The market, political and supply chain risks could all eventually lead to financial risks to IKEA.



• Political decisions in India such as increasing corporate taxes or setting a minimum wage for workers in the future could lead to decrease in profits for the firm.

 

• Supply chain issues could lead to lack of supply leading to losses in revenue as the demand is not met.
   
• Indian economy could be impacted due to the current European debt crisis getting worse, causing decrease in exports and which will impact the business and people’s lifestyle which could affect sales.
   
• IKEA may need net working capital need to balance its cash flow in India, this will require a short term loan if the initial investment does not cover it. Interest rate fluctuations will impact the terms of the loan payment.
   
• Payment in India will be done in Rupees but will need to be exchanged to Euros, currency fluctuations in the market will also impact revenue for IKEA but this can be resolved with currency hedging policies.