CAGE Analysis

In order to assess the complexity of a proposed entry into India, the CAGE framework is a good starting point. This helps pinpoint the difference across countries that might put IKEA at a relative disadvantage as compared to its local competitors.

C = Cultural Distance

D.I.Y. concept not yet familiar
Lack of trust in external organisations
Different attitude and tastes to furniture

A = Administrative Distance

Absence of shared monetary or political association
No existence of political hostility between India and Sweden
Minor corruption issues

G = Geographical Distance

Physical distance from headquarters
Weak transportation links between borders
Cost and time savings if IKEA makes use of local resources

E = Economic Distance

Income inequality
Large economic size and low capita per income
Cost vs. quality compromise
Need for local customisation and standardised products