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Simran Arora Professor Grimalda BUS 475 -1 April 2, 2020 Case Study - IKEA’s Ethical Procurement Practices IKEA is a home products retailer with its branches spreading internationally and is privately owned. It sells furniture, Bathroom and Kitchen items and accessories in flat packs. IKEA is the world’s largest furniture sellers due to its unique concept of the furniture sold in flat packs, affordability and at home assembling by the costumer. Immense retail experience, product differentiation and reasonable prices are the key for IKEA s success. It is the world’s most successful multinational retailers. Its large range of products includes furniture, food, large items such as cabinetry, and smaller items such as kitchenware, décor, and small plants. IKEA also operates restaurants within their stores. IKEA is highly focused upon design, viewing it as a competitive advantage. For instance, IKEA stores have been designed intentionally to what some describe as a “maze” that encourages shoppers to go through the entire store. This strategy allows shoppers to see a variety of IKEA items, possibly leading to impulse or add-on purchases. IKEA tries to create a better life for all of their stakeholders, including customers, employees, suppliers, and communities. It achieves this through the implementation of 10 core values, a strong vision statement, and its supplier code of conduct. IKEA’s values have helped to direct IKEA’s actions. For instance, the company tries to ensure that materials for its products are

not taken from protected forests, which fits in with IKEA’s value of accepting responsibility. Table 1 describes these values in more detail. Additionally, IKEA has developed a sustainability strategy that encompasses people and planet. The strategy consists of a number of long-term strategic goals to enhance IKEA’s impact on communities and the environment by 2020. For instance, IKEA wants to produce as much renewable energy as it consumes by 2020. To ensure that it is on track, IKEA has developed milestone goals that it can use to measure its progress in shorter time periods. For instance, by 2015 the company wants to produce renewable energy that is at least 70 percent its rate of consumption. Throughout this process, IKEA wants to be transparent with its stakeholders, providing frequent disclosures about its progress. Not only has IKEA tried to create a better everyday life for their customers, but for people around the world. IKEA has partnered with organizations such as UNICEF and Save the Children to provide funding for the building of schools and educational materials to address the causes of child labor and to empower women. For instance, each year IKEA holds a fundraiser in which it donates one euro to UNICEF and Save the Children for every soft toy sold. IKEA also donates a SUNNAN solar cell lamp to these two organizations for each one that a customer buy. In addition, IKEA is investing heavily in wind farms and solar panels, with the installation of 550,000 solar panels on IKEA buildings worldwide. IKEA will also provide discounts for consumers who wish to install a full solar panel installation for their homes. IKEA stores improved their energy efficiency by 8 percent from the previous year. About one-fourth of IKEA’s stores have electric vehicle charging stations for customers who want to be more sustainable through the purchase of electric vehicles. Finally, IKEA has a full-time Chief Sustainability Officer to oversee the sustainability program. IKEA also partners with other

organizations in its quest to be more sustainable. For instance, the IKEA Group owns IKEA GreenTech, an organization which invests in start-ups that are involved with technologies that have the potential to increase sustainable business operations. It also works with the nonprofit Compassion in World Farming to ensure that the suppliers of its animal products are using humane practices. IKEA and Suppliers In terms of its suppliers, IKEA has developed a number of standards codified in its IWAY supplier code of conduct. The first requirement that potential suppliers will notice before they can even do business with IKEA is that the supplier cannot use forced or child labor. Additionally, IWAY calls for the suppliers themselves to assign at least one person whose responsibility will be to ensure that the supplier is complying with IWAY expectations. Working conditions is another important topic in IKEA’s supplier code. Among its standards include limitations on how long workers can work, not exceeding 60 hours per week. IWAY also has a Forestry Standard that is included with the supplier code of conduct. The Forestry Standard attempts to ensure that all wood from IKEA suppliers is sourced responsibly and as sustainably as possible. Through its close co-operation with suppliers and assistance in implementing quality standards and becoming IWAY certified, IKEA has also changed the competitive context for the better. Through this IKEA has been able to achieve global sourcing, which has benefited the company in terms of lower costs, as well as the local industry and community, which it sources from. IKEA has not felt the need to advertise its CSR commitments; rather than relying on advertising rhetoric, it trusts in factual information. In addition, IKEA uses appealing elements

such as family, cultural and ethical values to portray its CSR commitments. Furthermore, IKEA carefully and efficiently maintains its image, then selects some specific CSR commitments, such as children’s rights and reduced environmental impact to communicate. With regard to organizational and institutional stakeholders, IKEA uses specifically adapted communication means, such as its annual CSR report. NGOs and trade unions have been more influential (in IKEA’s case) than consumers, so communication with these external stakeholders adds more value. IKEA has not felt the need to advertise its CSR commitments; rather than relying on advertising rhetoric, it trusts in factual information. In addition, IKEA uses appealing elements, such as family, cultural, and ethical values, to portray its CSR commitments. Furthermore, IKEA carefully and efficiently maintains its image, then selects some specific CSR commitments, such as children’s rights and reduced environmental impact, to communicate. With regard to organizational and institutional stakeholders, IKEA uses specifically adapted communication means, such as its annual CSR report. Our findings highlight the complexity associated with reaching decisions about the nature and level of communication. For example, the need to communicate varies depending on the type of stakeholder and the importance that the stakeholder places on CSR, as well as the IKEA has not felt the need to advertise its CSR commitments; rather than relying on advertising rhetoric, it trusts in factual information. In addition, IKEA uses appealing elements, such as family, cultural, and ethical values, to portray its CSR commitments. Furthermore, IKEA carefully and efficiently maintains its image, then selects some specific CSR commitments, such as children’s rights and reduced environmental impact, to communicate. With regard to organizational and institutional stakeholders, IKEA uses specifically adapted communication means, such as its annual CSR report. Our findings highlight the complexity associated with reaching decisions about the nature and level of communication. For example, the need to communicate varies depending on the type of stakeholder and the importance that the stakeholder places on CSR, as wel

IKEA has not felt the need to advertise its CSR commitments; rather than relying on advertising rhetoric, it trusts in factual information. In addition, IKEA uses appealing elements, such as family, cultural, and ethical values, to portray its CSR commitments. Furthermore, IKEA carefully and efficiently maintains its image, then selects some specific CSR commitments, such as children’s rights and reduced environmental impact, to communicate. With regard to organizational and institutional stakeholders, IKEA uses specifically adapted communication means, such as its annual CSR report. Our findings highlight the complexity associated with reaching decisions about the nature and level of communication. For example, the need to communicate varies depending on the type of stakeholder and the importance that the stakeholder places on CSR, as wel IKEA has not felt the need to advertise its CSR commitments; rather than relying on advertising rhetoric, it trusts in factual information. In addition, IKEA uses appealing elements, such as family, cultural, and ethical values, to portray its CSR commitments. Furthermore, IKEA carefully and efficiently maintains its image, then selects some specific CSR commitments, such as children’s rights and reduced environmental impact, to communicate. With regard to organizational and institutional stakeholders, IKEA uses specifically adapted communication means, such as its annual CSR report. Our findings highlight the complexity associated with reaching decisions about the nature and level of communication. For example, the need to communicate varies depending on the type of stakeholder and the importance that the stakeholder places on CSR, as wel

IKEA has not felt the need to advertise its CSR commitments; rather than relying on advertising rhetoric, it trusts in factual information. In addition, IKEA uses appealing elements, such as family, cultural, and ethical values, to portray its CSR commitments. Furthermore, IKEA carefully and efficiently maintains its image, then selects some specific CSR commitments, such as children’s rights and reduced environmental impact, to communicate. With regard to organizational and institutional stakeholders, IKEA uses specifically adapted communication means, such as its annual CSR report. Our findings highlight the complexity associated with reaching decisions about the nature and level of communication. For example, the need to communicate varies depending on the type of

stakeholder and the importance that the stakeholder places on CSR, as well as the IKEA’s ability to reduce costs through CSR can be regarded as a signal to other companies that see CSR merely as a necessary cost. The importance of CSR in society is increasing and thereby the need for companies to integrate it successfully. Companies can learn from IKEA’s experience that, whilst they perhaps cannot identically duplicate IKEA’s success because of its unique value-based company culture, they can save resources by integrating CSR in every step of the value chain. The first step for a company to undertake successful CSR is to systematically evaluate the value chain and observe areas where they can provide tangible joint value for society as well as the company’s competitiveness. We also see that a broad and socially oriented vision with a corresponding company culture facilitates the successful integration of CSR. Of course, not all companies can be based on the same values as IKEA, but larger effort can be put on storytelling to motivate employees. CSR can be viewed as a form of total quality management for the entire company. Once, this step is completed and the company has acquired knowledge of CSR through experience and co-operation with NGOs, it can broaden its focus on social issues as IKEA has done. The case of IKEA also shows that CSR is more easily implemented in a company where the company culture views CSR not as a cost and an external demand forced upon the company, but instead as a valuable challenge for the company that it commits itself to fully. IKEA has a strong reputation for selling quality products at low prices. The company’s ability to come up with innovative design concepts and keep prices low provide it with a significant competitive advantage. The organization is highly popular in Europe and the United States. It has also demonstrated a strong tendency toward philanthropy, innovation, and sustainability.

References Ballinger, Jeff, et al. “The Trouble With IKEA's New 'Social Responsibility' Report.” In These Times, 5 May 2010, inthesetimes.com/working/entry/5944/the_trouble_with_ikeas_new_social_responsibility_report.

Danielsethics.mgt.unm.edu IKEA Address Ethical and Social ... danielsethics.mgt.unm.edu/pdf/ikea.pdf.

IKEA and CSR. arc.hhs.se/download.aspx?mediumid=656.

“IKEA: Strategic Planning Analysis.” UKEssays.com, www.ukessays.com/essays/marketing/thestrategic-planning-of-retailer-ikea-marketing-essay.php. Singh, Aman. “Ikea: Sustainability And Profitability Two Ends Of The Same Stick.” Forbes, Forbes Magazine, 22 Feb. 2013, www.forbes.com/sites/csr/2013/02/07/ikea-sustainability-andprofitability-two-ends-of-the-same-stick/#7f6881d571ba....