Analysis of IKEA Entering India Case Study

Q1
The main attraction of IKEA to India is change in foreign investment policies that allow
foreign investors to own 100% of the businesses they start in the country. The case study posits
that IKEA was hesitant to move to India in the early years because of the laws that required
foreign businesses to venture through local partnerships. According to Roy (2021), the
government of India signed into law a legality that allows foreign businesses and investors to
operate unilaterally in the country. The legalities of that law integrate the factors that create the
need for foreign direct investment. In other words, foreign businesses venture into other
territories because of the value of the currency, the infrastructural development, the size of the
markets and the human capital, among many others (KB, 2021). In hind-set, they are the same
conditioned factors that motivated IKEA to venture into the new territory.
IKEA was also attracted to the Indian market because of its success in other countries,
especially China. The case study provides that the decision of the company to venture into other
markets is motivated by taking over the industry. It consequently had the same effect as China,
which shares characteristics such as large customer bases in major cities. The two countries also
share infrastructural developments that would encourage great returns on investment (Majid,
2020). Biblically, investing in a new country is an act of faith. It believes in the returns without
primarily seeing them. The company gave thought to how they would start in India, similar to the
way the Bible resonates that the prudent people give thought to their steps (English Standard
Version Bible, 2008, Proverbs 14:15). The idea about venturing requires faith and adequate
preparations to make the actions worthwhile in returns. Therefore, based on previous success
factors and market assessment, IKEA was attracted to India.

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Q2
IKEA chose Hyderabad as the ideal location because it was a hub known to many
Indians. The location would offer strategic insights about the nature of Indian customers to the
company. It would also acquaint the customers with the products, the services and the values
with which IKEA identify with. As an empirical research centre, the prominence of Hyderabad
captures the different market factors, including the market size, potential customers, regulating
frameworks and competitiveness (Isabelle et al., 2020). According to the case, opening a small-
scale store in Hyderabad instilled awareness in areas with the likelihood of risks that covers the
listed factors. Therefore, it was precautionary to build a shop in Hyderabad strategically.
Moreover, IKEA chose Hyderabad for the first location because it cultural allowed other
foreign companies like Microsoft to thrive. Having proven acculturated other high-end
companies, Hyderabad would provide universality required to integrate needs of IKEA. Isabelle
et al. (2020) expresses that culture entails the needs of different consumers of the product in the
same market. Therefore, circumstances surrounding culture inform the business on how to
provide satisfaction, engagement and retention. Therefore, the business must strategize how it
recruits local talent to meet all these cultural expectations. Additionally, the New Testament
Christian Bible provides that people should be careful how they plan their businesses to make the
best out of situations (English Standard Version Bible, 2008, Ephesians 5:15-16). Therefore,
IKEA made the most out of starting with a small-scale store before fully opening large-scale
outlets across India.
Q3
The main challenge that IKEA faces is Indians having dislike with its trademark. The
trademark of the company is “Do it yourself.” Although the trademark has been influential and

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impactful in other countries, the findings from more than two-hundred households indicate that
the majority do not like the trademark. Precisely, the trademark derails business acceptance by
the customers. Moreover, the operations of IKEA are challenged by the varying sociocultural
factors that make the market volatile for new entrants. Majid (2020) recommends that foreign
investors in India should focus on providing opportunities to the local people to contribute to
company-consumer relations. The brand image of IKEA is changeable by embarking on
corporate social responsibility. Therefore, the solution to the challenges faced in the operations
of the company rests on making frameworks that allow the business to align