Sociocultural. Perhaps the most pertinent externality for IKEA’s future is the social and cultural, which deals with the diverse cultural milieu a firm must interact with when operating globally. Localization of the international firm is key, as a company must navigate the cultural nuances and interpret their identity in a way that makes sense to different cultural groups. In IKEA’s case, one dimension of the sociocultural might include matching measurement specifications in different regions globally. In the past, IKEA has refused to switch from meters to feet, which inevitably impacts the way customers interacts with the firm at a local level.
However, for IKEA to succeed in Asian markets, transitioning measurements would be only one facet of adapting to sociocultural differences. China’s political regulations are not only daunting for a European firm to navigate, but also the associated cultural practices that must be used to circumvent heavily bureaucratic systems …show more content…
This division will be freed from exporting a “little bit of Sweden” while continuing to operate in Asia. This solution is the best for IKEA because it addresses the firm’s current issue of adapting to sociocultural differences. Current localization attempts have been strained, as evidenced by IKEA’s existing operations in China where locals sketch their own furniture based on IKEA product and build them at home (an unintended consequence of cultural misunderstanding). Simply, a set of executives entirely of Swedish descent simply cannot hope to comprehend Chinese culture without expertise. Thus, a specialized IKEA Asia division with its own executives with appropriate cultural qualifications will allow IKEA to adapt to cultural differences while expanding the low-cost furniture
However, for IKEA to succeed in Asian markets, transitioning measurements would be only one facet of adapting to sociocultural differences. China’s political regulations are not only daunting for a European firm to navigate, but also the associated cultural practices that must be used to circumvent heavily bureaucratic systems …show more content…
This division will be freed from exporting a “little bit of Sweden” while continuing to operate in Asia. This solution is the best for IKEA because it addresses the firm’s current issue of adapting to sociocultural differences. Current localization attempts have been strained, as evidenced by IKEA’s existing operations in China where locals sketch their own furniture based on IKEA product and build them at home (an unintended consequence of cultural misunderstanding). Simply, a set of executives entirely of Swedish descent simply cannot hope to comprehend Chinese culture without expertise. Thus, a specialized IKEA Asia division with its own executives with appropriate cultural qualifications will allow IKEA to adapt to cultural differences while expanding the low-cost furniture