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IKEA's Good Brand Image and Ethical Issues

Question:

Discuss about the Impact of Corporate Social Responsibility Dimensions.

IKEA is the world's one of the largest company selling furniture at reasonable prices worldwide. The products of IKEA are well-designed and cheap due to which the customers are insisted to buy the product of IKEA only. Currently, the company has a huge employee base of 139,000 employees working with them. The company is situated in total 43 countries worldwide. Further, the report comprises of IKEA's ethical issues, code of conduct, vision, mission and corporate social responsibilities to fulfill in the global market (Alänge, Clancy, and Marmgren 2016). Adding to it, the report also gives a view rightful acts which the company shall perform in future to initiate an ethical code of conducts in the organizational process.

Despite earing such good brand image in the market, the company still suffers from ethical issue which hinders the sustainable growth of the organization. Also to initiating their corporate social responsibility the company initiated many activities to resolve the issues as well. Further the most critical which came in front of the company is that there were some allegations imposed on the company that they were not following the corporate social responsibility. Additionally, it was said that the company involved themselves in some activities which were against the human rights, resulting to which IKEA also agreed on the term that was imposing the German political prisoners to work for irrespective of their will (Andersson 2017). But the company also mentioned the fact that the even had happened years ago, but still, it is reflecting the growth of the organization till as well. Apart from that another issue which was faced by the company IKEA was that they were pointed out for encouraging the practices of child labor in their organization by sourcing rugs from an Indian company which was producing goods by practicing child labor and it was along found in the management that the company is spying in the working of their employees which in unethical in the corporate world (Singh, Sethuraman, and Lam 2017).

Thus, in order to address the issue, the company adequately answered all the questions which were raised against the name of the company in the market. In case of the breaching of the human resource rights, the company stated that the event had happened in the past and no such practices are being implemented by the company in the current scenario (Crane, and Matten 2016). Additionally, the company also initiated the corporate social activities which favored the employees and stakeholders of the organization. They showed their extreme responsibility towards fulfillment of human rights in the organization. The claim was settled by having a word with the company that no such practices are now continued in the management of the organization (Stahl, et. al., 2016).

IKEA's Code of Conduct, Vision, and Mission

Additionally, to settle the dispute of child labor activities, the company stated that they only import goods from India by four suppliers only. Along with which the information of those transactions with suppliers is clearly mentioned in the audit report of the organization. Further for the case of spying on the activities of employees, the authorities of IKEA issued the statement that they respect personal space of every employee and do no hold any such activity in their management practices (Feldman, and Korn 2017).

Talking about the code of conduct and ethical values which they possess, the company IKEA believes that it is their vision to create a better day to day for the people globally. Also, the business idea initiated in the organization supports the vision of the organization as it offers a wide range of well-structured and functional home furnishing to assist the working of an individual at their home (V?duva, et. al., 2016). Further, the mission statement of the company stated that they intend to sustain their growth in the long run by investing in the future activities which can benefit the employees, customers, and stakeholders on a whole. Assisting the vision of the organization, the company possess core values which are mainly, adapt simplicity in working, focusing on their own way, cost-consciousness, sustainable development etc. These are mission, vision and the value statement which the organization adheres in order gain the market competence (Görg, et. al., 2017).

The context of the above statement, IKEA follows the above mention mission and vision statement so that to improve the current position of the organization globally. With that respect, the company initiated activities like sustainability strategy for 2020. In that strategy, the company decided to produce their products with renewable energy resources so that to maintain sustainable growth and save the resources for the future generation as well (Martin 2016). To initiate the systematic growth the company also developed small milestones to achieve so that they do not get distracted from their future goals. Assisting the cost-conscious concept of the organization, IKEA developed means which can help the company to produce the products cost efficiently, also they manufactured the simple structured product as to decrease its prices and make them achievable by all. The company constantly reviews their growth in terms of sustainability so as to look that the management is constantly following the way which they decided to follow (Grant 2016).

IKEA's Corporate Social Responsibility

Further to keep the interest of stakeholders lied in the managing activities of the business the company implemented "a big thank you" event to thank and congratulate the employees and the stakeholders of the organization. They take the initiative to align the interest of stakeholders along with the managerial objective of the organization. The company aims to treat all people equally who connected with the organization system. They call them co-workers irrespective of their job and position. This process helps the company in commencing equality in the organization along with good organizational culture (Gummesson 2017).

Carroll's CSR Pyramid helps the assessor to review the corporate social responsibility conducted in a business so as to make sure that these activities are law-abiding, economical and socially good. In order to be socially supportive, means that an organization shall responsible and obedient towards the law and apply ethics in the company's activities. The different level of the pyramid helps the manager to analyze the obligation of the company towards the society and the environment. Different aspects of the model are economic responsibility, legal responsibility, ethical responsibility and philanthropic responsibility (Kim, Colicchia, and Menachof 2016).

Talking about the company IKEA and its rules for the CSR, the company adequately comply the social norms so as to initiate sustainability in the environment. Further, the analysis of the company with regards to Carroll's model is discussed below:

  • Economic Responsibility: talking about the economic responsibility, it refers to the responsibility of the organization to produce goods which are suitable for the consumption of the society and selling them by making a profit for the organization. The company IKEA has maintained a competitive advantage in the global market so it can be clearly seen that the company provides differentiated product at reasonable cost and do not defraud the customers. Even the company supports local communities by operating their chain stores and provides services like they did in their flagship store of Syria (Larsson 2016).
  • Legal Responsibility: it refers to the responsibility of the corporation to abide the laws formed in the market by the government or other regulatory. Further, in order to comply with the legal requirement of the report, the company took the initiative to print their catalogue on 100 per cent forest stewardship council certified paper. This process initiated the less use of non-renewable resources. Also, they aimed to sustainably use the resources and recycle them so as to avoid overutilization of resources (Lili, and Jiaqi 2017).
  • Ethical responsibility: talking about the ethical responsibility, it is the responsibility of the company to initiate activities which are fit for the society and the people, it shall not harm the interest of the community, and for that purpose the company IKEA donates their profits to charitable foundations Brighter Lives, so as to initiate better lives for all.
  • Philanthropic responsibility: Philanthropic being the top of the pyramid, focus more on the luxurious things namely quality of life of employees, community etc. So, as mentioned earlier the company IKEA organized an event name big thank you so that to provide recognition to all the stakeholders and thank them for the company's achievements (Lim 2016).


According to the theory defined, the key stakeholders holding different relationships are discussed below:

  • Power: it refers to those people, who are important for the working of the business, mainly those people who have the power to affect and make changes in the activities of the business process. The key stakeholders of the company IKEA who have the power to influence the activities of the business are the employees, shareholders, customers and government, as they have the power to influence and restrict the activities occurring in the organization (Yang 2016). Another perspective power refers to the ability of a given person A to influence other given person B, to initiate activities which the other person was not willing to do earlier. It shows that the other person has the power to influence the decision-making process of a person. Similarly, in the company IKEA, they shall adequately align their interest with the objective of the organization. Also, the seek approval of these stakeholders in many cases as well (Ngai, and Falkheimer 2017). For the customers they rigorous safety alarm procedure and return policy along with strict follow up. This process helped the key stakeholders to act according to their powers.
  • Urgency: it refers to the claim which the key stakeholders shall make in case of emergency. It refers to the issues or problems of those stakeholders which shall be analyzed on a prior basis. These issues of such stakeholders are critical and require an initial focus on the problem. The key stakeholders of IKEA according to this approach are shareholders and the creditors of the organization. As creditors are the lenders of the organization so an activity initiated by them is looked after the company on prior basis. Also, EGM (extraordinary general meeting) can be conducted by stakeholders in case of emergency. Thus, it can be said that the company proper complies their duty to treat them ethically (Power 2016). IKEA strived to long term development so that more profit is derived for both the parties.
  • Legitimacy: according to this theory the stakeholders of the organization requires the attention of managers of the organization so that they get to know about the activities going in the organization. The key stakeholders according to this approach for the company IKEA is, employees. IKEA adequately looks after the interest of their employees as they socially satisfy the requirements of the organization (Rice, Hanoch, and Barnes 2017). For the employees, the company uses the VOICE survey so as to motivate them and seek if they are facing as issue.

Thus, in this way the company IKEA fulfills their social responsibility towards the stakeholders of the organization.


Already the company IKEA is moving on the path of fulfilling the corporate social responsibility, still, there are some ways in which the company can perform better and growth beyond the competitive market. The recommendations for the company are discussed below:

  • As from the above analysis, it is seen that the company has faced many allegations on their name for practicing unethical activities which destroyed the image of the organization in the target market. Thus, in order to coupe up with the situation, the company shall circulate a disclaimer regarding the ethical practices which they conduct keeping in mind the interest of the stakeholder of the organization (Savur 2017).
  • As IKEA uses natural resources which if once depleted, cannot be formed afterward, thus the company shall adopt an adequate measure to replace such resources with alternative products and they shall also aim to recycle such resources so that they can be saved for the future generation. Apart from that, the company shall also socialize such issues and its resolution so that other corporates also get to know about the current problems which the environment is facing (Schlegelmilch 2016).
  • In order to keep the interest of stakeholder lied in the business activities, IKEA shall circulate all resourceful and mandatory information to them so that the stakeholders are satisfied with the services of the organization. Apart from that, they focus on providing better satisfaction to them from their product. So the company shall manufacture products according to the taste and preferences of the customers present in the target market.
  • Another way in which the company shall work and maximize the benefits of stakeholders is that the company shall firstly identify their stakeholders and then analyze their powers and benefits which they shall receive in the organization. In this way, the company can maximize their benefits along with interest of the stakeholders. also they shall monitor the growth of employees on qualitative as well as quantitative basis.
    • Lastly, in order to satisfy the corporate social responsibility, the company shall initiate to plat more trees so that the environment is saved. This will help the company to produce more raw materials as well and initiate equal consumption and production of raw material (Schmeltz 2017).

Conclusion

Thus, in the limelight of above mentioned events the fact that shall be noted that in today's world it is important for a company to maintain their corporate social responsibility and provide benefits to the stakeholders of the organization. Similarly, the company IKEA performed their corporate social responsibility and maintains a sustainable growth in the environment. The company redressed all the allegations levied and satisfied the stakeholders with their claims. Also, IKEA followed their vision and mission statement by complying with the plans formed by them. Thus, in this way the company gained goodwill in the market by involving the stakeholders in the activities of the organization and providing them adequate services as well.

Recommendations for IKEA to Enhance Corporate Social Responsibility

References

Alänge, S., Clancy, G. and Marmgren, M., 2016. Naturalizing sustainability in product development: A comparative analysis of IKEA and SCA. Journal of Cleaner Production, 135, pp.1009-1022.

Andersson, T., 2017. Differences between American and Swedish cases–a study of how case studies can differ.

Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Feldman, M. and Korn, N., 2017. Evolution, Innovation, and Best Practices in Corporate Social Impact. In Managing for Social Impact (pp. 89-103). Springer International Publishing.

Görg, H., Hanley, A., Hoffmann, S. and Seric, A., 2017. When Do Multinational Companies Consider Corporate Social Responsibility? A Multi?country Study in Sub?Saharan Africa. Business and Society Review, 122(2), pp.191-220.

Grant, R.M., 2016. Contemporary Strategy Analysis Text Only. John Wiley & Sons.

Gummesson, E., 2017. Case Theory in Business and Management: Reinventing Case Study Research. Sage. Elg, U. and Hultman, J., 2016. CSR: retailer activities vs consumer buying decisions. International Journal of Retail & Distribution Management, 44(6), pp.640-657.

Kim, S., Colicchia, C. and Menachof, D., 2016. Ethical sourcing: An analysis of the literature and implications for future research. Journal of Business Ethics, pp.1-20.

Larsson, R.G., 2016. Ikea's Almost Fabless Global Supply Chain—A Rightsourcing Strategy for Profit, Planet, and People. In Lean Management of Global Supply Chain (pp. 65-82).

Lili, C. and Jiaqi, C., 2017. Consumer Responses to Corporate Social Responsibility (CSR) in China.

Lim, W.M., 2016. A blueprint for sustainability marketing: Defining its conceptual boundaries for progress. Marketing Theory, 16(2), pp.232-249.

Martin, M., 2016. To Solve Problems, Take a Fresh View at Opportunity. In Building the Impact Economy (pp. 21-28). Springer International Publishing.

Ngai, S.B.C. and Falkheimer, J., 2017. How IKEA turned a crisis into an opportunity. Public Relations Review, 43(1), pp.246-248.

Power, H.I.H., 2016. Stakeholder Analysis.

Rice, T., Hanoch, Y. and Barnes, A.J., 2017. a Brief overview of Behavioral economics. Behavioral Economics and Healthy Behaviors: Key Concepts and Current Research, p.14.

Savur, S., 2017. Role of Exemplars in Ethical Decision-Making in Small and Medium Enterprises (SMEs). In Responsible Leadership and Ethical Decision-Making (pp. 21-35). Emerald Publishing Limited.

Schlegelmilch, B.B., 2016. Global Marketing Ethics and CSR. In Global Marketing Strategy (pp. 195-220). Springer International Publishing.

Schmeltz, L., 2017. Getting CSR communication fit: A study of strategically fitting cause, consumers and company in corporate CSR communication. Public Relations Inquiry, 6(1), pp.47-72.

Singh, P.J., Sethuraman, K. and Lam, J.Y., 2017. Impact of Corporate Social Responsibility Dimensions on Firm Value: Some Evidence from Hong Kong and China. Sustainability, 9(9), p.1532.

Stahl, G.K., Miska, C., Noval, L.J. and Patock, V.J., 2016. IN publicized THE corporate WAKE scandals, OF A MAJOR ECONOMIC CRISIS. International Human Resource Management, p.416.

V?duva, S., Alistar, V.T., Thomas, A.R., Lupi?u, C.D. and Neagoie, D.S., 2016. Stakeholders’ Management. In Moral Leadership in Business (pp. 45-75). Springer International Publishing.

Yang, X., 2016. Get consumers walk into the sustainability talk: an analysis of consumers' sustainability perception via business’s sustainable practice, focusing on a case study from IKEA. Master Thesis Series in Environmental Studies and Sustainability Science.

Cite This Work

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My Assignment Help (2018) Essay: IKEA [Online]. Available from: https://myassignmenthelp.com/free-samples/impact-of-corporate-social-responsibility-dimensions
[Accessed 23 February 2024].

My Assignment Help. 'Essay: IKEA' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/impact-of-corporate-social-responsibility-dimensions> accessed 23 February 2024.

My Assignment Help. Essay: IKEA [Internet]. My Assignment Help. 2018 [cited 23 February 2024]. Available from: https://myassignmenthelp.com/free-samples/impact-of-corporate-social-responsibility-dimensions.

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