Business Environment

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Table of Contents

Table of Contents

Introduction3

Vision3

Products3

Market Outlook and Internationalization4

The Indian furniture industry4

Available alternatives6

Perfect Competition7

SWOT Analysis10

Strengths10

Weaknesses10

Opportunities10

Threats11

Marketing Mix11

Product11

Price14

Place15

Promotion16

References18

Business Environment

Introduction

IKEA is a Swedish worldwide retailer of home products company. The unique characteristic of IKEA furniture is that it is ready to assemble. The company offers a wide range of home products that are functional and affordable at the same time. The company is dedicated to making its products affordable for all and the idea is central to everything that is done at IKEA. This is what differentiates IKEA from other home products manufacturer and retailers. Designing quality furniture and selling it at a premium price is not something that anyone can do, but designing high quality products and that too for a lower price is something that only IKEA excels at. It is because of this reason that cost-effectiveness and innovation are embedded in the very culture of the organization. The company saves on cost and passes on the advantages of lower cost to its customers.

Vision

IKEA wants to create a better every day for all its valued customers.

Products

As stated, the company offers a range of products for its valued customers. These products are categorized not by their type but by the philosophy that goes in their manufacture, retail, shipments and sale. The price tag first range is the one that focuses on operational excellence to deliver premium quality at lower cost (Young 2008, p. 12). For instance, the 'price tag comes first' and then the material is chosen. Similarly, the 'Flat packing' range is another philosophy of reducing the shipment cost. Some of the products of IKEA include beds, armoires, tables, dressers, entertainment centres, chairs, chest, and benches.

Market Outlook and Internationalization

As part of the internationalization strategy and market growth, there were many options available for IKEA. Out of the various regions that IKEA could have expanded into, it chose to enter the Indian market. The reasons for this choice are discussed hereunder (Tracogna 2011, p. 45).

The Indian furniture industry

India is one of the emerging markets of its region and the world. According to a World Bank report published in the year 2011, the Indian economy will outperform the Chinese economy in the coming years. There are certain factors that are responsible for this phenomenal growth. The growth for the year 2011 was 8.7% (Tracogna 2011, p. 45). This growth was essentially a function of rise in domestic demand. The sectors that boomed during the fiscal year were Housing and real estate and hospitality. According to Department of Industrial Policy and Promotion, the inflow of foreign direct investment in the housing industry alone for the year amounted to USD2.8 billion (Gronroos 2004, p.9). This translated into a rise in the demand for residential and commercial projects. The total demand for the residential projects amounted to 4.25 million whereas demand for the commercial projects in terms of area was 400 million sq. ft. This demand was highest in Mumbai and is estimated to grow further in future. Currently, there are 398 projects under ...