Ikea Pest Essay

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PEST ANALYSIS POLITICAL Analysis • Transparency International's Corruption Perception Index (CPI): 94th out of 176 nations, score of 36 out of 100 on a scale from 0 (highly corrupt) to 100 (very clean) • Political instability: factions, criminal cases against leaders, corruption • Government stipulation for foreign single-brand retailers: source 30% of what they sell from SMEs. Ikea requested for moratorium on this, government agreed to 7 years a 10-year • Frequent strikes, protests and bandhs (complete or partial shutdown of cities), often instigated for political reasons – Often in response to some change introduced or proposed by the ruling party – If it’s a union or organization strike / protest, opposition party will support it in order to bolster its vote banks – Examples of reasons for strikes / protests / shutdowns: • Increase in LPG or petrol prices, or even onion and potato prices • Allowing foreign supermarket chains to enter • Not raising public transport tariff (autos and taxis) • Death of a political leader • Release of a controversial movie • Regulation changed to allow 100% FDI for single-brand retailers. However, states free to allow or bar retail FDI – Key cities and states for Ikea: • • • • Mumbai (Maharashtra) New Delhi (Delhi - Designated National Capital Territory) Chennai (Tamil Nadu) Bangalore (Karnataka) – Two strong parties in most states; one is more liberal and supports progressive reforms, the other supports the masses and blue-collared workers. For e.g., • Mumbai: Congress-NCP v/s BJP-Shiv Sena • Chennai: AIADMK v/s DMK – State policies keep changing according to who’s ruling and what alliances have been formed between which political parties Hurdle & Solution - Ruling and opposition political parties have different stands on FDI - If opposition comes to power,

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