Competitive Strategy of IKEA: Analysis of Indian Market Dynamics

This report provides a comprehensive analysis of IKEA's competitive strategy in the Indian market. It begins with an introduction to IKEA's operations in India, highlighting their focus on price competitiveness, quality retention, and the DIY concept. The report then explores IKEA's multi-channel market approach, including both online and offline stores, and their expansion plans within India. It examines the current status of the Indian furniture industry, including the preference for customized furniture and the dominance of unbranded furniture companies. The report also addresses roadblocks related to government guidelines and the operational skill of Indian craftsmen. A SWOT analysis is conducted, evaluating IKEA's strengths, weaknesses, opportunities, and threats in the Indian market. The report concludes with recommendations for IKEA, such as conducting demographic surveys and launching targeted advertising campaigns. The report references several academic sources to support its analysis, providing a well-rounded view of IKEA's competitive strategy in the Indian market.

Competitive Strategy
Of IKEA

Introduction
• IKEA have been operating for 30 years in
Indian market domain
• In order to fit in the Indian retailing
periphery, the organization has adopted
several basic plans like price competitiveness,
quality retention and the DIY
conceptualisation.
• Various other cross cultural and demographic
factors that plays a decisive role in shaping
the success of IKEA in the Indian market have
been discussed and analysed in detail in the
course of this report

Multi Channel Market Approach
• Indian customers have the access to
both online and offline stores of IKEA
in India (Ehsan Ullah, Karlsson and
Dada Olanrewaju, 2016)
• IKEA opened a new distribution facility
in Pune
• Within, 2022, the company is planning
to invest at least INR 750 Crores more,
in order to express itself as a Pan-
Indian company.
• IKEA has planned to expand their sales
through tertiary e-commerce website
operating in India like Amazon, Flipkart
or Snapdeal (Fragouli, 2016).

Current status of the Furniture industry of India
• Branded furniture companies
occupy only 12 to 15 % of the
business of the furniture
sector of India.
• About 48% of the Indian
customers prefer to
customise their own
furniture.

Price Competitiveness
• Major amount of Indian consumers of the
furniture consider that branded furniture
is costlier
• they also suppose that timber quality of
purchased customers is of under graded
quality.
• recently about 18 to 20 % of the Urban
middle and lower middle class people
have showed the trend of purchasing
branded furniture, owing to their
contemporary design and finer finishing.

Chances of Customisation
• The Indian customers
want the designs of
customers to be befitting
with their homes. Hence,
they find it easier to
appoint local craftsmen
to build furniture at
home.

Roadblocks of Government guidelines
• The Indian government have launched the Make In
India campaign
• the peering manufacturing MNCs of India to have
30% of their inventory manufactured in India
• The level of operational skills of the Indian craftsmen
is considerably low (Bharti and Agrawal, 2018).
• the Indian suppliers do not maintain the permissible
level in their items. As an outcome, the table tops
that the Indian suppliers provide, contain, high level
of formaldehyde content, which makes them prone
to leach chemicals in to food

Environment analysis
• Strength: The contemporary design, competitive price and the light weight have made the products of IKEA
more attractive
• Weakness: the IKEA retail stores are located on the outskirts of the city and hence the urban middle and
the upper middle class customers who have the maximum spending capacity cannot access the stores.
• Opportunities: the locally sourced timber in India, is readily available and comes in various price and
quality ranges. As an outcome, the organisation will also be able to incorporate products of various price
ranges in India
• Threats: the political roadblocks that the company f aces in India.

Recommendations
• In India, IKEA should allow a demographic survey based on the purchase
capability and purchasing trends of the customers to know the most potential
customer base
• IKEA should launch advertisement campaigns that highlight the features of their
products like low cost, durability and weather proof nature. The advertisement
campaigns need not focus on the elegance or global approach of the company
• the compounded annual growth rate of the home décor and home furnishing
sector of Indian has grown about 10.2% in between 2010 and 2016. Hence, the
rate of further growth of the industry is going to higher. This is a sharp
opportunity for IKEA to invest in the branded furniture sector of India (Burt,
Johansson and Dawson, 2015).

References
• Bharti, K. and Agrawal, R., 2018. High customer involvement: an essential element for effective co-
creation. International Journal of Business Innovation and Research, 15(4), pp.431-451.
• Burt, S., Johansson, U. and Dawson, J., 2015. International retailing as embedded business
models. Journal of Economic Geography, 16(3), pp.715-747.
• Ehsan Ullah, E., Karlsson, B. and Dada Olanrewaju, D., 2016. Foreign Market Entry Srategies.: A Case
study of IKEA entering Indian Market. 11, pp.1-14
• Govind, D. 2108. Ikea to follow three-step retail strategy in India: CEO Juvencio Maeztu. Livemint.com.
Available at: https://www.livemint.com/Industry/a8SVLF8lze2g7gfjf4sfKN/Ikea-to-follow-threestep-
retail-strategy-in-India-CEO-Juve.html [Accessed 09/05/2018]
• Hansen, M.W., Jensen, P.D.Ø. and Petersen, B., 2016. 10. drivers and strategies of international service
firms in emerging markets. Handbook of Contemporary Research on Emerging Markets, 12 pp.223-224.
• Mani, V., Agrawal, R. and Sharma, V., 2015. Supply chain social sustainability: A comparative case
analysis in indian manufacturing industries. Procedia-Social and Behavioral Sciences, 189, pp.234-251.