ikea csr essay

IKEA Corporate Social Responsibility (IKEA CSR): a brief overview

IKEA Corporate Social Responsibility (CSR) efforts are led by Chief Sustainability Officer, Lena Pripp-Kovac. Furthermore, retail managers at every country are also Corporate Sustainability Officers (CSO). The home improvement and furnishing chain started to research CSR reports under the title People & Planet Positive starting from 2012.

IKEA CSR efforts and activities comprise supporting local communities, educating and empowering workers and addressing the issues of gender equality and minorities within the company. Moreover, the global furniture retailer works to reduce its energy consumption and derive energy from alternative sources. Sustainable sourcing represents an additional CSR issue that IKEA aims to address within the scope of its operations.

CSR Programs and Initiatives

IKEA Supporting Local Communities  

• IKEA Group operates 422 stores in 50 markets around the world. [1] The home improvement and furnishing chain aims to cause positive impact on local communities, where its stores are located.
• Packing event organized by all IKEA stores in Sweden involved customers and representatives from Save the Children to prepare more than 37,000 welcome backpacks filled with toys and other products for children
• In UK, IKEA has planted one million trees in communities across the country
• In Australia, IKEA Perth and IKEA Adelaide employees contribute to the improvement of the environment in which children live and develop.

IKEA Educating and Empowering Workers

• Starting from January 2015, IKEA has introduced a new hourly wage structure that concentrates on the needs of its employees, rather than market standards.
• The furniture retailer has launched My Learning online system that provides employees at all levels access to face-t-face and digital learning solutions.

Employee Health and Safety at IKEA

• In 2021, the furniture retailer introduced a common solution for reporting incidents and accidents that’s easily accessible for all co-workers
• The number of accidents at IKEA was reduced by 30% in 2021, compared to2018

IKEA and Gender Equality and Minorities

• As of 2022, across IKEA retail, 3 out of 12 retailers have at least 50% of their management positions filled by women
• At Inter IKEA Group function 70% of all employees and 40% of all managers are women
• Annually on May 17 th the company celebrates IDAHOT, the International Day Against Homophobia, Biphobia and Transphobia, to stand up for the rights of lesbian, gay, bisexual, transgender, and people of all sexual orientations and gender identities.
• The Swedish furniture chain is the member of Workplace Pride Foundation and Stonewall, two organisations focused on LGBT+ inclusion in the workplace.

Energy Consumption by IKEA

• IKEA climate footprint in FY21 amounted to 26.2 million tonnes of CO2 – a decrease of 5.8% in absolute terms compared to our FY16 baseline
• Energy consuming products offered by IKEA are on average 50 per cent more efficient compared to 2008.
• There are about 700,000 solar panels installed in buildings owned by IKEA.
• IKEA owns and operates 327 wind turbines around the world and have invested in 730,000 solar panels on its buildings worldwide. [2]

Water Consumption by IKEA

• 14% of total water footprint comes from the furniture retailer products being used by customers

Water usage across IKEA value chain [3]

Waste Reduction and Recycling by IKEA

• In FY21, IKEA reached a waste reduction of 46% compared to baseline (FY17)
• In FY21, 55.8% of the materials the Swedish furniture chain sourced were renewable and 17.3% were recycled.
• 73% of the material sourced for the IKEA range for the same period was renewable or recycled
• About 60% of all products offered by the furniture retailer are based on renewable materials and 10% of products contain recycled materials. [4]
• The retail giant has an ambition to use 100% renewable and recycled materials by 2030
• Skapro Chair sold by IKEA is made of 100 per cent recycled plastic.
• The IKEA catalogue is the largest print production ever to be printed on 100 per cent Forest Stewardship Council certified paper

IKEA and Sustainable Sourcing 

• All cotton used by IKEA and 85% of wood comes from more sustainable sources
• 94% of fish and seafood sold by the company is certified to MSC or ASC standards
• The company has commit­ted to source the fish and seafood it sells and serves in restaurants and Swedish Food Markets from fisheries and farms certified by the Marine Stewardship Council (MSC) and the Aqua­culture Stewardship Council (ASC).
• IKEA serves more than 100 million cups of coffee every year. The company’s PÅTÅR coffee range is certified by UTZ, as well as, EU Organic

Other CSR Initiatives and Charitable Donations

• EUR 7.7 million has been denoted by IKEA foundation to Brighter Lives for Refugees campaign.
• 76 per cent of cotton used by IKEA is gained from sustainable sources
• IKEA enforces Supplier Code of Conduct that prohibits the use of child labour, the use of forced or bonded labour and discrimination at work. The Code of Conduct also requires the freedom of association for employees and the provision of a safe and healthy environment.
• IKEA Foundation as an independent charitable body has donated EUR 1 to Save the Children for every soft toy sold in IKEA stores in November and December since 2003.

IKEA Group Report contains a full analysis of IKEA corporate social responsibility including IKEA CSR issues. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on IKEA . Moreover, the report contains analyses of IKEA leadership, business strategy, organizational structure and organizational culture. The report also comprises discussions of IKEA marketing strategy and its ecosystem.

[1] IKEA Facts and Figures 2018 (2019) IKEA, Available at: https://www.ikea.com/ms/en_US/this-is-ikea/facts-and-figures/index.html

[2] Group Yearly Summary (2016) IKEA Group

[3] Sustainability Report FY 2021, IKEA

[4] Sustainability Report FY 2018 (2019) IKEA

IKEA: Business Responsibility and Sustainability Essay

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Company Introduction

Evaluation of ikea’s corporate social responsibility.

The concept of corporate social responsibility (CSR) rapidly gains popularity, implying the voluntary participation of companies in the formation and development of the social sector. It is critical to determine whether companies meet the core characteristics of CSR or not. This paper aims at revealing specifics of IKEA’s CSR based on the review of the academic literature and projects that were implemented by this company in practice.

Beginning with a brief company introduction, the paper will focus on analysing IKEA against six characteristics of CSR developed by Crane, Matten, and Spence (2013). Relevant conclusions will be presented as a result of the research, and a summary will provide key highlights of the essay.

IKEA Group is a large corporation represented in 29 countries of the world, specialising in the manufacture of interior items and furniture. Founded by Ingvar Kamprad in Sweden, it was an innovation in the field of furniture consumption by creating a sophisticated yet simple design (“Company information”, n.d.). The accessibility that was offered to people formed a culture of home improvement. Due to this company, customers who did not previously target style and comfort since it was too expensive acquired the possibility to have these advantages in their homes. IKEA also contributes to the development of a special furniture style.

Soft and pastoral Scandinavian modernism is opposed to European modernism, and it quickly becomes more and more widespread. IKEA furniture attracts by its functionality and rationalism inherent in every furniture item.

Currently, the creation of the necessary materials for IKEA employs about a thousand suppliers in more than 50 countries. The mission of the company, as reported on its official website, is to enhance the daily lives of as many people as possible (“Company information”, n.d.). IKEA’s business idea should also be noted in order to understand its goals and the ways to achieve them. By offering more than 9,500 convenient and functional products for the home at relatively low prices, IKEA strives to ensure the opportunity to buy them.

The company claims that it makes every effort to build long-term relationships with suppliers, optimise the whole supply chain, invest in social and environmental projects, as well as produce large volumes of goods (“People & Planet”, 2018). Most importantly, IKEA clarifies that not only customers but also all people affected by the business are at the centre of attention to promote improvements in their lives.

Corporate social responsibility (CSR) is understood by IKEA in accordance with the definition of the World Bank (Hamidu, Haron, & Amran, 2015). It refers to a set of policies and actions related to key stakeholders, values ​​that meet the requirements of legality, the interests of communities and the environment, as well as focus on sustainable development. In addition, the coverage of this notion is conceptually unlimited since there is no single definition of CSR (Okpara & Wynn, 2012). It should be noted that, depending on the current practice of state regulation, various models of CSR arise. In this paper, six characteristics of Crane et al. (2013) will be used to evaluate IKEA’s CSR.

The first characteristic of CSR is the voluntary nature of taking the corresponding actions. In particular, Crane et al. (2013) identify it as a set of activities initiated by organisations, which extends the minimum required by laws. By applying self-regulation regarding CSR, companies enhance their opportunities to assist those in need, be it child protection projects or struggle with environmental pollution.

There is the legislation regulating the duties of companies on local and national levels, while IKEA is already in a position in which it fulfils some norms, and it takes additional efforts voluntarily (“The IKEA Group approach to sustainability”, 2011). Another issue that should be noted while discussing voluntarism in terms of CSR is the attitudes of society. IKEA is well aware that the concept of leadership responsibility is not just a slogan. It gives additional opportunities, but it also imposes a certain responsibility that no one can force the company to follow. The identified company wants to be successful in a long-term period and invests in charity programs and social development, following the inner desire of its founder and management.

Humanistic ideas are reflected in many initiatives and affairs of such an international company like IKEA. It not only develops goods and services but also creates brand loyalty and enhances the conditions of purchase to build close relationships with customers. In this connection, not the intention to have more profits but the desire to help people with their needs is the goal. For example, IKEA allows every customer to return a purchase within 365 days in case all rules were followed (“Return policy”, n.d.).

It should be noted that this is significantly more than legislations of many countries suggest in the context of consumer protection. Other initiatives of the company concern voluntary contributions to funds to help children in difficult situations as well as the participation and initiation of environmental actions. Occasionally, IKEA’s initiatives are supported by regional or global authorities, and the effects of the joint implementation of projects tend to be higher since they involve various specialists and ideas.

Internalising or Managing Externalities

Given that IKEA is a large corporate structure, it can be safely stated that the company’s social responsibility practices are mainly focused on external projects. According to Crane et al. (2013), externalities are companies and stakeholders that cannot directly affect the decision-making process in a company. By 2020, IKEA plans to generate as much renewable energy as it needs for environmentally safe operations (Hsueh, 2014).

The commissioning of new wind power stations in Poland and the United States allowed producing 71 per cent of green energy from the total energy consumed by IKEA stores and other facilities in 2016. For businesses that look to the future, the unlimited potential for the development of a low-carbon economy is obvious. Following IKEA’s mission to change people’s lives for the better, a positive impact on the planet is the paramount target.

The company announced plans to invest one billion euros in forestry, waste management, biomaterials, as well as the development of renewable energy. Since 2009, IKEA has already allocated 1.5 billion euros for wind and solar energy projects, and 600 million euros will be spent for further development, thus achieving full energy independence by 2020 (“IKEA Group sustainability report ”, 2015). The company also completely transferred its range to energy-saving LED light sources. The sales of LED lamps amounted to about 80 million units in recent years. It is estimated that IKEA customers using them may save as much electricity as 650 thousand families consume annually.

In the US, projects were launched for the sale of solar panels for home use. Today, the whole cotton and 61 per cent of the wood from which IKEA products are made are received from more environmentally friendly sources (“How IKEA embraces sustainability globally and in Singapore?”, 2016). In addition, the company replaced the expanded polystyrene, which is used for packaging goods, with an environmentally safe, biodegradable fibrous material. In view of the mentioned attitudes of IKEA on externalities, it is possible to conclude that its CSR actions are voluntary and transparent.

Multiple Stakeholder Orientation

In a highly competitive environment with saturated markets, IKEA integrates its interests with those of society and global initiatives. The main task of corporate social responsibility is to ensure that the entire chain of creation of goods or services is transparent (Hamidu et al., 2015). While creating, preparing, and selling goods, IKEA pays attention to multiple stakeholders. In particular, customers, suppliers, shareholders, and employees are covered by CSR principles and practices. The company places high demands not only on the quality of products but also on all suppliers in terms of compliance with a set of rules, which helps in creating conditions throughout the entire chain of services (Hamidu & Daneji, 2014).

For example, IKEA does not accept unfair wages, child labour, and improper working conditions with regard to its suppliers (Boström, Gilek, Jönsson, & Karlsson, 2013). In case some of the rules are not respected at any stage of the chain, this supplier will be avoided even though the company will incur losses. Thus, such a strategy guarantees that the whole supply chain is legal and transparent.

One more externality that is targeted by IKEA is the assistance to the largest United Nations International Children’s Emergency Fund (UNICEF). As a corporate donor, the company made a donation of US $ 48 million in support of UNICEF programs in India. The total amount of donations made and planned by IKEA in favour of UNICEF programs worldwide from 2000 to 2015 is $180 million (Dudovskiy, 2017).

Due to the cooperation of UNICEF and IKEA in the period of the past ten years, education, health, and social protection systems in Africa, Asia, and Europe were enhanced significantly. Millions of children and women became participants in joint UNICEF and IKEA projects. Currently, IKEA’s social initiative program focuses on projects aimed at improving the living conditions of women and children in the countries where IKEA is present. Despite the general downturn in the global economy, the amount of investment from IKEA is increasing, which sets the bar high for other UNICEF corporate partners.

Even though employees compose the internal asset of the company, they should be noted as another important area that is valued by the company. For example, since 1953, IKEA has a tradition to celebrate Christmas together at the key distribution centre. Listening to Kamprad’s speech and receiving presents from his hands, many employees understand that their work is appreciated, and the company considers them as a critical part of the overall performance. Now, when more than 40 thousand people work at IKEA, 1600 best employees are invited to celebrate Christmas (“Why CSR is becoming a crucial part of IKEA’s long-term recruitment strategy?”, 2018).

The so-called veterans of the company who have served more than 20 years are awarded gold badges. At the same time, the donation of funds for educational projects of leading universities and the subsequent recruitment of graduates provides a bi-sided positive effect from the cooperation with young professionals.

Practices and Values

The relentless cultivation of specific values ​​has led to the fact that all the company’s employees are loyal followers of IKEA. It is possible to state that they are enthusiasts committed to their work and considering it their important responsibility area. According to Hamidu et al. (2015), “to a greater extent, CSR practices are influenced or affected by the personal values of managers, because they formulate the CSR policies of the business organisation” (p. 87).

Since their individual attitudes also form their personality, it is also investable reflected in CSR policies. Therefore, IKEA strives to implement its corporate values in the everyday processes of all employees. Willpower and humbleness, enthusiasm and togetherness, leadership by example, as well as daring to be different are identified as the key values (“Our values”, 2018). At the same time, employees of the company are not embarrassed by the fact that top management does not receive any privileges and that it is always ready to take part in the work of any employee.

The company regularly provides anti-bureaucracy weeks during which managers work, for example, as sales assistants or cashiers. As stressed by the ex-CEO of IKEA, Anders Dahlvig, he practised to unload cars as well as sell beds and mattresses. One of the practices that characterise the corporate culture is adequate competition among workers (Confino, 2012). Everyone should try to become the best while improving the work of the entire company.

On the wall of one of the main offices of IKEA in Helsingborg, there is a big poster that reflects the pace and volume of sales along with the best market indicators by countries. In addition, the company promotes the principle of self-improvement and self-demand while recognising the right of employees to make mistakes (Confino, 2012). Despite the commitment to tradition, IKEA encourages new approaches. For instance, it was one of the first to use images of same-sex couples in its advertising (“IKEAs flatpack approach to diversity”, 2012). It is evident that the company tries to act not in the way it is accepted, and its practices prove the success of such an approach.

Researchers claim that companies driven by a great idea are more productive, even if their ultimate goal is profit (Crane et al., 2013; Duarte, 2010). IKEA wants people around the world to be able to buy beautiful furniture and furnishings, turning this into a mission. It seems that for most people, modern design in the house would be inaccessible without IKEA. Fitting the characteristic of practices and values, Kamprad clearly outlined the morale and business principles of the company. For example, one of the postulates states that wastefulness in resources is impossible as IKEA products are designed to improve not only the interior but also the people themselves. The identified argument disarms those who criticise the self-service system and the need for self-assembly of furniture after purchase.

The principle of the constant desire for renewal and transparency should also be discussed as it represents the company’s culture. IKEA readily advertise vivid statistics: the total area of ​​its stores is equal to almost 600 football fields, its catalogues are published in millions of exemplars, and every tenth European can be considered to live in the place IKEA production origin. An indicator of belonging to a middle class and a symbol of good taste and desire for the best, IKEA definitely meets the requirement of values and practices. Thus, CSR is one of the necessary factors for the sustainable development of this company focused on long-term functioning. Providing additional investment, improving the company’s image, and maintaining relations with stakeholders contribute to further development.

Alignment of Economic and Social Responsibilities

The investments of IKEA in CSR refer to all types of property and intellectual values ​​that are integrated into business facilities, which result in profit and a social impact. In addition to the implementation of specific projects in the economic sphere, social investment contributes to the legitimisation of their activities in the eyes of the public, which is a very important factor for the modern business community (Brammer & Millington, 2008).

As one of the main prerequisites for adopting CSR in companies, there is an ever-growing link between public opinion and sales. The way the public treats the very brand of IKEA depends not only on promotional activities or the quality of products but on the extent of responsibility with regard to the social arena. The benefits in the economic sphere from the introduction of CSR arise when there is an increase in the activity of the company both in the environmental and social spheres (Brammer & Millington, 2008). The effects of the social activities that were presented in the previous sections of this paper are manifested in sales, risk management, and the reputation of the company.

It is essential to evaluate the effectiveness of investments in the social environment in terms of a systems approach, considering a set of interrelated and interdependent elements. The latter should be capable of changing the structure while actively interacting with the environment, maintaining integrity, and choosing tactics to achieve a common goal (Crane et al., 2013).

When evaluating the results of its social investment, IKEA focuses on savings for the reproduction of human capital, including health, training of specialists, and cultural and moral capital. Also, inventory items as the physical component of the investment process are taken into account. The social effect is characterised by certain indicators that increase the quality of human capital (Mittal, Sinha, & Singh, 2008). IKEA’s social investments provide the maximisation of the beneficial effect for business, which impacts production through the mechanism of multiplicative influence on the social environment.

The practical importance of active participation in the global social arena presents a number of advantages such as strengthening reputation, increasing attractiveness as an investment, and contributing to social stability (Mittal et al., 2008).

Over the past decade, a lot of studies were conducted in an attempt to find an answer to the question of whether companies benefit from social activities or not. As a result of them, it was revealed that enterprises that use social programs in their activities excel those who avoid it in all essential indicators (Brammer & Millington, 2008; Mittal et al., 2008). According to the indicators of return on assets, $ 1 invested in social activities in 1993 brought $ 7 by 2010 (Mittal et al., 2008). Therefore, CSR is a factor that has a great influence on the implementation of strategies for the sustainable functioning and development of IKEA.

Beyond Philanthropy

Currently, CSR is identified as a discretionary activity in spite of the fact that many companies introduce it following their own regulations. Hamidu et al. (2015) emphasise its “viability to be instrumental or strategic in satisfying stakeholder expectations and its potential capability to the achievement of organisational objectives” (p. 87). Reviewing the social actions of IKEA, one may note that they are highly altruistic and focused on assistance to people who need help and the planet in general.

For example, in collaboration with the Regional Public Organisation, Perspektiva, IKEA announced the launch of a federal project aimed at developing inclusion in Russian schools. For school teachers, experts will conduct training seminars on how to engage children with disabilities in the wider educational context. In addition, work with schoolchildren will be performed in order to teach them empathy and tolerance toward people with disabilities. The fact that IKEA participates in the socialisation of children with disabilities is a serious step in the creation of a society that provides opportunities for the development of any person.

In sum, this paper examined IKEA’s corporate social responsibility, analysing it with regard to six key characteristics of the mentioned concept. It was revealed that the company has a clear mission, cultural values and practices that are directed to assist in a global social sector. Acting voluntarily, IKEA expands its initiatives beyond philanthropy and aligns social and economic responsibilities. Also, it focuses on multiple stakeholders and internalises externalities, balancing the entire supply chain. Thus, based on the critical analysis conducted in this paper, it is possible to conclude that IKEA meets all six characteristics of CSR.

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IKEA: Corporate Social Responsibility

Corporate social responsibility

Commonly known as CSR, corporate social responsibility is part of the larger discipline of Ethics and is the attempt by businesses to achieve accountability for the impact of their activities on employees, customers, suppliers, the environment and basically the entire community in which the company operates. The concept derives from the development of the modern selling model, in which the consumer is of central focus, and therefore his interest outside of what the company is offering must be addressed if is to guarantee long term survival.

It is manly an effect on public perception, and is basically the process of ensuring that business decisions have factored in public interest. For CSR to succeed, the main components of the stakeholders have to be viewed in a new perspective. For instance, instead of considering employees as mere economic units that are a means to an end, amore profitable end, businesses has to treat their staff like the human beings that they are, try to inculcate pride and loyalty to the company, because if a staff member leaves because of dissatisfaction your competition is just waiting for him and all the precious experience that he has gained in your institution.

The environment is not being polluted, you are just paying for things that you end up discarding as waste and hurting the environment in the process. Customers are the whole point why you exist and treating them like statistics that will just be multiplied by prices to come up with revenue figures is bound to attract a fatal backlash especially in their era of cutthroat competition. Apart from being paid in time, your suppliers would like to feel involved and appreciated in the operations of your business, and the recognition that their success it tied to yours and vice versa means that you need to show them that your job is also making them earn a decent living and that their success means as much to you as your own.

The pursuit of public approval however presents a dilemma for the company, as on one hand it is estimated that the company will gain in the long term by endearing itself to the local community which more often than not comprises of the stakeholders of the business, the customers, suppliers, employees and legislative apparatus will all want it to succeed if they feel that it has considerably taken care of their interest.

On the other hand, social responsibility dopes not come without its costs and the company might find itself diverting its resources to CSR to secure revenues in the long term at the expense of current (short term) financial stability and to some extent even liquidity. This is because as the success of CSR is measure by the impact perceived by the public, the company may be tempted to embark on extremely expensive projects whose return may not justify their cost, or even stick to existing CSR projects whose costs have increased unexpectedly just so it can keep its caring image.

There are many ways n which companies engage in social responsibility, such as the natural ones of providing employment for workers, market for suppliers and variety and quality for customers. These are however not enough and thus corporates have to go a step further using a variety of approaches, one of the most popular being the company’s involvement in community development projects.

Thee projects cover a wide range of areas, be they business oriented, such as the promotion of free trade practices or dealing with only those companies that have passed some quality certification, community oriented such as education sponsorships and programs, health programs and those target at the legal aspect of business for example only trading with companies with a clean tax returns history. An alternative that is however not very popular is funding community based organizations which do the above. This is no widely practiced because no matter what amount of advertising is used to illustrate the development activities are being funded by the company, it cannot substitute the effect of actually being in the field and being in direct contact with the community.

An alternative form of corporate social responsibility comes in the form of social accounting, which is basically an attempt by the company to take responsibility for the impact of its operations on its surroundings be it the people, the environment or even the country as a whole. This is because as mentioned earlier economic actions may not always be in the best interests of the community. Though social accounting and auditing is largely voluntary, there are some places where legislation exists to support it for instance France.

Difficulties arise on the methodologies and standards of measurement in the generation of Social Accounting Reports, in response to which there have been several guideline that have bee developed for the purpose of streamlining them. Examples of these include the popular triple bottom line standard (Profit, Planet, People) the United Nations standard and the ISO 14000 standard, among many others. Despite all these attempts at standardization, actual reports differ greatly both in terms of content and area pf measurement and also style of display. At any rate they are considered by many to be just endearment strategies that hold absolutely no water in terms of the management commitment.

IKEA is a Swedish – Dutch owned furniture manufacturing that was founded in 1943 by Ingvar Kamprand. The first retail store was however opened in Sweden in 1958. It is easily the world’s largest furniture company with revenues $28.8 billion. It has stores in all continents with the majority being in American and European markets. Employing over 120,000 employees globally as of 2008, the company has 296 stores in 36 countries. The furniture will normally come with an instruction manual on how the assembly should be carried out.

Most of the furniture sold by the company is mainly home based, i.e. kitchen items, bathroom accessories and also some office applicable products. The company specializes on flat pack furniture, which is furniture that typically arrives in a box, and requires the user to assemble it himself, which the company say is works wonderfully in saving shipping costs, since a piece of furniture when assembled occupies a lot o space most of which is just open air, the disabled version is a lot less bulky. Probably what makes the furniture from IKEA to stand out is its affordability, and in fact the Chinese name for the company when written literally means fit for home.

Apart from furniture, some of the other products that are offered by IKEA include partnerships with other corporate entities to provide such products as flat pack houses, that are targeted at first time home owner and intended to reduce the cost and an innovative product dubbed ‘Family Mobile’ which is a partnership between IKEA and T-Mobile, which allows family members obtain and share credit among their SIM cards, and also has the cheapest rates than any other in the UK (Ingvar Kamprad and IKEA, 1996).

The company’s product catalogue, considered to be it major marketing tool, taking about 70% of the total annual budget, is published ion 27 languages for 36 countries, and is one of the most extensive descriptions of the products that the company offers. It is distributed both by mail and also via the retail stores. Although this catalogue is quite exhaustive, it falls short of the company website, which boasts of over 12,000 product variants and has 470 million visitors in the years between 2007 and 2008.

The home page of the website introduces the company as a one stop shop for Scandinavian type furniture, and has little else apart from links to the location of the visitor. This underlines the global reach of the company and emphasis on customizing the product for each consumer, as each location link is dully written in the local language of the region (albeit with the English name in brackets below). There are also links to a page describing the company’s franchising concept, possible targeting distributors and prospective store owners (Ingvar Kamprad and IKEA, 1996).

IKEA in the Middle East

IKEA is a multinational corporation that is it has outlets all over the world. After opening its first store in Europe, it embarked on a global expansion program that saw it open branches in the Americas, the middle and Far East. The fist IKEA stores in Asia were opened in 1974 in Japan and Australia. According to Urbanplanet.com, an online business directory and business trends forum, the company currently has five stores in the middles east, spread between Kuwait city, the United Arab Emirates (UAE) and Saudi Arabia.

It is also poised to open 10 more branches in the region (Urban Planet, 2008). A visit to the IKEA website confirms the strong presence of the company in the region, as there are several redirects to Middle Eastern dedicated sites under the umbrella of the company. These locations include, the UAE, Saudi Arabia, Israel, and Kuwait. The websites are written in the language that is most dominant in the region, although there are options for choosing German, French or Italian.

IKEA and CSR

The consumer.

The website, as part of the corporate responsibility of the company, the website has a feedback service dubbed ask Anna, which is quite instrumental for the companies survival, because since most of its products are to be assembled by the client, there inevitable arises difficulties despite of the instruction manual that accompanies each product. The service also allows for questions concerning the product catalogue, disambiguation of product names most of which are of Swedish origin, since the company uses real names rather than product codes, on the premises that the names are more memorable and therefore customers find it easier to order for products they may have been introduced to and may want to purchase.

This is of particular importance especially in the Middle East where religion is an integral part of the people, and since one word may mean one thing in the home country of the company and a completely different one in the middle eastern market, care must be taken to ensure that the names that are potentially offensive are at least adapted or even completely withdrawn. The information concerning the effect of the names primarily comes from the consumers, although some measures would have been taken to minimize the impact as much as possible, it is unlikely that the company will be able to avert all possible naming blunders that may happen. Examples of such a problem can be in the American understanding of such a name as a ‘farfull workbench’, which could kick off a controversy that is potentially damaging to the company’s image.

The suppliers

IKEA enjoys a strong relationship with its suppliers, under a program known as the IKEA way, the company’s social responsibility vehicle. The company places much emphasis on the role of the supplier in its value chain and thus has instituted strict guideline and conditions that govern the selection of the partners. Issues that are factored into the decision include how the supplier treats their employees, their policy on child labour, working conditions and since most of their suppliers deal with timber, their response to forestry issues (Samy Karur and Vijayabaskar, 2007).

The company strives to develop long term relationships that are based on good practices and that have a common IKEA philosophy of providing quality products at minimal cost both to the consumer and to the environment. To achieve this, suppliers are required to meet certain certifications from organizations such as the United Nations. The company also expects each of its partners to account for the impact of their activities on the environment. The compliance of the IKEA requirements is done by instituting appropriate internal monitoring and evaluation measures, the results of which are verified externally by contracting several auditing firms.

Though IKEA’s requirements are not so difficult to comply with, some suppliers do have some genuine challenges, and the company tries its best to help them achieve them through dialogue and the development and execution of a reforms plan. Is however the supplier is unwilling or unable to execute the plan then the relationship with that company is terminated. All this information concerning the relation of the company with its suppliers is easily accessible on the IKEA website, and guidelines on how to become an IKEA supplier are also provided online (Samy Karur and Vijayabaskar, 2007).

The community

Sometimes the activities that are aimed at social responsibility do not always bear fruit, as can be attested by the incident in Saudi Arabia in which free vouchers were offered to customers in the launch of a new outlet that led to the death of three people in the stampede that ensued. The company has also bee faulted for destroying and replacing historical site so as to erect branches. To counter or at least reduce these adverse effects, IKEA is involved in several community projects, which are directed at a diverse social sphere including education, health care and conflict resolution.

For example, in conjunction with the United Nations Children Fund (UNICEF), IKEA promotes the education and rehabilitation of children in war torn countries such as Angola, where some amount is contributed to the fund from the sale of toys made by IKEA which is then channeled towards the education of children with a focus on non – formal instruction and playing. In health care, the company is involved in the rehabilitation of at risk children especially teenagers in an attempt to sensitize them in the reality and danger of HIV/AIDS. Also in healthcare the company is involved in several immunization programs around the world.

The environment

In 1992, the company instituted an environmental sustainability action plan that was meant to address diverse environment concerns related to the company. Among the measures undertaken were a reduction in the amount of PVC and formaldehyde in the company’s products, encouraging recycling by developing a chair made from 100% recycled materials, introduction of air inflatable furniture and the reduction in the use of a variety of chemical in the production processes.

Probably the largest area of social responsibility that the company can demonstrate is care for the environment, specifically forests, since it is in the business of making furniture out of wood, and therefore its very core business activity involves the cutting down of tree, which is universally accepted as detrimental to the global environment in general and to the food security situation in many specific places, since it leads to changes in climate patterns throwing the farming cycles out of phase with the weather thus leading to loses of livelihoods and sustenance. In recognition of this, the company has instituted several projects that are aimed at reducing the impact on the global stock of forest cover. According to the company website (IKEA, 2009), IKEA is committed to ensuring that the forests from which its raw materials are obtained are reasonably taken care of, since apart from ensuring their own sustainability, forest cover is an important resources and thus has to be conserved. It is also aggressively against illegal logging ad works closely with the relevant authorities to minimize the vice as much as possible. Using the supplier code of conduct described above the suppliers are required to show accountability in obtaining the wood that they supply to IKEA.

The company cooperates with the world Resource Institute to obtain information about the distribution of the worlds natural forests in an attempt to ensure that logging operations are placed such that they have the least adverse effect on the forest resources available world wide. Apart from this, IKEA also supports education in the forestry sector by providing scholarships to students in several countries who are pursuing studies in the area of forestry so that the future generation is equipped with knowledge that will be instrumental in the responsible management of the resource. The Sow a Seed foundation was also started by the company in 1998 and is aimed at encouraging the planting of indigenous trees while rehabilitating destroyed forest cover.

Conclusion and suggestions

The company seems to have done a commendable job in its social responsibility, as the needs of the majority of the stakeholders have been considered and attempts made to meet them. Some work however remains to be done especially in the area of responsible marketing, and response to criticisms. Case and point, in the 1990s the company came under fire on account of its advertisements in British television media, most of which were dismissed. Instead of this he company should have at least made an attempt to assure the complainants that their suggestions were welcome and have been duly noted, even if nothing would be done because of them.

This would have strengthened the company’s image as a caring listener as opposed to the arrogant and self righteous picture that was probably perceived by the public from its reaction. The relationship of the founder of the company Ingvar Kamprad with Jewish clients is also in need of some serious mending since he is known to have had Nazi ties in his younger years and this connection draws a lot of ill will especially from Israel, as can be attested by the controversy that developed when the company opened a store there.

Although the public has learned to separate the product from the producer, I feel that more should be done to show that he is apologetic of his actions in a direct approach to the people. His admittance in his book that it was a big mistake to support the inhuman regime in his youth is not enough to placate many Jews that were afflicted during the period. The company does not also have a clear cut public policy on the issue of gender equality management, as highlighted by a retired Norwegian Prime Minister that most of the assembly photographs comprise of men doing the work thus leaving the women out which portrays the image that the assembly is strictly a man’s job.

Apart from the above few suggestions, compared to most other multinational corporations, I would say the company has made great steps in looking after the needs of the society, given the difficulties in coming up with harmonized Corporate Social Responsibility policies when dealing with the diverse societies that are characteristic of a global environment. IKEA seems to have kept most of the promises that it has made, although it remains to be seen whether this trend will be sustained in the wake of changing global conditions and also as the company expands.

• Inter IKEA, (2008) ‘IKEA social & environmental responsibility – the IKEA way’ Web.
• Ingvar Kamprad and IKEA (1996). Ingvar Kamprad and IKEA . Harvard Business School Publishing, Boston.
• Urban planet (2008) ‘ IKEA Plans 10 Stores in Middle East’.
• Samy Karur, L.A. and Vijayabaskar, M. (2007). ‘ Codes of Conduct and Supplier Response in the IKEA Value Chain ’. Web.

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Essay Service Examples Business IKEA

IKEA Company: Overview And CSR Analysis

Introduction

What is corporate social responsibility, three benefits.

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• One of the benefits to engaging in CSR gives the company a better brand recognition. This boosts the overall impact the company has on consumers, giving them a more positive view on the company.
• Positive business reputation is also another benefit. Having a positive business reputation gives the company a higher advantage over similar companies.
• Having increased sales and customer loyalty is also a beneficial factor to participating in CSR. This guarantees that loyal customers will constantly go back to the certain company.

Company Overview

Economic data.

• Germany (24.2%)
• Belgium (10.7%)
• United Kingdom (8.8%)
• France (8.8%)
• Italy (4.2%)
• Germany ($89.9B)
• Belgium-Luxembourg ($67.6B
• The United Kingdom ($47B)
• France ($29.8B)
• Italy ($24.8B)

CSR Analysis

• Supporting the local communities - in Australia, IKEA Perth and Adelaide have contributed to improve the environment where children develop and live.
• Empowering and educating workers - beginning in January 2015, IKEA has established a new hourly wage, focusing more on the workers needs rather than the market standard.
• Addressing the issues of gender equality & minorities – annually (May 17), the company celebrated IDAHOT, the international day against transphobia, homophobia and biphobia, to stand up for the rights of lesbian, gay, bisexual, transgender, and people of all sexual orientations and gender identities.
• Reducing energy consumption - IKEA strives to reduce their energy consumption, expecting to become energy positive this year. Their current achievements include: owning 700,000 solar panels installed in their buildings and owning and operating a total of 327 wind turbines around the world. Around 60% of their products are based on renewable materials and 10% contain recycled products.

Bibliography

• https://research-methodology.net/ikea-corporate-social-responsibility/
• https://www.smh.com.au/business/companies/ikea-australia-s-sales-stay-flat-packed-as-losses-continue-20191224-p53mpq.html
• https://www.heritage.org/index/country/netherlands
• https://oec.world/en/profile/country/nld/
• https://en.wikipedia.org/wiki/Economy_of_the_Netherlands

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IKEA’s Corporate Social Responsibility

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IKEA’s Corporate Social Responsibility

• Author: Henry Smith
• Posted on: 14 Oct 2019
• Paper Type: Free Essay
• Subject: Business and Finance
• Wordcount: 1378 words
• Published: 14th Oct 2019

Introduction

IKEA is a firm that was founded in 1943 by Ingvar Kamprad in Sweden. Initially, their core objective was the sale of furniture locally by the year 1947. IKEA is currently involved in the designing and sale of kitchen appliances, ready-to-assemble furniture, and other home accessories. Currently, IKEA is ranked as the largest retailer of furniture globally.

The Headquarters of the company are in Leiden, Netherlands. IKEA has over 411 locations globally where they continue to sell homeware and ready-to-assemble furniture. The firm is responsible for about 1 % of the global commercial consumption of wood hence making it the world’s largest wood user. The company has over 194,000 employees. The company has for years been involved in various Corporate Social Responsibility (CSR) initiatives around the globe with the aim of giving back to society. This paper will expound on challenges that IKEA is facing in regard to Corporate Social Responsibility and the measures that are undertaken by the company to mitigate these adverse effects. The paper will also offer remedies to the remedies that ought to be undertaken by IKEA or even the government in efforts to eliminate these CSR issues which are already having effects on the supply chain of the firm.

IKEA’s Corporate Social Responsibility issues relevant to Supply Chain

IKEA’s Chief Sustainability Officer is the person who is responsible for leading CSR efforts, and Steve Howard is currently holding the position. Some of the CSR initiatives that the company has been involved in include supporting the local communities, educating and even playing an important role in empowering the workers. The company has also been concerned with the addressing of gender equality as well as the minorities in the company. Sustainable sourcing is another CSR issue that IKEA is constantly addressing with its operations.

Major Problems or Challenges Facing IKEA’s CSR

The first issue related to the CSR of IKEA can be viewed as the pressure the company receives when dealing with multiple stakeholders. The business model that IKEA utilizes is that of facilitating its cost-effectiveness. As a result, the company at times is forced to operate in developing countries where the resources are available cheaply, and the cost of labour is relatively low. One of the issues or problems that are facing the company is that at times they have engaged in some unethical practices such as forced labor and child labor in an effort to adhere to their low-cost model. Such practices have continued to ruin the reputation of the company over the years. Similarly, the company has been involved in obtaining wood from areas that are questionable hence leading to the questioning of such motives by the stakeholders who are primarily responsible for setting the CSR policies that are applied by the company.

As a result, they require full commitment from the IKEA. The lack of collaboration between diverse stakeholders and the company has continued to wreak havoc in the company. Regularly, the stakeholders have continued to accuse the company of not following the required laws and also disrespecting the social, environmental, and human rights responsibilities which are the core mandate of the company. That conflict is playing a part in distorting the operations of the company as well as creating an environment that is not favourable for the company to thrive. The conflict with the stakeholders has also continued to bar the success of other Corporate Social Responsibility initiatives of the company from ever succeeding. The impacts of these negative issues have also been demonstrated through the increase in the challenges that are being experienced in the company’s supply chains (Andersen and Skjoett-Larsen, 2009. p.75).

The second problem that is linked with the CSR at IKEA and affecting the operations of the supply chain is the fact that various independent organizations have been tasked with assessing as well as challenging the types and the forms of environmental measures that have been undertaken by the company. The communication of these groups regarding CSR and the activities conducted by IKEA has always appeared to be biased and raised many questions hence influencing the company’s supply chain.

Robin Wood and Greenpeace are some of the organizations that have been posing a threat to the continued success of the company by questioning various activities and initiatives that the company has been engaged in recently. IKEA has partnered with organizations such as “Save the Children” whereby they donate some soft toys to these children hence affirming the company’s position that they do not support child labour and any other forms of violations regarding the children. However, the interpretation and the differences in the manner in which such issues have been communicated have always posed a threat to the company’s supply chain as well as its success in assisting and doing what is right for the people and society as a whole. The communication challenges between the company and other organizations that are involved in overseeing the company’s operations have significantly caused issues in the implementation process of various CSR initiatives that have been proposed by IKEA.

Various concerns were raised by these organizations asserting that IKEA never respected various responsibilities accorded to them. Some of the issues raised were in regard to the freedom of association between the employees, issues to do with collective bargaining, workers’ rights, working conditions, and salary levels among other concerns (Maon, Swaen and Lindgreen, 2010, p. 18).

The third issue/problem facing IKEA’s CSR was the presence of various violations that IKEA’s supply chain as per the SOMO study that was conducted. Studies revealed that IKEA has continued to use products that are supplied by firms that are still involved in massive human rights violations. IKEA was accused of purchasing their products from some Bangladesh and Vietnam firms that did not uphold the employee’s rights. The engagement was in violation of the code of conduct that is usually used and upheld by the IKEA of IWAY. Some of the concerns that were raised were that the firms in Bangladesh exhibited a massive violation of the workers which was done on a large scale.

Similarly, the Vietnam firm had continued to violate the code of conduct of IKEA although some improvements had been made from 2002. The violations regarding the working hours of employees were better in Vietnam compared to Bangladesh which was on the lower level. Regarding the wages, factories in both regions paid their workers minimum wage although in Bangladesh factories the overtime pay was always late for either a month or even a few weeks. These violations had an impact on the supply chain of the company. As a result of their association with these suppliers, the company’s CSR was significantly affected (Morsing and Roepstorff, 2015, p. 409).

Remedies / Solutions taken to address these Issues

IKEA has been operational for many years hence making it one of the most stable and dominant companies in the furniture and homeware sector. In efforts to address the issue of the pressure from the stakeholders, there is a need for the company to come up or devise proactive and reactive actions that will specifically be involved in countering such issues. Creating a department that will deal with all the CSR issues is a major step towards systematically addressing these issues that are usually faced by the company. The firm will also need to engage with the stakeholders in constructive dialogue as well as strategizing on the best way forward to counter these negative happenings in the company. The reputation of the company is likely to be preserved through a concerted effort by both IKEA and the organization. The government can play an oversight role in monitoring the operations of the company and the interactions with various stakeholders (Andersen and Skjoett-Larsen, 2009. p.77).

The second issue are the collaboration of the company with various agencies monitoring the company’s operations. As a result, the solution available is for IKEA to start enforcing the code of conduct and adhering to all regulations. Violations such as child labour and disrespecting human rights are some of the areas that IKEA should emphasize in its promotion of their CSR. The company should strategize on the way forward and engage various stakeholders who will independently monitor whether the company’s operations adhere to the desired standards. The company should also continue to support the management review body that will be tasked with the responsibility of making sure that everything has been conducted as expected. Finally, there is a need for the company to engage with the consumers through a platform where they will share knowledge and practices that are exhibited by the company. This ensures that the company has continued to adopt sustainable practices for a healthy company (Morsing and Roepstorff, 2015, p. 396).

The third solution to the problem of various violations that IKEA’s supply chain. IKEA should take part in ensuring that all its suppliers have met IKEA’s primary requirements. This goal is likely to be achieved through the enactment of environmental policy that will continue to value the overall relationship of IKEA, its suppliers, and the consumers. The company should also consider engaging in a strategic production model that is likely to be sustainable in the long run. Most importantly, the company should enforce strong policies that will ensure that the suppliers who do not adhere to the code of conduct as per IWAY their engagement are terminated with immediate effect. The government should also take the oversight role and restrain forced labor, child labour, and also minimal pay and worse working conditions (Edvardsson and Enquist, 2008, p. 50).

A strong CSR is important for all companies that wish to succeed in various activities. IKEA has been struggling with various CSR issues namely the pressure from various stakeholders, conflicts with the independent organization on responsible practices, and various violations in the supply chain. The proposed solutions include designing reactive and proactive actions to counter such issues, collaborating with various agencies, and enforcing their regulations strictly.

Reference List

Andersen, M. and Skjoett-Larsen, T., 2009. Corporate social responsibility in global supply chains.  Supply chain management: an international journal ,  14 (2), pp.75-86.

Maon, F., Swaen, V. and Lindgreen, A., 2010. Impact of CSR commitments and CSR communication on diverse stakeholders: The case of IKEA.

Morsing, M. and Roepstorff, A., 2015. CSR as corporate political activity: Observations on IKEA’s CSR identity–image dynamics.  Journal of Business Ethics ,  128 (2), pp.395-409.

Edvardsson, B. and Enquist, B., 2008.  Values-based service for sustainable business: Lessons from IKEA . Routledge.

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We also believe that whatever we are doing today, we can do a bit better tomorrow. Because, like our founder, Ingvar Kamprad, once said: “Happiness is not reaching your goal, happiness is being on the way”.

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Essay: Evaluating Ikea and its sustainability (inc. CSR)

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The promotion of IKEA consists of advertising, sponsorship, newspaper and magazine advertising, and many other elements. IKEA also for once had a campaign about men and woman at home and who was worse in their household. For their campaign, they used 4 stand-up comedians , two men and two women, arguing which gender is worse. The target of this campaign was to demonstrate that people face and offer solutions for these kinds of problems. (Services, 2018)

IKEA is one if not the biggest retailer in furniture. But IKEA doesn’t only sell furniture they also sell all kind of different products for a household now in their store. Like products for the garden, kitchen, bathroom and more. They also categories their product in different kind of age groups like for baby’s, children, teenagers, adults and elderly’s. IKEA also has a restaurant where they are known for to have a break feast for only 1 dollar. (Services, 2018)

The STP of IKEA

Segmentation Targeting Positioning

Segmentation

Middle/lower class: IKEA targets this segmentation because the income level of these people is quite low and most of these people live in suburban areas of the country. You could also speculate that IKEA segments at the higher class but that isn’t so visible for the public. IKEA wants to show that there are making good products for a cheap price and that why the segment of middle and low tier is the best option for IKEA. (Cravens & Piercy, 2018)

People from urban areas: IKEA first step is to understand the business and what they hope to achieve through their marketing strategies. After this IKEA analyses, what their target is. The target of IKEA is variates from country’s but the most common target that every IKEA has is people in the middle/lower class. This was also in their segmentation; this target group can also go deep in what age group they are targeting but for the most part it’s the young people because they have a lot of money they are willing to spend for furniture and other product in a household. (Cravens & Piercy, 2018)

Positioning

World leader of home furniture: IKEA is like the leader of all furniture stores, not in every country but it is considered one of the biggest stores that sell furniture. If you ask people about buying furniture the most will recommend IKEA as the main to go store for it. It’s not only important what people think about IKEA and its position, position itself is also important. IKEA is becoming more and more noticeable and accessible worldwide. For the future IKEA wants to build the stores in a centrum where more people are coming. And they also want to build pick-up points where the customers can pick the products them self-up. (Cravens & Piercy, 2018)

Is Ikea private or publicly financed?

Ikea is privately held, it is not a listed company. IKEA has reasons for this choice to be a private company, so that the company can fully decide which way they want to head without only aiming for profit. Because what is also listed in IKEA’s vision is that the company wants to make furnisher available for the many people. This means they want to keep the costs down and don’t aim for the highest profits. This is not what most companies aim for.

Which stakeholders are there in this company?

• Better Cotton Initiative (BCI)
• Building and Wood Workers’ International (BWI)
• Business for Social Responsibility (BSR)
• Clean Cargo Working Group (CCWG)
• Compassion in World Farming (CIWF)
• European Retailers Round Table (ERRT)
• Forest Stewardship Council (FSC)
• Global Compact
• Global Forest & Trade Network (GFTN)
• Global Social Compliance Programme (GSCP)
• International Labour Organization (ILO)
• Rainforest Alliance
• Roundtable on Sustainable Palm Oil (RSPO)
• Save the Children
• The Network for Transport and Environment (NTM)
• UTZ Certified

(B.V, 2012)

What can you conclude about the company’s profitability and liquidity using the main financial statements in the annual report?

Ikea does make a net profit of 2,473 million euros although this is a good net income, it is substantially less than last year with a 4,200 million net income. (41.11% less) this is a pretty big decrease in net income, there is a reasons for this. The reason is that the corporate tax rates went up from 21,6 to 24,9%. The current ratio (liquidity) of this company. The group equity is 39,943 divided by the current liabilities 10,220 =3,908. This means the company can pay back there short term liabilities 3,9 times by there current group equity. Current ratio of IKEA is 39,943 / (10,220 + 2,777) = 12,997 = 39,943/12,997 = 3,07 so that means they can pay back all companies debt 3.07 times.

(macfarlane, 2018)

“Quick Ratio = Current Assets (Cash + Cash Equivalents + Accounts Receivable) ÷ Current Liabilities”

“Current Ratio = Current Assets / Current Liabilities”

(investopedia, 2014)

[2023 update – you can download Ikea’s financial reports here ]

What does the supply chain of Ikea look like?

What Type of Supply Chain Does IKEA use?

Make to stock

“Make to stock is the traditional production process of building up an inventory based on sales forecasts. Inventory is then stored in locations such as warehouses or retail stores until it is purchased by the customer.” (John, 2017)

Make to stock is also the most effective for the ratio between the revenues and the use of resources. Ikea has a fast-moving consumer goods, this means they can produce their products in large batches which can achieve the consumer in getting benefits in production and / or transport on a large scale at a low costs per unit. (John, 2017)

Make to stock relies on reliable prediction for the future situation for a particular aspect of the demand. IKEA’s case is design of the furniture. If the forecast is off, this leaves IKEA with unsold products. Food is particularly hard in make to stock, because these products may parish if not sold in time. Make to stock normally allows the customer to get their product the way it is without customising them. This way they are often used as starter items for mass customization. Take the products of IKEA for example, they are designed in one way but can perfectly fit together with all different products. (John, 2017)

IKEA Supply Chain

Raw materials and components are supplied to IKEA suppliers. IKEA main distribution method is that the suppliers supply directly to the Ikea retailers or warehouses. This is also how IKEA maintains their low costs. Ikea has 2 types of warehouses, one for products that sell a lot, and one for products that don’t sell that much. Ikea has 3 warehouses for the low distributions, one in America, Europe and Asia. The other warehouses are used for all other products that can’t be stored directly into the Ikea retail shops.

When costumers place orders for Ikea products to be delivered at their homes, Ikea normally sends the products from a warehouse, but they can also be sent directly from the store. But mostly IKEA wants the costumers to pick up the products themselves, so there is no cost included for the costumers to pay.

What Does IKEA Do for Cost Saving In Their Supply Chain?

Furniture design

More than half of the items IKEA produces are made from sustainable or recycled products. This is very nice because in this way IKEA uses les materials. Ikea cuts down on transportation costs, fuel and manpower to receive materials and shipped products in this way. (Tradegecko, 2018)

Packaging design

IKEA has unique packaging, this way their packaging takes up less space during transport and inside the warehouse bins and reserve racks. This way the products are really convenient and efficient. The packages are as flat as possible and there for taking up less space in trucks, so a maximum number of products can fit inside the trucks. This way the costs of the shipment is minimalised, and the costs saved in this way can be used to make the products of Ikea cheaper. (Tradegecko, 2018)

Sustainable relationships with suppliers

IKEA does shipments in bulks, because of this IKEA can make good trades. IKEA wants to have the best prices and materials, and to ensure this IKEA makes long-term contracts with their suppliers. Therefore, IKEA has low prices. (Tradegecko, 2018)

“Cost-per-touch inventory tactic”

“Having customers select the furniture and retrieve the packages themselves is an inventory management tactic called ‘cost-per-touch’. As a rule of thumb, companies find that the more hands touch the product, the more costs are associated with it.”

Every time a product is moved someone must be paid for doing so. This means if a product is left on the shelves for the costumers to take it themselves, less costs are made and this way the product can stay cheap. (Tradegecko, 2018)

IKEA makes use of a make to stock model which is the most effective supply chain option for them to use. There is a visible relationship between the cost saving tactic and their supply chain. They also make sure to put their packaging design in a way so as many products as possible can go with the cargo, and they try to ship as little air as possible. Based on everything I talked about what Ikea does for cost saving, I think one of IKEA core KPI’s is definitely cost saving. Ikea also has good relationships with their suppliers, so they can buy their products for a good price, and they expect their costumers to come gets the goods themselves, so the price can be even better.

Is IKEA behaving Ethically?

Introduction

The theory explains that ethics is the study of what is good and evil, right and wrong and just and unjust. But in this case ethics will be seen in a business way, with values based on religion, philosophy, culture and law. It is important to look at IKEA from an ethical perspective for the simple reason that the organization became the biggest furniture store worldwide and thereby gained worldwide brand name recognition. Said that, it means that with the whole world watching what the company is doing the organizations gained a lot of responsibility. Not only towards the customers, but towards co-workers, suppliers, business partners, the environment and stake holders too. So, the company has gained a social responsibility that needs to be maintained. But how will IKEA deal with this responsibility?

Why it is important for the Organization to think about Corporate Social Responsibility

IKEA strives to meet the requirements of all the buyers wishes which resulted in that a growing number of consumers choses the products. The organizations goal in the future is that the company will be able to continue to operate effectively and keep fulfilling the consumers demands. But nowadays consumers do not only want products that have a good design and are cheap, but they want products that are not harmful to the environment and that employers are treated in a decent way. Therefore, if IKEA wants to keep the large number of consumers it has now is it necessary for the brand to think about corporate social responsibility. Corporate social responsibility can be explained as the urge to meet the requirements we have in the present such as maintaining a healthy ecosystem, social equity, a good organizational governance and as main goal to contribute to a sustainable development. To check if IKEA takes corporate social responsibility into account we should look at, what is expected of the organization by customers and society, environments standards and how the company uses the power that it has. (Frost, R., 9 March 2011)

What do the customers demand from the Biggest Furniture Store?

As told before consumers find it important that a brand such as IKEA does not only provide good quality products and services, but that the company also benefits the environment and creates a good working environment for its employers. In order to develop a good working environment Ikea promised to ensure that employees feel that they are being heard and feel empowered. They need to feel that they are a part of the company. Because of that must business contagiously be done with common sense. Common sense based on generously, admiration, justice and uprightness. IKEA expects that every co-worker should be themselves at work, respect a diverse work team and should stand up for others and themselves. When the company fails these requirements from the consumers, it is most likely that some will turn their back on the company. That would mean that the goal would not be achieved. The question is: does the organization fulfill its promises?

(Business Case Studies., n.d.)

Environment Standards

The organization states that sustainability means that on a long-term you have to meet the needs of the people but should not compromise the needs of the future generations. So, the organization strives to make a significant positive impact that does not only affect the present but also the next generations that are yet to come, but how? To fulfill that statement, IKEA balances three things, namely protect

and regenerate the environment while making a positive social impact and also focus on economic growth. You can see that Ikea is very committed to sustainability since the store has invested in sustainability through its entire organization. Since consumers demand products that meet the highest possible standards for the environment, the organization aims to perform business in a way that energy, water and raw materials are used with efficiency and waste of products are as low as possible. Therefore, Ikea made small changes that are of a big impact since it has 423 stores worldwide. For example, changing the whole lighting range to energy-efficient LED. They also strive that by the year of 2020, 100% of its used wood, cardboards and paper sources are more sustainable, like recycled material of certified wood. In the present the percentage of wood that comes from sustainable foresters is close to the 50%. Meanwhile 100% of its used cotton comes from sustainable farmers who meet the Better Cotton standards. So that means that the company is on the right path. They want to produce as much as they consume. Which concludes that they do not want to consume their resources at a faster rate than nature can replace them or want to use any unnatural materials and substances. In fact, they strive to preserve nature and its inhabitants they want to avoid dumping waste as much as possible. To make true of they have promised, IKEA has installed over more than 700,00 solar panels that are powering their stores and also invested in wind energy. They even plan on selling solar panels to customers in the UK.

(Business Case Studies., n.d.; Inter IKEA systems B.V., 2018.; Inter IKEA system B.V.,2003-2017.; Care2., June 2, 2016)

How does IKEA use its power?

IKEA strives to be a company with a vision to form a better way of life for the various individuals. And will still invest in commitment to creating a positive distinction to individuals and therefore the planet. Ikea uses its power well. The company is well aware of the fact that customers and other organizations are watching every step they take. They use this advantage to encourage other companies to act ‘greener’. For example, at the moment they are the only retailer worldwide that sells product that are made from 100% cotton sources that meets the Better Cotton standards. goal is to be an example on how to be more responsible to the environment with result that other companies will follow their footsteps soon. (Inter IKEA Systems B.V., 1999-2018)

IKEA believes that it is necessary for them to be able to maintain their standards and achieve certain goals and expectation. The company has two values, that come back in every aspect of the report, namely being cost conscious and simplicity. The company strives to be profitable which explains it professional behavior. But on the other hand, must the company pay a lot of attention to the sustainability to meet the demands of the consumers. Luckily, is the company of the opinion that profitability and social responsibility have links and can easily combine the two for an optimal outcome. Ikea’s code of conduct is based on a long-term perspective of the company. The company raises its voice on essential problems like global climate change . So, when Ikea uses equipment, materials and services, they strive for an option that is best for the environment and for their long-term perspective. So, do they invest in alternatives for powering their stores till finding different sources for their products. And at the same time is in the organization a good working team. Where honesty is a key value., which on the working floor must always be maintained. Given these points in we can answer the question: Are there any ethical/socially responsible rules of conduct in the company regarding professional behavior? Yes, simply because sustainability has been invested through the entire organization.

2019-1-20-1547995802

Discover more:

• Corporate social responsibility

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Essay On IKEA

IKEA: Revolutionizing the Way We Live and Furnish Our Homes

IKEA, a Swedish-founded multinational group, has become synonymous with affordable and stylish home furnishings. Founded in 1943 by Ingvar Kamprad, the company has grown to become one of the world's largest furniture retailers, with a focus on offering well-designed, functional, and affordable products.

One of the key aspects that sets IKEA apart is its concept of "democratic design," which emphasizes five key elements: form, function, quality, sustainability, and low price. This approach has allowed the company to cater to a wide range of customers, from budget-conscious individuals to those who appreciate modern and innovative designs. By focusing on these principles, IKEA has been able to democratize design, making well-designed products accessible to the masses.

Another hallmark of IKEA is its flat-pack and self-assembly model. This approach not only reduces shipping costs but also allows customers to transport their purchases easily and assemble them at home. While some may find the assembly process daunting, it is an integral part of the IKEA experience, and many customers take pride in building their furniture, adding a personal touch to their homes.

Furthermore, IKEA has made sustainability a core part of its business model. The company has committed to using sustainable materials, reducing waste, and investing in renewable energy. In recent years, IKEA has made significant strides in sustainability, such as phasing out single-use plastics and offering more eco-friendly product options. By integrating sustainability into its operations, IKEA is not only meeting the demands of environmentally conscious consumers but also setting an example for the industry as a whole.

In addition to its products, IKEA has also revolutionized the retail experience with its unique store layouts and the iconic "IKEA effect." The stores are designed to guide customers through a series of staged rooms, allowing them to visualize how IKEA products can fit into their own living spaces. This hands-on approach, combined with the vast array of products and the famous in-store restaurant serving Swedish meatballs, has turned a trip to IKEA into a social and sensory experience.

In conclusion, IKEA has fundamentally changed the way we approach home furnishings. With its emphasis on democratic design, flat-pack model, sustainability efforts, and unique retail experience, IKEA has not only made stylish and functional products accessible to a wide range of customers but has also reshaped the entire industry. As the company continues to innovate and expand, it is clear that IKEA will remain a global leader in the world of home furnishings for years to come.

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Interpretive Essay : Art Museum Essay

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The wind, a force of nature as old as time itself, holds within its invisible grasp the power to shape landscapes, sway trees, and stir emotions. It is both a gentle caress and a fierce adversary, capable of invoking feelings of tranquility or stirring up chaos. Its presence is ubiquitous, yet its form remains intangible, manifesting only through its effects on the world around us. In this descriptive essay, I will explore the multifaceted nature of the wind, capturing its essence through the senses and delving into its significance in human experience. Firstly, the sound of the wind whispers secrets of distant lands as it dances through the air. It sings a melody of freedom, carrying echoes of faraway places and forgotten tales. Sometimes, its voice is soft and soothing, like a lullaby coaxing the world to sleep. Other times, it roars with a ferocity that commands attention, reminding us of nature's untamed power. The rustling of leaves, the creaking of branches, and the howling of gusts all contribute to the symphony of the wind, painting a vivid auditory landscape that evokes both serenity and awe. Secondly, the wind's touch is as ephemeral as a fleeting thought yet as tangible as a lover's embrace. It brushes against the skin with a gentle caress, leaving behind a tingling sensation that lingers like a fond memory. In moments of stillness, its presence can be felt as a comforting presence, a reminder of the ever-present pulse of life. Yet, in its fiercest manifestations, it becomes a force to be reckoned with, pushing against the body with an undeniable strength that commands respect. Whether it whispers tenderly or rages relentlessly, the wind leaves an indelible mark on those who encounter it. Lastly, the wind's impact extends beyond the physical realm, permeating the depths of human consciousness with its symbolic significance. It is a metaphor for change, carrying with it the promise of new beginnings and the inevitability of endings. Like the ebb and flow of time, it sweeps away the old to make way for the new, reminding us of the impermanence of all things. In literature and art, the wind often serves as a symbol of freedom, liberation, and transformation, inspiring countless works that seek to capture its elusive essence. In conclusion, the wind is a complex and enigmatic phenomenon that defies easy categorization. It is at once a gentle breeze and a raging tempest, a whisperer of secrets and a harbinger of change. Its influence permeates every aspect of human experience, from the tangible sensations it evokes to the symbolic meanings it embodies. In the end, the wind remains a timeless force of nature, forever shaping the world around us and stirring the depths of our souls with its boundless energy....

Model Essay Comparison Essay Post-Classical Civilizations

Model Essay Comparison Essay Post Classical Civilizations The post-classical period witnessed the rise and fall of several major civilizations that emerged after the decline of classical empires such as the Roman and Han dynasties. Two prominent post-classical civilizations, the Byzantine Empire and the Abbasid Caliphate, emerged in different regions of the world and left lasting legacies that shaped the course of history. The Byzantine Empire, centered around the eastern Mediterranean and the capital city of Constantinople, inherited much of the cultural, political, and administrative legacy of the Roman Empire. With its strategic location at the crossroads of Europe and Asia, the Byzantine Empire served as a bastion of Christianity and a bulwark against Islamic expansion into Europe. The Byzantine Empire's political system was characterized by a centralized monarchy headed by the emperor, who wielded considerable power over the state and the Orthodox Church. Byzantine society was hierarchical, with a rigid social structure that included aristocrats, peasants, and slaves. The Byzantine Empire made significant contributions to art, architecture, and literature, preserving and adapting classical Greek and Roman traditions while also incorporating influences from the Near East and Asia. In contrast, the Abbasid Caliphate emerged in the Arabian Peninsula and rapidly expanded its influence across the Middle East, North Africa, and parts of Asia. The Abbasid Caliphate represented the pinnacle of Islamic civilization during the post-classical period, fostering a golden age of learning, science, and culture known as the Islamic Golden Age. Under Abbasid rule, Baghdad emerged as a vibrant center of scholarship, trade, and innovation, attracting scholars, merchants, and artisans from diverse cultural backgrounds. The Abbasid Caliphate's political system was based on Islamic principles of governance, with the caliph serving as both the religious and political leader of the Muslim community. Abbasid society was characterized by religious tolerance, intellectual curiosity, and a rich cultural exchange between Muslims, Christians, Jews, and other religious communities. Despite their differences, the Byzantine Empire and the Abbasid Caliphate shared some similarities in terms of their administrative structures, economic systems, and cultural achievements. Both civilizations were characterized by a sophisticated bureaucracy that facilitated trade, taxation, and governance across vast territories. Additionally, both the Byzantine Empire and the Abbasid Caliphate made significant contributions to art, architecture, and literature, leaving behind a rich cultural legacy that continues to influence modern society. In conclusion, the Byzantine Empire and the Abbasid Caliphate represent two distinct but interconnected post-classical civilizations that emerged after the decline of classical empires. While the Byzantine Empire inherited much of the cultural and political legacy of the Roman Empire, the Abbasid Caliphate ushered in a golden age of Islamic civilization marked by intellectual curiosity, religious tolerance, and cultural exchange. By comparing and contrasting these two civilizations, we gain a deeper understanding of the diverse dynamics and complexities of the post-classical world....

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