Ikea in India

Table of Contents

Particulars Pages

1. Executive summary 1

1.1 Introduction 2

2. Company Background 3

2.1 The growth of IKEA 3

2.2 IKEA Malaysia company's strategy 4

3. New Delhi's Background 5

3.1 New entry strategy 5

3.2 The international business 6

3.3 The market screening 6

3.4 New Delhi's economy 7

* Figure 1: International Business Model 8

* Figure 2: The Tribune, Chandigrah, India- Budget Highlights 2006 - 07 9

4. Barriers of Entry 10

4.1 Culture and beliefs 10

4.2 Pricing 10

4.3 Environment barrier causes 11

5. Recommendations 12

* Figure 3: The Global Strategic Planning Process 13

6. Conclusion 14

7. References 15

* IKEA's Overview 16-17

1. Executive Summary

First of all, the assignment that is about International Business. The research and task which was given is an intention to expand the largest furniture company that is IKEA in Malaysia to New Delhi, India.

IKEA was one of the biggest furniture manufacturers in the world where they have conquered the European state until Asian state with their most famous product and valued product money can buy. Since Malaysia's goal was to look forward in becoming the next exporting industry, Malaysia companies should take this opportunity to explore the foreign market.

The task will be based on the barriers of the company is likely to meet when entering and exploring the market. The strategies of controllable and uncontrollable forces will be examined throughout the research. This research purpose is to understand the markets in New Delhi and how to enter their market. The company and its strategy information can help by understanding the motives of the expansion around the globe. By using the five main drivers (politics, cost, market, competitive and technology) of globalization should be fitted in the research so that the expansion will be easier to handle.

The analysis of the assignment can be judged whether it is relevant or logic for this research on expanding the IKEA business to New Delhi, India. Each steps to expand into New Delhi will be carefully learnt and to position the market in the new entry.

1.1 Introduction

The task that was given is about the research of overseas market with the intention to expand a company; permanently to understand the foreign market situation and to grab the opportunity to explore the oversea market.

The oversea market research may consider this few process which includes designing the structure of the market, gathering information of the oversea market for business uses, analyzing the purpose of the expansion and report of the outcome that may be used to solve a specific marketing problem.

A company's decision to expand must understand the global environment, especially the trade system. Meaning, it must asses each of the foreign market economic, political-legal, as well as the cultural characteristics. The management must examine later on how much sales they can make, this is because the objectives is to get returns on investments against the level of risk that the company is facing.

Secondary data were collected like the information from the internet or books are useful in evaluating the country or market environments for making initial market entry decisions and for attempting to asses the future development and trends to screen the market potential while monitoring the environmental changes in an international perspective.

The planning was to build a long term market or business which the expansions were all about. By learning the other countries background economically; some of the research are theoretical based, some were search in the internet (especially the target market in New Delhi), text books and lectures notes as references.

The report will consist of the five driver forces for the international business, the growth of the New Delhi's economy, and understanding the barriers of Malaysia entering New Delhi's market.

2. Company Background

The headquarters of the IKEA Company was first built in Almhult in Sweden and the idea was made by only a 17 years old teenager named by Ingvar Kamprad Elmtaryd Agunnaryd during the 1940's. If you see carefully, the first letters from his name were taken for the company's name and it became IKEA. IKEA the meaning in Greek means home and that is why the company manufactured home products for consumers (http://en.wikipedia.org/wiki/IKEA).

In the beginning, IKEA like NOKIA Company before it became famous for producing hand phones; IKEA only sell small items like food containers, watches, pen, picture frame and many kinds when they decided to become an international business. Only in the year 1955 IKEA began to manufacture their own furniture and the design are very interesting for their customer's eye view and the satisfaction for using the product made the company popular (http://en.wikipedia.org/wiki/IKEA).

2.1 The growth of IKEA

Like any teenager, this 17 year old Kamprad do his sell from home for the first year and his customers can do mail order for the product. On 23rd March 1963 IKEA made the move to other area outside Sweden and that was in Asker. Now year 2006, the store is expanding and is also under renovation and remodeling. IKEA's international mission is to provide the world with the most comfortable household products and decors as well as their motto is "Affordable Solution for Better Living" (http://en.wikipedia.org/wiki/IKEA).

In 1996 the first IKEA Company was brought to Malaysia and it was settled in Selangor. Now it was then relocated in Mutiara Damansara next to The Curve shopping