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CASE ANALYSIS (30 Marks)

On August 9, 2018, IKEA inaugurated their first location in India. IKEA established its second location in Mumbai on December 18, 2020, and on December 9, 2021, it opened its third location and its first "city-store" of a more convenient form in Worli, Mumbai. By 2028, IKEA intends to have 30 locations. The IKEA mall division of Ingka made an announcement in December 2021 that it would open two more IKEA stores in malls in Gurugam and Noida. With one store opening in Mumbai by 2022, both malls are anticipated to open by 2025. Ikea is investing $1.5 billion in India, but analysts predict it would take the company, which is present in 49 countries, several years before it starts to see a meaningful return on that investment.

The retailer of home products has already invested up to $750 million in the acquisition of sites in India for four stores, including the enormous, brand-new 37,160-square-meter (400,000-square-foot) branch in Hyderabad. Ikea will sell more than 1,000 items for less than Rs 200 ($2.91), but industry analysts say it must strike a delicate balance between pricing products affordably for budget-conscious consumers and expensively enough to appeal to the wealthy with high status It will be challenging for Ikea to attract Indians away from trusted local furniture manufacturers, according to retail experts.

There are many small, family-run businesses in Indian villages and cities whose proprietors would visit your home and then customize furniture based only on your unique furnishing requirements.

To better understand what Indian shoppers desire, a Swedish company visited more than a thousand homes. Ikea will provide things made specifically for the Indian market, such kitchenware for preparing traditional rice cakes, but experts caution that convincing customers to forego their go-to woodworker in favor of larger items will be difficult and take time. With its extensive selection of affordable ready-to-assemble furniture, Ikea transformed the furniture-buying process in the West. However, many Indians would wonder why they must construct their own furniture.

India is not well-known for its "DIY" culture since there is an abundant supply of cheap labor there. Ikea has collaborated with UrbanClap, an online community that facilitates connections, because it is concerned that this may drive off certain customers However, analysts warn that the lack of UrbanClap in lesser-known cities could be problematic. It has taken a while for IKEA to open shop in India. After the government denied its proposal to alter the requirements on buying locally, the company ran into difficulties a few years ago. The popularity of online furniture companies like Pepperfry and UrbanLadder in major cities has raised competition for IKEA in the nation. But local and unorganized retailers continue to hold a greater proportion of the market share for furnishings.

From the above case:

1. Prepare a SWOT analysis of IKEA in India and evaluate the strengths, weaknesses, opportunities, and threats. Please support your points using evidence from the case (15 marks)

2. Assess the external environment in India using PESTEL. Include 2 points ONLY for each factor (15 marks)