Indian market is a very complex market regarding its very diversified population, and fragment market consisting of the different peoples from different background having adifferentchoice of the lifestyle, and income, and consciousness. Meanwhile, Indian market cannotbe comparedwith any other country in the world. Because the country is a developing country, and peoples are not more diverted towards more lifestylethan the individuals in the United States and Germany.
Hence, it becomes necessaryto understand the market first on some set of acharacteristic of the customers. On the other hand, the furniture industry was estimated at Rs.700 billion in 2010, and it was also theunorganized market. So, the home furniture segment was thelargest segment in the Indian market. However, the 85%-90% of the production was handicraft. Meanwhile, only 10%-15% of the manufacture of furniture were coming from the organized sector consisting of manufacturers, importers, dealers, and distributors.(Samad, 2015)
Beyond these all the factors, Indian market was the attractive place for the company from afuture perspective. The growth in the Asia was supposed to be 20% annually, and alone in the India, there was ahuge gap in the furniture market. However, the IKEA group has a competitive advantage that its products are well styled, and cheap that could be drive force for the customers in the market, and might help the company to gain market share.
The government controls all the regulations and decides what best fits to country’s interest, and rules as per. Meanwhile, the government controls the economy and imposes laws over the import, and export of the commodities. Similarly, it has imposed therule of the sourcing about 30% from the MSMEs within the India. But, later it changed, imposed and emphasized the IKEA to open its assembling facilitative center in the India. Beyond, these all issues, the Government of India has only one Brand-retailing policy in foreign direct investment before 2012, which restricted the entry of IKEA group in the country.
However, the issue of the 30% sourcing from within the country was amajorchallenge for the company to meet with it initially, and the government also stated their reservations over the restaurants and cafés in the stores. But later,negotiations with the governing bodies allowed thecompany to have restaurants, and cafés within the stores, not outside of the premises. On another hand, thegovernment also showed leniency in sourcing rules;when it proposeda fiveyears’ gross period to prepare for sourcing 30% from the MSMEs within India alone.(Samad, 2015)
The furniture retail market in India has been contributing 14% to the GDP, whereas the market was unorganized with the small shops, and furniture repair shops, and selling new furniture, and purchasing old furniture, and renovating it for the resell in the market. Because,the market has different customers having adifferent perspective like some are quality conscious and some are cost conscious,representing a different set of characteristics.
On the other hand, IKEA has determined to enter the Indian market, when thegovernmentallows 100% FDI in the multi-brand retailing. Because the government of India has banned on 100% investment in the multi-brand retailing in the India……………………
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