IKEA INDIA: EXPANDING TO

SUCCESS

Zykiel Razz Dominic Ambrose

Karen Rachel Degamo
Kariz V. Macaspac
Lyrah Kazzandra B. Marcon
Justin Jose F. Pena
Michelle Aubrey Y. Sy
Kobe Bryant Villaranda

BBA MANAGEMENT IV Mgt 42 -A

Brief Background of the Case

IKEA Based in Denmark, IKEA International is one of the world’s top retailers of
furniture, home, furnishings and housewares. The company designs its own items, and
sells them in more than 140 IKEA stores that spread throughout approximately 30
countries worldwide.

Mission: offering a wide range of well-designed, functional home furnishing

products at prices so low that as many people as possible will able to afford them.

Vision: To create a better everyday life for the many people

Objective: Produce affordable prices of product for the customer who cannot
afford to buy expensive product. Ensure the customer found what they are looking for
in the store at a low price.

IKEA INDIA
• has been present in INDIA for 30 years, sourcing many different products for
IKEA stores worldwide
* They work with suppliers, engaging 400000 co workers in extended supply
chain
* Sources products worth over 315 million Indian rupees annually from India

Central Problem

Determining strategic actions that IKEA India should undertake to reach its goals
and fulfil its Indian expansion plan despite the complexity of the Indian Market

Secondary Problems

 How can IKEA source more materials to support the incoming demand
that will be brought by its expansion?
 How can IKEA Maintain its global cost leadership pricing strategy?
 How can IKEA adapt to constant changes in furniture designs?
Objectives

 To examine the current expansion plan in India

 To improve IKEA’s existing product portfolio that would cater to the
needs and preference of the Indian Market
 To maintain the culture and values of IKEA and its global cost leadership
strategy

SWOT ANALYSIS

Strength Weaknesses

 Brand value  Negative Image

 Financial Strength  Control for standards
 Products IKEA  Scaleability
manufactures and designs  Environmental Problems
 Cost Consciousness  Increasing Raw material costs
 Research and Development
 Marketing
 Organizational culture
(IWAY)

Opportunities Threats

 Environmental friendly  Counterfeit

 Cost-conscious consumers  Changing Laws
 Developing Countries  Internet
 Saturated markets  Higher Income

ALTERNATIVE COURSES OF ACTION

1. Aim to double the suppliers to meet global and Indian needs
Advantages:

 IKEA can achieve to produce more of their product portfolio in line with
their expansion in other states/territories in India.
 IKEA can meet the demands on Indian aesthetic and requirements in
order to meet the consumer’s preference.
  IKEA can maintain its low-cost structure
Disadvantages:

 IKEA India may experience miscommunication with their future suppliers

that can lead to surplus
 The tendency of local suppliers not complying the supplier code of
conduct, IKEA WAY (IWAY)
 The country may experience economic downfall that will lead to
disturbance of operations of IKEA India’s supply chain

2. Keeping production costs low by partnering with local suppliers.

Advantages:
 Attracts price-conscious buyers
 Lessens the tax they are paying for imported products
 Supports young social entrepreneurs
 Provides labor opportunities
Disadvantages:
 Discourages status-conscious class
 Risk of inability to cover expenses
 The tendency of local suppliers not complying the supplier code of
conduct, IKEA WAY (IWAY)

3. Conducting constant research and development studies in India

Advantages:
 Gain insight to the Indian customers’ preferences, mindset and aesthetic.
 Product development
 Knowledge on how to penetrate the Indian market
 Constant Innovation of products so it can adapt in India
 Possibility of becoming a ‘first-mover’
Disadvantages:
 May be costly
 May take a long time
RECOMMENDATION

In order for IKEA to reach its goal and fulfill its Indian expansion plan, the group
recommends the following courses of action:

IKEA should aim to double suppliers to meet global and Indian needs. This is to
support the incoming demand that could be brought by its expansion.

IKEA should keep production costs low by partnering with local suppliers. This
way, IKEA would be able to support young social entrepreneurs who conforms to the
IWAY. They would also be able to maintain their low pricing strategy since most of the
supplies would no longer come from foreign companies.

IKEA should conduct constant research and development studies in India.

Through this, IKEA would be able to gain insights on the Indian customers’
preferences, mindset, and aesthetic. This would also be a gateway for them to
continuously improve and innovate their products.

CONCLUSION

IKEA has been present in India since 1975, and in 2012, they received foreign
direct investment approval from the government of India to set up retail operations in
the country. In August 9, 2018, IKEA India opened its first retail store in Hyderabad,
with this, they aim to continue expanding more. IKEA India’s expansion plan aims to
set up 25 stores across the country by 2025. However, this expansion plan has various
challenges brought about by the complexity of the Indian market.

In conclusion, IKEA should undertake various strategies in order for them to

fulfill their expansion plan. This could be achieved by doubling their number of
suppliers, by partnering with local suppliers and by conducting constant research and
development studies in India.