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Evaluate specific company strategies and analyze the impact on competitive advantage and financial performance; Demonstrate careful reasoning for strategic initiatives using the tools of external and internal analysis
Hence, creating a strategic analysis of a company’s situation will help you develop the skills to synthesize diverse information and so reason critically about potential solutions. Such skills are necessary for effective business management. The task is to create a written analysis containing the following three aspects:
An identification of the company’s strategy, referencing course concepts (e.g. business-level strategy, five elements of strategy, international strategy)
An explication of the strategic issues facing the company, derived from an analysis of the external environment and internal organization (i.e. SWOT analysis)
A recommendation plan for dealing with the issues explicated (i.e. detailed options that weigh the benefits and costs of the proposal)
A few points of clarification:
The format is a typed document (12-point font, double-spaced text).
The Strategic Analysis must be submitted electronically by the scheduled due date. Your file (Word; PDF) should be uploaded to the proper folder under the Assignments tab on our iCollege site.
Each submitted analysis should be roughly three pages in length.
The purpose of this case is to examine the factors leading to IKEA’s decision to enter India, as well as to propose strategic actions to build a competitive advantage in this new market. Review the questions below before reading the case study materials linked to this case introduction.
What are the segments in the general environment that relate to IKEA’s situation?
What is IKEA’s choice of international entry mode? What are the advantages and disadvantages compared to other entry modes?
Describe IKEA’s intended international corporate-level strategy in India. Is it different from its earlier international strategy?
Identify IKEA’s current challenges in India. Based on your analysis, what recommendations would you make to help IKEA achieve its goals?
Background: In June 2013, IKEA approved a plan to invest €1.5 billion to open 25 stand-alone stores across India. In the previous year, India reversed course on foreign entrance by allowing 100% foreign direct investment (FDI) in single-brand retail. This shift in FDI regulation provided IKEA with an opportunity to enter at the retail level. Prior to 2012, IKEA had been sourcing materials from India for roughly 30 years. The company’s initial attempt to enter the retail market was thwarted in 2009 by India’s previously stringent regulations. In fact, the company had established a market research division to seek relationships with Indian companies.
With the shift in FDI regulation, IKEA announced the objective of opening an initial 10 stores by 2023. However, there were still a number of regulatory issues restricting IKEA’s business model. For example, FDI in multi-brand retail was forbidden, meaning that IKEA could not sell its famous meatballs in a furniture store! The Company was also forbidden by the Indian government from selling furniture online in India. IKEA was also required to source 30% of its products from domestic SMEs (i.e., small-to-medium enterprises). This would limit the company’s ability to ensure global efficiencies, meet safety standards, and source from quality suppliers.
Case Study: IKEA Adapting its service for India.pdf
Company announcement: IKEA_Next Stop_India.pdf
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