Abstract

The Netherlands-based Swedish company IKEA, was the largest furniture retailer in the world with its presence in 44 countries around the globe – in countries like the US, the UK, Russia, the Euro region, Japan, China, Australia, etc. However, it did not enter the Indian market till 2013, though the company had had its presence in the country since the 1980s as a sourcing destination for its global stores. After years of lobbying, and negotiating with and convincing the Indian politicos and bureaucrats, on May 2, 2013, IKEA’s €1.5 billion investment proposal to set up its stores in India was finally accepted by the local government. The company also had to tweak its global store model to fit in with the Indian FDI regulations and sourcing requirements and Indian consumer preferences. However, there were still numerous obstacles in its path in the form of real estate locations and cost, Indian consumer requirements and mentality, and competition from existing Indian furniture retail chains. The question was could IKEA tweak its globally successful business model to suit the requirements of India without breaking the model? This case is meant for MBA students as a part of the Strategic Management/ International Management /Competitive Strategy course.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand issues and challenges related to IKEA’s business model and its competitive strategy
• Understand issues and challenges related to IKEA’s globalization and strategy in a key emerging market.
• Understand issues related to IKEA’s market entry strategy and expansion in India
• Identify challenges that IKEA could face in the Indian market and explore ways in which these could be overcome.

Keywords

Competitive strategy, Business Model, Competitive strategy, Hybrid business model, Bowman’s ‘Strategy Clock’, Globalization strategy, Entry and expansion strategy, Emerging market, Competition, Localization, International Management, Retail, IKEA