Introduction and conclusion

Business Model and Competitive Strategy of IKEA in India

IKEA is a Swedish company based in the Netherlands and it is the highest furniture retailer in the world. Its humble beginnings started in 1943 by 17-year-old Ingvar Kamprad. IKEA’s stores did have a presence in the Indian market since the 1980’s as a sourcing destination for its global stores, but it wanted to establish its stores in India also. In 2009, IKEA tried to enter the country of India the establish its stores but the attempts were thwarted by India’s stringent Foreign Direct Investment(FDI) regulations. (Deresky PC.3-9). In 2010, the company also entered the Latin American region with a store in Santo Domingo, Dominican Republic. However, the company did not have much of a presence in the developing countries. (Deresky, PC.3-11) IKEA applied again with India in 2012 but they had to wait another year before the Indian government gave its approval. In January 2012, India approved reforms to allow 100 percent FDI in single-brand retail. In welcoming the change, an IKEA spokesperson said, “The IKEA Group welcomes the Indian government’s decision to allow 100 percent foreign direct investment for single-brand retailers. (Deresky, PC.3-15)

All of IKEA products were designed in Sweden but were largely manufactured in developing countries. (Deresky, PC.3-11) IKEA did outsourcing to 50 suppliers, and their products were identified by single word names which are native to Scandinavia. And with their low prices IKEA should be a great place for the customers of India to shop. But there are some challenges such as the assembling of the furniture and how most customers are not able to bring items home when a large car is not available. Also, it will be difficult for IKEA to find the type of location that is important for its success of its business model. This will mean the very first store will take a long time to get started. The good news about IKEA is that it is a privately held company with a long-term orientation that will persevere when other firms have given up.

For India to kick its economy back to the growth rates necessary for meeting the aspirations of its citizens, we need to roll out the red carpet to foreign investors instead of red tape. Competition law and trade policies are supposed to ensure that a free competitive marketplace exists, with easy entry and exit, not protect existing competitors from new entrants.

Work Cited

Deresky, H (2017), International Management: Managing Across Borders and Cultures: Text and

Cases. Boston: Pearson Higher Education