Case 6 in chapter 8 called \"Business Model and Competitive Strategy of IKEA in

Question

Case 6 in chapter 8 called "Business Model and Competitive Strategy of IKEA in India"

1. Based on the materials covered in Chapters 8 & 9 on international expansion strategy, what are the top two reasons why businesses pursue international expansion beyond their domestic markets? How can businesses determine the attractiveness of a foreign market?

2. Using the IKEA case, what do you think are the major benefits of expanding to the Indian market? What are the prominent challenges?

3. Using the five modes of entry into an international market discussed in Chapter 8, what options does IKEA have in entering the Indian market? Are there weaknesses to these specific modes of entry?

Explanation / Answer

Global availability of bigger market as well as generation of Huge revenues from different market is one of the most important reasons why business for international expansion we are on their domestic market. This type of approach helps the business to grow prominently and to increase the overall profit by a great margin by entering into the international market region. For serving large number of people as well as creating a distinctive brand identity, globalisation is done. Best type of approach requires an organisation which is capable of understanding international Marketplace and invest specifically in the international markets for increasing the overall profit generated by the organisation.

IKEA implemented its service into India but later role of the services as effectiveness of the specific furniture was not accepted by Indian customers. IKEA lost its understanding of the specific Marketplace as Indian customers usually go for the low cost and local made furniture which has proven to be the biggest drawback for IKEA as it serves qualitative furniture with a nominal price.

IKEA can enter with the help of the joint venture in India. This type of approach would help it to create a more productive working environment as it would be working with a well set up company in India. Providing high quality products at an affordable price would be the most beneficial strategy for it are together the customers.

Entering with the joint venture would be the most appropriate way for IKEA to enter India.Opening a franchise would not be appropriate as it would increase the overall cost involved in operation. If it wants to enter India then definitely they have to understand Indian culture to provide best services to the Indian customers and to improve their overall market revenue from the same use market.

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