With the process of globalization, a surging number of companies are diversifying and expanding trades and capital abroad. These companies, known as "Multinational Enterprise" which implicates the organization that do business in multiple countries rather than only in domestic economy. These transactions across different countries, however, are to be closely related to different cultures, which can be defined as "the sum total of the beliefs, rules, techniques, institutions,and artifacts that characterize human populations" (Ball and McCulloch, 1999) or "the collective programming of the mind." (Hofstede, 1980). In fact, there are two different approaches for interpreting culture: one refers to sociocultural level, which focuses on the people's values, rules and beliefs. The other is based on an institutional level, like organizational culture.
This essay lays emphasis on the impacts of sociocultural factors and then elaborates that what these culture variables exactly are and how these factors specifically affect the decision making process in multinational enterprises. Finally, this essay takes IKEA as an example to illustrate that what strategies IKEA have altered and applied while exploring the untapped market in China.
2.0 Literature Review.
According to Wild.J and Wild.K (2014), culture can be divided into eight components, namely aesthetics, values and attitudes, manners and customs, social structure, religion, personal communication, education, and physical and material environments. Detailedly speaking, firstly they claims that aesthetics can help multinational company promote and advertise in a effective way by deciding which color or symbols should be selected. For example, the color of green is popular in Islam but in most part of Asia, the green color represents bad luck. As Milne and Labrecque (2012) point out that color plays an important role in forming consumer brand perceptions and then influence consumer motivation of purchase.