IKEA_India_SeminarPaper2020_Shuporna_MEM19

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OpportunitiesThreatsNo inteference fromGovernment - 100% ownershipin the country2nd most populous countrywith the median age of 28years. Young populationHigh PPP, showcasing highbuying potential of theconsumers in the marketEnviornment friend Powergeneration approach by IKEAPrice Sensitive Market - Priceover QualityNo exposure or experience toDIY (Do-it-yourself) amidstcustomers. hence tie-up withaseembers and delivery entitiesmaking the products expensive.Modification of productsrequired due to difference inculture ethnicity and beliefsCorruptionAvailability of Cheap andcompetent Labour/ workforceElectricity DisruptionsAvailability of Cheap LabourForecastIKEA was very clear on its strategy to enter India with the allowance of 100% foreigndirect investment (FDI) in single-brand retail, it didn’t want to go down the joint ventureroute. The emergence and rapid growth of e-commerce is all-the-more reason for IKEAto see more of an opportunity in India. On one hand IKEA has to compromise on price11 Seminar Paper BDIM January 2020
of the product on the other hand, it is will benefit by availability of cheap labour andcompetent labour.Since well-travelled Indians have known IKEA for a while now, with thriving Furnituremarket in India, it is a promising business venture. India is a large and growing marketwith the furniture industry worth $32 billion and projected to be double to $61 billion by2023. Ikea has a huge potential to capitalize on this. But in the meantime, other Indianplayers (such as Pepperfry and other unorganized furniture vendors) have effectivelyheld their ground by leveraging local knowledge and addressing the country’sinfrastructure challenges.4.2. Porter’s Five ForcesFurther to analysing the macro environment for IKEA in India now, It is imperative toanalyse the key determinant of profitability by scrutinizing the extent of competition andthe strength of buyers and suppliers. Porter’s Five Forces Framework will help usanalyze and identify the attractiveness of the market for IKEA in terms of Five competitiveForces –i. extent of rivalry between competitorsii. threat of entryiii. threat of substitutesiv. power of buyersv. power of suppliersRivalry among existing firms [HIGH]IKEA faces stiff local competition from Pepperfry, India’s existing, largest online furnitureretailer and many local retailers like Future Group (Home Town), Landmark (HomeCentre), and Shoppers Stop (Home Stop) with Indian customer base. With the entry ofIKEA, there is hope that small and medium retail furniture market will get a standardizedstructure and shape. The other already existing players may not be as big as IKEA but,these players understand Indian customers very well simply by the virtue of being inIndian market for long. Having developed trust factor amidst Indian consumers, theexisting furniture brands have a strong hold due to low cost of the furnitures,12 Seminar Paper BDIM January 2020
Page 1 and 2: See discussions, stats, and author
Page 3 and 4: Table of ContentsTABLE OF CONTENTS
Page 5 and 6: 2. IKEA OverviewFounded by Ingvar K
Page 7 and 8: According to a study by World Bank,
Page 9 and 10: Politicali. FDI LimitationsIKEA tri
Page 11: Ecologicali. Electricity Disruption
Page 15 and 16: StregthsThreat of Substitute Produc
Page 17 and 18: 5.1.1. Competitive Characteristicsa
Page 19 and 20: and within the margin of error of i
Page 21 and 22: 5.3. Porter’s DiamondTo analyze t
Page 23 and 24: AdvantagesI. Well trained and aware
Page 25: https://www.ft.com/content/c85e2ca6

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