Dissertation

INTRODUCTION

At the 2012 Cabinet meeting  held in India , the regulation of laws with regards to Foreign Direct Investment was passed. 100% FDI has been approved in the retail sector with respect to single branded products only. It is then that giant Swedish furniture retailer IKEA has decided to enter the Indian market with a total investment of $ 1.95 billion. Certain conditions were laid down by the Indian Government as to sourcing a certain percentage of finished products locally , and after a few negotiating rounds, India has now approved of IKEA’s  investment. The furniture Industry in India is valued at about $8 billion. This Industry belongs to the unorganised sector. Reports suggest that 85% of the Industry belongs to the unorganised sector. The Industry is also highly fragmented but at the same time it has a few big retailers who supply a large portion of the home furniture segment.

The major retailers are AT Home,Durian Industries , Godrej Interio , Lifestyle. These are the established retailers and have their presence all over the country.  Since IKEA is now entering  the Indian furniture and home furnishings market , all major retailers are at a risk of losing their market share as IKEA is  known for supplying innovative designs at attractive price making it a value for money package , which is exactly what Indian consumers look for.

Since this would be a cause of concern for Indian furniture retailers, this research paper focuses on different possible strategies that can be used by these retailers in order to gain a competitive advantage over multinationals like IKEA.

The literature review begins with defining the concepts of what exactly MNC’S are and also defining what competitive advantage means. The literature review for this paper can be looked at in 2 perspectives. First is the different sources by which a firm can gain competitive advantage.  This deals with different sources with which a firm can generate and develop an edge over other competitors in the market.  The various sources highlighted in this paper are, the resource base of a firm as a major source of competitive advantage. The other sources were cultural diversity as a source of competitive advantage and generation of customer value as source of competitive advantage. The literature on competitive advantage is more on a general basis however it is important to understand the different sources available at a firms disposal. The more narrow study of the papers literature review focuses on survival of local firms vs MNC’s mainly focusing on emerging markets. The review is interesting and there is literature to support both sides of the argument. Some authors clearly identify MNC’s as the superior power with regards to resources and experience , however there is past evidence that shows  that emergence of homegrown champions in emerging economies is also something Indian furniture retailers can be inspired by. The literature review also manages to highlight certain strategy frameworks which have proved to be successful in the past.

In terms of the methodology the researcher has managed to conduct structured interviews with important personals from the 5 major retail stores in order to gain their insight. The author has chosen to use qualitative primary data as the main source of research in order to analyse the response to various strategies that these retailers would wish to employ. In terms of research philosophy the researcher has focused on positivism and interpretivism.  The researcher would focus on inductive research as the main approach which deals with adding to existing literature by gaining valuable insights from interviews carried out. A combination of both inductive and deductive approaches have been used.  Although more focused on inductive approach , the deductive approach focuses on comparing the data collected with existing literature and then developing a hypothesis on the same.The research paper then focuses on analysing the data collected via interviews and analysing the same with various approaches that have been adopted by the researcher.

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