Global Perspectives

Case Study: How Ikea of Sweden Got to India

By the team: 

Ms. Katia BASKOVA (Russia) 
Ms. Eugenia TEUSKKINA (Russia) 

, 27th November 1998 

Executive summary 

  • How will be the IKEA’ products and services into the Indian market? 

What adjustments are or will be necessary to entry in the Indian market of furniture? ( culture, competition, 
currencies, marketing and management) 

What threats from local competition should IKEA take into account and how can these threats be counteracted? 

What are the IKEA strategic global alternatives and what will be the future prospective?

Content of the report 


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  – Ikea's timetable 



 If retailers are to succeed in an overseas market, they must not only master the traditional skills of market segment cultural and economic traditions of the host country.

 Ikea Svenska AB, founded in 1943 is the world's largest furniture retailer that specializes in stylish but inexpensive Scandinavian designed furniture. It has 128 fully-owned stores in 26 countries, visited by over 108 million people yearly, and worldwide sales of about $5.4 billion in 1994. Ikea's success in the retail industry can be attributed to its vast experience in the retail market, product differentiation, and cost leadership. The company is, perhaps, one of the World's most successful multinational retailing firms operating as a global organization based on its unique concept that the furniture is sold in kits that are assembled by the customer at home.

 Ikea's mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them (IKEA 1994). The company targets the customer who is looking for value and is willing to do a little bit of work serving themselves, transporting the items home and assembling the furniture for a better price. The typical Ikea customer is young low to middle income family.

I – The regulatory environment: 

A – Political system: 

A recognized political party has been classified as a National party or a State party. If a political party is recognized in four or more states, it is considered as a National party.

Congress, Bharatiya Janata party, Janata Dal, communist party of India and communist party of India is the prominent National party in the country. Congress Party ruled the country and it came to power.

Also, tenth Lok Sabhas (The Parliament) has been constituted so far, on 10th July 1991. But even the states, the regional parties or the non-Congress parties gained importance over the years.

But we have to make a point in saying that in depends on the political government, the business is more or less easy and so the GDP (gross domestic product) will be more or less high in the country where there is a "legal" business.

The importance of ethical issue in international business is fundamental to know who is responsible.

B – Legal system: 

The judicial system in India is widely seen to be plagued by systemic problems, which require urgent and radical solutions. Cost of litigation probably is a part of the general inflationary trend in the economy.

Moreover, India is a member of the International Labour Organization and complies with convention, which it has ratified. It has enacted comprehensive legislation to provide a good working environment for labour and protect their interests. The Government continuously reviews various labour laws in line with changing circumstances specially industrial relations which are regulated by the Industrial Disputes Act that provides for just and equitable settlement of disputes through negotiation, conciliation, arbitration or adjudication.

But we have to focus on an important legal element in business: intellectual property. It represents a big asset of the company and in international business overview, we can consider that there are some risks (and their consequences) of copyright because the company which is "victim" of this unfair manipulation loses a lot of money and support some damages on its own brand image.

 C – Cultural challenge: 

In international business, the culture is very important and we can consider one fundamental element " the culture shock" where there are several stages in the difference of the country’ culture: the honeymoon stage (we know that it is a new culture and we want to be there), the irritation-hostility stage, the gradual adjustment and the bi-culturalism, at this stage, the company gets a comfortable way in the settlement of the new culture.

But, few countries in the world have such an ancient and diverse culture as India. India’s culture has been enriched by successive waves of migration, which were absorbed into the Indian way of life. And, the diversity lies the continuity of Indian civilization and social structure from the very earliest times until the present day. Modern India presents a picture of unity in diversity to which history provides no parallel.

Moreover, the Indian Council for Cultural Relations (ICCR) has been working to project Indian culture abroad and to bring to India the rich manifestations of international culture. It has thus become a major vehicle of international cultural exchange.

We can also focus on the Indian’s process of development, which has been accompanied by significant social changes and an increasing awareness about issues.

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This period has also seen the burgeoning of the voluntary movement in India.

Today, the Government makes constant attempts to promote values like democracy and independence and India is working to have equal opportunities in all spheres of life. We cannot rule out the Indian Art, because it is also an Art of social, political and religious influences. It changed and evolved with the evolution of a civilization, which is full of remarkable innovation.

Finally, we can make point on Indian religion, because it is another way of life and an entire part of Indian tradition. So in ...

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