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plans to
enter India
International
Distribution
Nikhil Garg
Lov Loothra
Emilie Perrussel
Anne-Laure Laclau
SUMMARY
Summary
I. Presentation of the company
II. IKEAs General distribution strategy
III. IKEA in India: 3 possible strategies
Plan A: Leverage the Global Production &
Distribution Network
Plan B: Setup a Production & Distribution centre
Plan C: Identify established player for a Joint
Venture
IV. Suggestion
V. Conclusion
I. Presentation of IKEA
IKEA
Founded in Sweden (1943); HQ in Netherlands
Privately held, international home products
company
Specialized in affordable self-assembly
furniture
338 stores in 40 countries in 2012
27,5 billion turnover of which
80% made in Europe
15% made in the US
Only 5 % in Asia!
I. Presentation of IKEA
Hallmarks of IKEAs
Distribution
II. Distribution strategy
Distribution Statistics
27 distribution centers
11 customer distribution centers in 16
countries
41 trading services offices in 30
countries
1380 suppliers in 54 countries
Most supplies purchased from Europe
9500 products
II. Distribution strategy
Success Factors
Sourcing materials close to the supply chain
to reduce transport costs
Building DCs closer to seaports so that it can
use more of ocean transport and less of road
transport
Delivering products directly from the supplier
to IKEA stores to cut handling cost, reduce
road miles and lower the carbon footprint
Warehouse attached to retail stores
II. Distribution strategy
Success Factors
Using flat packs: reduce costs through
reduced transportation expenses, lowered
storage space requirements, decreased
transportation damage and reductions in
labor costs
Transporting goods where possible by rail and
sea
Utilizing fuel-saving techniques that allows to
be cost-effective and environmentally
friendly
II. Distribution strategy
Success Factors
Implementing JDA supply chain management tools
JDA Demand
JDA fulfillment
Advantages:
Consolidated suppliers base, helps focus on low cost
suppliers
Improved forecast accuracy to drive profits
Cost saving due to long term commitments achieved
from near accurate forecasts
Increased overall supply chain visibility
Better coordination in sales, capacity and distribution
III. IKEA in India: 3
possible strategies
Ikea
plans to open 25 stores, investing
about 1.5 billion over the next 15 to
20 years
III. IKEA in India: 3
possible strategies
Distribution Challenges in
India
III. IKEA in India: 3
possible strategies
Plan A
Leverage the Global Production &
Distribution Network
Pros
Already established: no initial setup costs
Reliable
Consistency of Quality
Cons
Costly
Decreased viability in the long run
Legislative constraints
III. IKEA in India: 3
possible strategies
Distribution Center
(China)
Rail / Trucks
Swedwood
Production Multimodal
Center
(Europe)
European
Suppliers
Retail Stores/ Multimodal
Warehouse
(India)
Indian
Suppliers
Personal
Vehicles
Personal
Vehicles
Plan Customers
A
III. IKEA in India: 3
possible strategies
Plan B
Setup a Production & Distribution
center in India
Pros
Easy to meet local demand
Better coverage possible
Will create jobs for locals
Cons
Huge initial time and cost
Infrastructure can be a hindrance
III. IKEA in India: 3
possible strategies
Distribution Center
Huge (India)
Initial Indian Rail / Trucks
Cost Production
Center
Rail / Trucks
Retail Stores/
Warehouse
Rail / Trucks
(India)
Personal
Vehicles
Indian
Plan Suppliers
Customers
B
III. IKEA in India: 3
possible strategies
Plan C
Identify established player for a Joint
Venture
Pros
Can leverage contacts/infrastructure of the
partner
Valuable insights and experience into an
untapped but growing market
Cons
Imbalance of expertise and/or investment may
create conflicts
Initial establishment of a working model may
prove to be difficult
III. IKEA in India: 3
possible strategies
Distribution Center
(Indian Partner)
Rail / Multimodal
Retail Stores/
Warehouse
Rail / Multimodal
(IKEA +
Indian Partner)
Personal
Vehicles
Indian
Plan Suppliers
Customers
C
IV. Conclusion
Conclusion
Our distribution plan suggestion
Exercising patience
References
1. TREBILCOCK Bob, "IKEA: Think global, act local for warehouse
distribution", Modern Materials Handling, 25 August 2011
2. SHARMA Amol, HANSEGARD Jens, IKEA Says It Is Ready To Give
India a Try, The Wall Street Journal, 24 June 2012
3. SHARMA Malavika, IKEA India Plans Give Scant Reassurance to
Foreigners, Bloomberg, 10 January 2013
4. ROY Rajesh, AHMED Rumman, Indian Agency Clears IKEA's
Proposal to Open Stores, The Wall Street Journal, 21 January 2013
5. DAS Sohini, "Local players give thumbs up to IKEA's entry in
India", Business Standard, 28 January 2013
6. http://www.youtube.com/watch?v=11AehTPD-Vg
7. http://franchisor.ikea.com/about.html
8. http://www.swedwood.com/about-swedwood/
Thank you for your
attention!