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PESTEL Analysis

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The PESTEL framework is a useful tool to assess the external, non-corporate, non-industry variables that might affect IKEA’s performance in India. This framework would enable identify key influences and understand the risk attached.

Economic Factors

 

  • Annual GDP growth rate of 6.9%
  • Fluctuation of local currency
  • Recorded inflation rate of 9.3% in Dec. 2012
  • Strong export market

​Political Factors

 

  • Allowing 100% FDI in retail sector
  • Complex political structure
  • Slow economic reforms

​Legal Factors



  • Customer protection regulations
  • Government preference towards home-grown companies (86% market share)
  • Legal policies and trading regulations (SAFTA, APTA)

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​Environmental factors

 

  • Climate changes
  • Strong Corporate Social Responsibility in IKEA’s culture
  • Various Tax and Tariffs

​Social Factors

 

  • Large and young population – 54% below age 25
  • Different social beliefs and traditional mind-set
  • Cultural difference with IKEA’s home country - Sweden

​Technological Factors​

 

  • Highly educated, skilled and dynamic human resources  - Low labour cost
  • Technology and IT hub
  • Furniture industry has slow absorption of innovation & change
  • Underdeveloped complimentary asset (e.g. delivery service)​
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