You are about to read a short case exploring IKEA$$s strategy for entering foreign markets. Even with its extensive experience in expanding into international markets, IKEA$$s move into India has presented new challenges for the Swedish home furnishings giant. You will be asked to answer questions linking your knowledge from the chapter to the situation detailed in the case.

This activity is important because as a manager, you must be able to make decisions regarding which foreign markets to enter, when to enter them, and on what scale. You will also need to consider how to enter the markets. There are usually no right or wrong answers to these decisions, but managers need to be able to weigh the advantages and disadvantages of each choice. The goal of this activity is to demonstrate your understanding of the decisions a manager must make regarding when to enter foreign markets, which markets to enter, the level of commitment the firm should make, and how the firm should enter the market.

Read the case and answer the questions that follow.

The Swedish home furnishings giant IKEA has finally entered India in $2018$ after more than five years of preparation $($including the last two years building the stores$).$ India had been on IKEA$$s radar screen for some time, but the company had been hesitant to invest until $2012,$ when India changed the laws governing foreign investment into its large and growing retail sector, for the first time allowing single$-$brand foreign retailers to establish $100$ percent$$owned operations in India. Up until $2012,$ retailers like IKEA were only allowed to establish stores if they entered into a joint venture with a local Indian partner, something IKEA was reluctant to do$.$

Questions still linger, though: Can IKEA adapt to the aesthetic wants and needs of Indian customers, and can the company motivate the Indian customers to buy into the do$-$it$-$yourself philosophy that is a symbol of the IKEA brand? After all, many customers around the world think that IKEA$$s success was built on the $$L$-$shaped$$ metal IKEA tool used to put together virtually all of IKEA$$s furniture after you get the pieces out of the flat box. And no one knows what to call the L$-$shaped tool$$although there is an official IKEA emoji for it on smartphones and a keyboard app for iOS and Android phones for IKEA emoticons $($the meatball plate with a Swedish flag at the top looks interesting$)!$ But is this a style, emoji, emoticons, and lifestyle that will work in India? How is it working so far?

India became the $51$st country that the largest furniture company in the world, IKEA, entered since its founding in $1943.$ Since its founding, IKEA has become a $$43$ billion company in sales annually $(35$ billion$),$ which has been the envy of the furniture industry and the benchmarking model for companies across several industries around the world. Flat packaging and high quality for the price you pay $($i$.$e$.,$ great value$),$ as well as global supply chains, make IKEA a superbly efficient company with a very effective business model. Amazingly, the business model has been in place ever since Ingvar Kamprad founded IKEA, with very minimal changes except for being implemented on a much larger scale$$growing rapidly almost every year.

The IKEA business model and the company$$s assortment of products are now on the move to take over India like they have been doing with other countries. After all, IKEA$$s market entry into China in $1998$ went reasonably well. IKEA has three stores in Shanghai, two stores in Beijing, two stores in Chengdu, and one store each in Tianjin, Guangzhou, Shenzhen, Nanjing, Dalian, and Shenyang, along with $11$ more stores across smaller cities in China. For India, IKEA initially plans to open $25$ stores but has marked some $49$ Indian cities that have potential to get an IKEA store in the future. The $25-$store plans call for an investment of about $$2$ billion over $15$ to $20$ years. As we said in the opening, IKEA began its India market entry planning in $2013$ and started building in $2016.$ The first construction took place in Hyderabad, a high$-$tech center where companies like Microsoft have their Indian headquarters. The Hyderabad store is $400,000$ square feet and cost $$110$ million to build.

To ease Indian customers into the IKEA model before the store opened in $2018,$ the company unwrapped its first experiential center IKEA Hej $($Hello$)$ Home close to the IT hub of Hyderabad. The Hej Home small$-$scale store provides some insight into IKEA products and solutions, which future Indian customers could buy before the store opened in Hyderabad. This also eased the market entry into India and helped point out glaring problems that IKEA management could tackle before opening the actual large$-$scale IKEA store. The Hej Home, designed and built over a six$-$month period, highlights what IKEA stands for and what to expect. Ikea Hej Home reflects IKEA$$s understanding of life at home in India and its unique