IKEA is a multinational company who deals with designed and ready to sell assemble furniture, appliances for kitchen use and other home accessories. Based in the Netherlands, the company also operates their business in more than 48 countries.
Creating shared value refers to a business concept that was first introduced in Harvard Business Review article. Sharing value refers to a generation of economic value keeping in mind the beneficiary of the society with the address into the challenges. Shared value approach seeks to connect the company with social progress (Crane et al. 2014). The company can create their opportunities for sharing values in three different ways, which are:
Reconceiving markets and products- Any company cancel the existing markets for meeting the social needs and access new ones by using innovation strategies.
Redefining productivity in the value chain- companies can look for improvisation of the quality cost quantity and reliability of the products for inputs and distributing them along with acting as an essential and natural resource that drives economic and social development.
Enabling local cluster development- this is the strategy that Idea needs to follow here in this case. Companies have to complete and strike through the market. Collaborating with local suppliers accessing to talents and forming predictable and effective legal system along with infrastructures like telecommunications and roads are the need elements for this (Kramer and Porter, 2011).
There are numerous approaches to corporate social responsibility of business can be put against to the society by emphasising on the cost and limitations externally imposed on them. Social standards and compliance are also a part of it. Creating shared value emphasises on acknowledging trade-offs within profitability of short-term and environmental or social goals. However, it focuses more on the competitive advantage of opportunities by creating a social value proposition within the corporate strategy (Kvistgaard, 2013).
Stakeholders are considered to be the members who enjoy relatively equal benefit as the business. Stakeholders are shareholders, employees, government, competitors, suppliers and customers.
The two most important stakeholders of IKEA are considered to be as follows:
Customers- Customers are the ultimate users of the product that is produced by Idea. It is the customers who have given the opportunity to the company to become and recognised as IKEA. Customers are considered to be the most important stakeholders of the company. Every other stakeholder of the company is related to the customers because the profit that is owned by the company is from their customers. Therefore it is necessary to look at the customer interest and the company must focus entirely on fulfilling the demand and requirements of the customer for sustaining in the world.
Suppliers: Suppliers other key stakeholders of the company. Suppliers are the secondary business organisations which are operating their functions collaborating with the main company and taking up risks to generate profit for both the organisation. Supplying the raw materials for the manufacturing of furniture generate the ultimate products that are demanded by the market (Michelini and Fiorentino, 2012).
Therefore, IKEA, in order to sustain in the market, has to make the balance of demand and supply by putting more emphasis on creating their share value with their customers and suppliers. With the increase in profit, the other stakeholders are bound to be benefited.
Crane, A., Palazzo, G., Spence, L.J. and Matten, D., 2014. Contesting the value of “creating shared value”. California management review, 56(2), pp.130-153.
Kramer, M.R. and Porter, M.E., 2011. Creating shared value. Harvard business review, 89(1/2), pp.62-77.
Kvistgaard, L.T., 2013. Creating Shared Value.
Michelini, L. and Fiorentino, D., 2012. New business models for creating shared value. Social Responsibility Journal, 8(4), pp.561-577.
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