The Pros and Cons of Opening a Franchise in India

The plan by IKEA to enter the Indian market could have come at a better time. The world economy is getting more globalized, and businesses must strategize beyond their national borders in order to remain marketable. Based on the debate, one of the incentives of IKEA opening up a franchise in India is the high growth of the economy (Mangaldas, n.d.). In such a country, the company will be granted great fortunes since there will be access to highly skilled personnel that will provide ideas to make the franchises successful. Second, India is amongst the fastest growing economies with an expanding middle-class. For that reason, there will be a huge potential market for the company’s products.

            On the opposite side of the debate, there are fears that the huge tariffs that the Indian government imposes on foreign goods would make the venture not feasible. However, it is worthy to consider many multinational businesses that have set up a base in the Indian market and are operating quite well. Moreover, the profits that would be generated in the market due to lack of close competition will be such that the duties paid will not affect the profitability of the firm.

            The opposition side also cites the product design for not being suitable for the Indian market. The Indian market largely consumes highly designed products while the company deals with simple products (Mangaldas, n.d.). However, the company should turn this into a disadvantage since there will be now product differentiation in the Indian market which will make them more competitive. There are a lot of people in the market that would prefer the simple designs offered by the company.

Bibliography

Mangaldas, L., n.d. IKEA Will Finally Open Its First India Store, But Winning Customers Won’t Be Easy [WWW Document]. Forbes. URL https://www.forbes.com/sites/leezamangaldas/2018/06/26/ikea-will-finally-open-its-first-india-store-but-winning-customers-wont-be-easy/ (accessed 10.22.18a).