presentasi kelompok 24

Awaludin Ridwan

11 Sept 202403:50

Summary

TLDRIkea's entry into India in 2013 presented a significant opportunity due to the country's large population and growing middle class. The company faced challenges like complex regulations, diverse consumer preferences, and price sensitivity. Ikea conducted a comprehensive feasibility study, researching local preferences, assessing logistics, and planning product adaptations. They opened their first store in Hyderabad in 2018 after five years of preparation, which was met with an overwhelmingly positive response. The success underscores the importance of a detailed market analysis and strategic adaptation.

Takeaways

🌏 Ikea, a Swedish multinational, decided to enter the Indian market in 2013, recognizing the potential in India's large population and growing middle class.
🔍 The company conducted a comprehensive feasibility study to understand local consumer preferences, purchasing power, competition, and the need for durable, low-cost furniture in India.
🏭 Ikea assessed the logistics and supply chain requirements, deciding to source a significant portion of its products locally to reduce costs and comply with India's foreign direct investment regulations.
💼 Ikea identified an aspirational urban middle class in India that was increasingly inclined towards modern home furnishings, indicating a market for their products.
💡 The company planned to adapt its product offerings to suit Indian consumers, including smaller-sized furniture and a locally inspired food menu in its in-store restaurants.
📈 Ikea projected costs and forecasted revenues and profitability, taking into account the price sensitivity of Indian consumers.
🛠️ The company invested in training its workforce to cater to Indian consumers, emphasizing customer service and cultural sensitivity.
🚧 Ikea identified potential risks such as regulatory hurdles, supply chain disruptions, and cultural differences, and worked to mitigate these through close collaboration with local partners.
🏬 After a thorough feasibility study, Ikea opened its first store in Hyderabad, India, in 2018, which received an overwhelming response.
📈 The success of Ikea in India illustrates the importance of a detailed feasibility study in understanding market dynamics, consumer behavior, and local regulations, allowing the company to adapt its strategy and establish a strong foothold in a new market.

Q & A

Why did Ikea decide to enter the Indian market in 2013?
-Ikea saw a lucrative opportunity in India due to its large population and a growing middle class.
What were some of the challenges Ikea faced when entering the Indian market?
-Challenges included complex regulations, diverse consumer preferences, and a price-sensitive market.
What was a key finding from Ikea's research on Indian consumer preferences?
-Indian consumers preferred durable, low-cost furniture and were unfamiliar with self-assembly concepts.
How did Ikea address the logistical challenges posed by India's geography?
-Ikea decided to source a significant portion of its products locally to reduce costs and comply with India's foreign direct investment regulations.
What regulations influenced Ikea's sourcing strategy in India?
-India's foreign direct investment regulations required foreign retailers to source at least 30% of their goods from local small and medium enterprises.
What financial projections did Ikea make before entering India?
-Ikea projected costs of entering the market, including setting up stores, establishing supply chains, and marketing, and forecasted revenues and profitability based on different scenarios considering price sensitivity.
How did Ikea plan to adapt its product offerings for the Indian market?
-Ikea planned to include smaller-sized furniture, a broader range of kitchenware, and a locally inspired food menu in its in-store restaurants.
What steps did Ikea take to cater to Indian consumers?
-Ikea invested in training its workforce to emphasize customer service and cultural sensitivity.
What potential risks did Ikea identify before entering India?
-Potential risks included regulatory hurdles, supply chain disruptions, and cultural differences.
How did Ikea mitigate the identified risks?
-Ikea worked closely with local partners, adapted its business model, and continually refined its strategies based on local market feedback.
When and where did Ikea open its first store in India?
-Ikea opened its first store in Hyderabad, India, in 2018.
What was the outcome of Ikea's feasibility study and its impact on its entry into India?
-Ikea's thorough feasibility study allowed it to understand the unique challenges of the Indian market and adapt its offerings, pricing, and strategies accordingly, leading to a strong foothold in the new market.

Outlines

00:00

🛋️ Ikea's Entry Strategy into the Indian Market

Ikea, a Swedish multinational renowned for its ready-to-assemble furniture and home goods, embarked on entering the Indian market in 2013. Recognizing India's vast population and burgeoning middle class as a lucrative opportunity, Ikea faced challenges such as intricate regulations, diverse consumer preferences, and a price-sensitive market. To navigate these, Ikea conducted an extensive feasibility study. This study encompassed understanding local consumer preferences, purchasing power, and competition, discovering a preference for durable, low-cost furniture and unfamiliarity with self-assembly. Ikea also identified an urban middle class with a growing inclination towards modern home furnishings. Considering India's geographical and infrastructural challenges, Ikea decided to source locally to reduce costs and comply with India's foreign direct investment regulations, which mandate at least 30% local sourcing. The company projected market entry costs, including store setup, supply chain establishment, and marketing, and forecasted revenues and profitability, accounting for Indian price sensitivity. Ikea planned to adapt its product offerings to the Indian market by introducing smaller furniture sizes, a broader range of kitchenware, and a locally inspired food menu. The company also emphasized workforce training to cater to Indian consumers with a focus on customer service and cultural sensitivity. Potential risks such as regulatory hurdles, supply chain disruptions, and cultural differences were mitigated by working closely with local partners and adapting the business model. Ikea's first store in Hyderabad, India, opened in 2018, attracting over 40,000 visitors on its first day. The success of Ikea's feasibility study in India underscores the importance of understanding market dynamics, consumer behavior, and local regulations, which enabled the company to adapt its strategy and establish a strong presence in a challenging new market.

Mindmap

Keywords

💡Feasibility Study

A feasibility study is a systematic approach to evaluating the potential for success of a project or business venture. In the context of the video, Ikea conducted a feasibility study to assess the Indian market's potential for its business model. This involved researching consumer preferences, purchasing power, and competition, which are all critical factors in determining whether entering the Indian market would be viable. The study helped Ikea understand the unique challenges and opportunities, allowing it to tailor its strategy accordingly.

💡Indian Market

The Indian market refers to the economic environment where goods and services are bought and sold in India. The video highlights the Indian market as a lucrative opportunity for Ikea due to its large population and growing middle class. However, it also poses challenges such as complex regulations and a price-sensitive market. Ikea's entry into this market required a deep understanding of local consumer behavior and the ability to adapt its products and strategies to meet local demands.

💡Consumer Preferences

Consumer preferences refer to the inclinations and tastes of consumers that guide their purchasing decisions. In the video, Ikea discovered that Indian consumers preferred durable, low-cost furniture and were unfamiliar with self-assembly concepts. Understanding these preferences was crucial for Ikea to adapt its product offerings to suit the local market, which included introducing smaller-sized furniture and a broader range of kitchenware.

💡Purchasing Power

Purchasing power is the ability of consumers to buy goods and services. Ikea's feasibility study identified the growing purchasing power of the urban middle class in India, which was aspirational and increasingly inclined toward modern home furnishings. This insight was significant for Ikea as it helped them target the right consumer segment and price their products competitively in the Indian market.

💡Self-Assembly

Self-assembly refers to the process where consumers put together furniture or other products from pre-cut and pre-drilled parts. Ikea is known for its self-assembly furniture, but the video notes that many Indian consumers were unfamiliar with this concept. This realization was important for Ikea as it influenced their decision to invest in training their workforce to cater to Indian consumers, emphasizing customer service and cultural sensitivity.

💡Logistics and Supply Chain

Logistics and supply chain management involve the processes of organizing and managing the flow of goods from the point of origin to the point of consumption. Given India's vast geography and infrastructural challenges, Ikea assessed the logistics and supply chain capabilities required to support its business model in India. This included sourcing a significant portion of its products locally to reduce costs and comply with India's foreign direct investment regulations.

💡Foreign Direct Investment Regulations

Foreign direct investment (FDI) regulations are government policies that govern how foreign companies can invest in a country. In the video, Ikea had to comply with India's FDI regulations, which required foreign retailers to source at least 30% of their goods from local small and medium enterprises. This regulation influenced Ikea's sourcing strategy and its decision to source a significant portion of its products locally.

💡Market Entry Costs

Market entry costs refer to the expenses a company incurs when entering a new market. Ikea projected the costs of entering the Indian market, which included setting up large-format stores, establishing supply chains, and marketing the company. Understanding these costs was essential for Ikea to forecast revenues and profitability and to make informed decisions about its investment in the Indian market.

💡Product Adaptation

Product adaptation is the process of modifying products to meet the needs and preferences of consumers in a new market. Ikea planned to adapt its product offerings to suit the Indian market by including smaller-sized furniture, a broader range of kitchenware, and even a locally inspired food menu in its in-store restaurants. This strategy was crucial for Ikea to appeal to local tastes and to differentiate itself in the competitive Indian market.

💡Cultural Sensitivity

Cultural sensitivity refers to the awareness and understanding of different cultural practices and values. In the video, Ikea emphasized the importance of cultural sensitivity in training its workforce to cater to Indian consumers. This approach was essential for Ikea to build trust and rapport with local customers and to ensure that its products and services were culturally appropriate and appealing.

💡Risk Mitigation

Risk mitigation involves the process of identifying potential risks and implementing strategies to minimize their impact. Ikea identified potential risks such as regulatory hurdles, supply chain disruptions, and cultural differences. To mitigate these risks, the company worked closely with local partners, adapted its business model, and continually refined its strategies based on local market feedback. This proactive approach to risk management was crucial for Ikea's successful entry and expansion in the Indian market.

Highlights

Ikea entered the Indian market in 2013, recognizing India’s large population and growing middle class as a lucrative opportunity.

Key challenges for Ikea included complex regulations, diverse consumer preferences, and a price-sensitive market.

Ikea conducted an extensive feasibility study to understand the Indian market, local consumer behavior, purchasing power, and competition.

Indian consumers preferred durable, low-cost furniture and were largely unfamiliar with the self-assembly concept.

A significant urban middle class in India was identified, showing aspirational tendencies toward modern home furnishings.

Ikea decided to source a significant portion of its products locally to reduce costs and comply with India’s foreign direct investment regulations.

Indian foreign direct investment regulations required foreign retailers to source at least 30% of their goods from local small and medium enterprises.

Ikea forecasted revenues and profitability by accounting for India’s price-sensitive consumers and projecting costs for store setup and supply chain establishment.

Ikea adapted its product offerings to suit the Indian market by providing smaller-sized furniture, a broader range of kitchenware, and locally inspired menu items in its restaurants.

Ikea invested in training its workforce to cater to Indian consumers, emphasizing customer service and cultural sensitivity.

Potential risks identified by Ikea included regulatory hurdles, supply chain disruptions, and cultural differences.

Ikea mitigated risks by working closely with local partners, adapting its business model, and refining strategies based on market feedback.

Ikea opened its first Indian store in Hyderabad in 2018, five years after deciding to enter the market.

The Hyderabad store’s launch was a success, attracting over 40,000 visitors on the first day.

Ikea’s success in India demonstrates the importance of a detailed feasibility study to understand market dynamics, consumer behavior, and local regulations.