- Research Handbooks in Business and Management series
Edited by Hemant Merchant
Chapter 10: Drivers and strategies of international service firms in emerging markets
When the giant furniture retailer IKEA opens its doors for sales in its first store in India in 2016, it will mark the opening of a new chapter in the story about the integration of the Indian economy into the world economy, the role foreign multinational companies (MNCs) play in this process, and more generally about the strategies service MNCs pursue to succeed in emerging markets – that is, fast-growing markets which hold great potential but also pose major challenges for foreign firms like IKEA. While IKEA has been sourcing products from India for several years, and there is a local industry of copycat products, IKEA has so far not been present as a retailer in India. But a growing middle class in India, combined with the Indian government’s decision to allow IKEA to enter the India market after lengthy negotiations between the two parties, have in combination paved the way for the market entry-to-be of IKEA. IKEA’s entry decision has been underway for some time. This is partly due to the Indian government’s reluctance to open its retailing sector to foreign firms. The entry of foreign retailers is expected to enhance consumer choice but also to increase competition in this sector.
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