Strategy 3
production with the help of advanced and effective measures. This is done so that organization
could offer high qualitative products amongst the target audience at low rates as compared to
other companies in the market. Apart from this, organization could also reduce its profit margins
for offering its products and services at reduced rates in comparison to other companies in the
target market (Grant, 2016).
In relation with IKEA’s present situation, it is required for the organization to adopt cost
leadership strategy in order to gain competitive advantage along with establishing an effective
position in the target market. It is one of the crucial elements of Porter’s Generic model and with
the implementation of cost leadership strategy; organization would be able to acquire
competitive advantage in the target market along with acquiring a large customer base. With the
help of cost leadership strategy, organization would be able to accomplish its desired goals and
objectives along with establishing an effective position in the Indian market. Target audience
will get appropriate choices in relation with making selecting the appropriate product and service
from the available options and IKEA will be able to acquire a large customer base due to their
large product offering and effective competitive strategy (Rugman & Verbeke, 2017).
Corporate strategy
There are mainly three types of corporate strategy through which organization could enhance its
performance along with acquiring sufficient share in the target market. Growth, stability and
renewal are major types of corporate strategy.
 Growth: Growth strategy is a strategy through which organization expands its business
in international or national market with same products and services or with new products
and services. With the help of growth strategy, IKEA will be able to accomplish its
desired goals and objectives along with attaining an effective place in the Indian market
(Purce, 2014).
 Stability: In relation with stability, IKEA will continue to serve its existing clients by
maintaining the same sort of quality in its products and services. Apart from this,
organization could also adopt effective measures to enhance the quality of their products
in relevance with increasing revenues as well as for maintaining the acquired market

Competitive Strategy 4
share. This strategy will act as the defensive strategy under which organization will not
grow neither it will fall behind.
 Renewal: This strategy will be used by IKEA when their performance in the Indian
market will start decline. With the help of this strategy, organizational managers will
adopt certain effective measures and strategies in order to uplift organizational
performance. It is also known as backup plan which will be implemented when company
will not find itself in good position (North & Kumta, 2018).
These corporate strategies will help IKEA to measure its performance in the Indian market and
these will also help the organization to determine several effective measures through which
organizational performance could be enhanced along with gaining leading position in the target
market.
Acquisition and structure
In order to set up an effective image in the Indian market, IKEA could adopt effective market
entry options such as joint venture, merger and acquisitions, etc. IKEA has already entered
Indian market and in relation to this, organization has adopted joint venture strategy. In order to
enhance organizational performance as well as to attain competitive advantage in the dynamic
business environment of Indian market, it is suggested to the organization to adopt merger and
acquisition strategy. Under this strategy, organization will acquire a small or large entity engaged
in the furniture business or in other industries. By this way, organization will be able to set up an
effective image in the target market along with ascertaining the market needs of Indian market in
an effective manner. This strategy will help the organization to attain its desired goals and
objectives along with acquiring an effective market share in the competitive business
environment in Indian market (Barattieri, Borchert & Mattoo, 2016).
International Strategy
IKEA is a multinational corporation as its operations are expanded in various parts of the globe.
With the help of international strategies, organization could easily communicate with entities in
different countries. There are three types of international strategies such as multi domestic,
transactional and global. Each strategy has its own uniqueness and capability to enhance

Competitive Strategy 5
organizational efficiency across countries along with fulfilling varieties of target and potential
consumer’s demands (Lin, 2014).
 Multi Domestic: Multi domestic strategy is useful for those companies who produces
and delivers the products as per local public’s preferences. For example: McDonald’s,
Starbucks, etc. are multinational corporations and they have their unique speciality. But
while entering into Indian market, they have customised their menu range as per Indian
market’s requirements and wants. This is done to satisfy target customer’s demands as
well as to set up an effective image in the target market along with acquiring leading
position in the Indian market. McDonald’s, Starbucks and other multinational companies
have customised their product offerings as per Indian market’s conditions so that they
could develop an effective position in the target market. Thus, IKEA could also adopt this
strategy in order to set up its effective image in the target market along with acquiring
reputed position in the target market (Hitt, Li & Xu, 2016).
 Global strategy: This strategy is a complete opposite of multi domestic strategy. Under
this strategy, organization does not amend its products as per target market requirements.
Companies deliver the same products and services in the international market in order to
gain economies of scale. Along with this, organizations make certain changes in its
product offerings in order to meet with the target audiences’ demands and wants. This
strategy will not be much useful for the IKEA to operate with in the Indian market
because preferences and demands of the Indian audiences are quite unique and different
and though growth strategy, organization will not be able to target large part of customer
segments (Hitt, 2016).
 Transactional strategy: Transactional strategy is the mixture of growth as well as multi
domestic strategy. With the help of this strategy, organization will be able to match up
with the target audience’s demands and wants along with enhancing efficiency. For
example, McDonald’s, KFC, etc. have adopted this strategy and delivers their original
products with local tastes. This has helped them to acquire an effective and reliable
position in the target market. IKEA could also adopt this strategy so that the
organizational goals and objectives could be fulfilled along with attaining competitive
advantage in the target market (Regnér & Zander, 2014).

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Cooperative Strategy
Cooperative strategy has bene adopted by large number of firms and it is attempt by firms to
attain its desired goals and objectives through cooperation with other firms in relation with the
partnerships and strategic alliances rather competing with them. In the global business
environment, various companies have adopted this strategy in order to lead the market. For
example, in 2004 Sony Corporation and Samsung Electronics collaborated with each other to
produce effective LCD television in the global market. This strategic alliance was quite effective
and thus, it helped them to produce an effective brand in LCD televisions i.e. Bravia.
With regards to this, IKEA could also collaborate with large furniture brands in Indian market.
Some of the large companies in Indian market are Durian, Godrej Interio, Zuari Furniture, etc.
Making strategic alliances with these companies will help the IKEA to set up it effective image
in the target market along with attaining competitive position. Cooperative strategy has various
significant advantages such boost up the efficiency, enhances knowledge and resources, lifts up
organizational customer base, revenues, profitability, etc. Along with these advantages,
cooperative strategy will also help the IKEA to reduce the level of risk factors because the risk
will be divided amongst the partners in collaboration along with the distribution of profits and
revenues (Armstrong, et. al., 2015).
IKEA will be able to enhance its reachability in the target market along with gaining competitive
advantage. Along with this, organization is required to make its product offerings unique, distinct
as well as effective from the existing companies in order to make its effective position in the
target market. It is required for the organization to adopt certain effective and advanced measures
so that the goals and objectives could be attained. With the help of these strategies, organization
will be able to attain effective position in the emerging market conditions of Indian market. With
this regard, organization will acquire the leading position in the target market along with
attaining the desired goals and objectives (Wu, et. al., 2014).
India is a big marketplace for multinational corporations because it is in developing state and due
to this; its economic conditions are growing rapidly and constantly. In relation to this,
organization has several opportunities to set up an effective image in the marketplace with full of
opportunities to grow and expand. Due to this, various multinational corporations have already

Competitive Strategy 7
entered in Indian market to enhance their revenues as well as to expand their business in
international market. IKEA is also one of those multinational corporations which are present in
more than 44 countries across the globe including Europe region, USA, UK, Russia and other
such big countries. Organization could implement above discussed strategies in relevance with
attaining competitive advantage along with gaining competitive advantage in the Indian market
(Grant, 2016).
Conclusion
From the aforesaid information, it can be concluded that to attain competitive advantage, it is
necessary for the organization to adopt appropriate strategies and the measures so that the goals
and objectives could be attained in an effective manner. In this report, IKEA’s competitive
strategies have been discussed in relevance with attainment of competitive advantage in the
Indian market. Organization entered into Indian market in 2003 but since then, they were not
able to set up an effective image and to enhance their performance, set of effective strategies
have been discussed. With the implementation of these strategies, organization will be able to
accomplish its goals and objectives so that it could make its significant place in the competitive
business environment.

Competitive Strategy 8
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canadienne d'économique, 49(4), pp.1470-1501.
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Hilman, H. and Kaliappen, N., 2014. Do cost leadership strategy and process innovation
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beyond. Journal of World Business, 51(1), pp.58-73.
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Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.

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