Perspectives from ISB

A recent article reports that IKEA has applied to invest $2 billion in India. For IKEA to be successful it has to source 30% of its products for sale in India from small local firms. Is this really possible? I can only recall Li and Fung’s success story in this regard. Li and Fung have the unique ability to source from small manufacturers and aggregate the products into one large consignment for retailers in the US. It required considerable knowledge about local conditions and firms to succeed; and very few others could compete with Li and Fung due to its initimate knowledge of manufacturing and sourcing conditions. Perhaps some local entrepreneur will help IKEA out?