The strategic management issue in Swedish IKEA (IKEA), headquartered in the Netherlands, it was the largest furniture retailer in the world in 44 countries around the world in countries like the as the United States, the UK, Russia, the euro zone, Japan, China, and Australia, etc. Since 2007 IKEA was planning to enter the Indian market. India is one of the most emerging countries and IEKA expects to give a great opportunity. However, this company could not enter the Indian market until 2013.

The reason for trying to enter the IKEA India market, India is one of the world’s largest population and a great opportunity for IKEA. In addition, the Indian furniture industry consists of only 0.05% of GDP and it offers a great opportunity to successfully succeed in IKEA India. IKEA plans to target the Indian middle class. It is estimated that the population suitable for the target market of IKEA is 300 million people. The high-income strata Indians will purchase expensive foreign brands.

Also, India has great opportunities for foreign direct investment (FDI) due to the current economic situation and the rapid growth rate of the country from the perspective of GDP and other economic indicators. According to Sharma & Hansegard (2012) Ikea’s investment can help Indian policy makers send signals with investment destinations that are still attractive to other foreign investors.

On the other hand, one of the huge population and problems is various incomes, ranging from very wealthy people to top classes and lower class that can work at least 1 dollar a day. Although IKEA’s plan is confident for India, analysts point out that India government pressure to implement economic reforms still remains. The India GDP growth rate in the last quarter was only 5.3%, the lowest level in nine years. Sharma & Hansegard (2012) claimed that the expansion of trade disparity is putting pressure on the current account deficit of about 4% of GDP to attract international capital. In addition, the Indian market is very price sensitive, 85% of the furniture market led by local companies providing low quality and satisfying quality products. Furthermore, IKEA is recognized as a luxury brand in India. That is quite different from IKEA`s slogan “Affordable solution for better living” means. Lastly, IKEA may face problems specific to India, such as varying laws in different state laws ruled by various political parties.

After negotiating and persuading with Indian politicians and bureaucrats on May 2, 2013, an investment proposal of EUR 1.5 billion to establish a store in IKEA’s India was finally approved by local governments. IKEA is constantly striving to reduce costs for packaging, cost, and other cost savings. Therefore, IKEA has advantages of abundant labor and cheap wages from India, and it is also the best market with many consumers as argued by professional research paper writers at essaybureau.com

Sharma, A., & Hansegard, J. (2012, Jun 25). IKEA knocks on india’s door. Wall Street Journal Retrieved from http://search.proquest.com.libraryproxy.griffith.edu.au/docview/1021985750?accountid=14543