IKEA_India_SeminarPaper2020_Shuporna_MEM19

5. Global Business Analysis – Why India?
Despite ‘globalisation’ being the most commonly used word in the business environment,
it is also one of the most loosely used word, perhaps they overlook the challenges and
pressures for the business being local and regional at the same time.
There are substantial differences in customer needs and in economic, regulative/
administrative, political and cultural institutions that make Indian market more or less
attractive. While PESTEL framework for environmental analysis and Porter’s FIVE
FORCE industry analysis help identify the factors affecting the business, there are
specific determinants of market attractiveness that need to be considered in
internationalization strategy.
It is important to evaluate how initial estimates of country attractiveness can be modified
by considering institutional voids and various measures of distance.
Ghemawat’s CAGE framework measures the match between INDIA and IKEA according
to four dimensions of distance. CAGE framework emphasizes the importance of Culture,
Administrative, Geographical and Economic distance.
5.1. CAGE Framework Analysis
Cultural
Distance
Administrative
Distance
Geographical
Distance
Economical
Distance
DIY (Do It Yourself)
concept in India NOT
existing
Difference in Attitude
and Taste of furniture
Adaptation to
Lifestyles of Indian
customer i.e. culture,
Values and Beliefs
Usability Differences
due to demography,
climate and ethnicity
Absence of share
monetary or political
association
No existence of
political hostility
between India and
Sweden
Corruption Issue
Physical distance
from Sweden to India
Weak Transport links
between countries
Cost and time savings
of IKEA makes use of
local resources
Large Country, with
challenges in
customer accessibility
to the physical stores
Income Inequality of
the consumers
Large economic size
and low per capita
income
Cost Vs. Quality
compromise
Need for local
customization and
standardized products
15 Seminar Paper BDIM January 2020