Behaviors, Actions and Communications of IKEA - Term Paper Example

 Introduction There is a great need in the modern society that enterprises were guided not only by the possibility to make more profit, but also to fulfill community’s expectations. It requires companies to be customer-centered and perform activities in accordance with the view of society’s development. In addition, companies should also be responsible to stakeholders with regard to the environment, equity, employment, health and human rights and community development (Fulfilling Social Responsibility – Extract from Chinese Government Guidelines, 2013). Such approach will help enterprises realize a balance between their growth, society and the environment Moreover, it s a requirement by the entire society that companies followed social activities since  businesses have significant impact on almost all aspects of the society and life of its people. The following paper will examine and discuss how Ikea communicates and acts on a social issue and with regards to fulfilling different society’s expectations. It will also examine and discuss the impact and implications of Ikea’s actions on society and stakeholders. How Ikea fulfills society’s expectations Edvardsson and Enquist (2006) state that the most fundamental and enduring asset for any company is the brand. However, value-based service brands are more important in building the good company’s image, where the enterprise tries to avoid aligning itself with such negative values as environmental pollution or cheap labor conditions. Instead, focusing on the attractive values such as community development and provision of healthy products help the company to create its positive image and contribute fully to the society (Edvardsson & Enquist, 2006). A Swedish multinational company Ikea that designs and sells ready-to-assemble furniture, appliances, small motor vehicles and home accessories, has built its values-based service brand by following the vision “To create a better everyday life for the many people” (The Ikea vision, n.d.). The idea of its founder to create the home furnishings of a good design and functionality and at a price that everyone would afford was the main “democratic idea” of the company. There is no other furniture manufacturer that would follow such three dimensions that would also be driven by the combination of social and economic values (Edvardsson & Enquist, 2006). The values of Ikea are also in informality that the company represents in the modern and casual styles and respect to people with the identity of Ikea’s products. Besides, the company follows cost consciousness, where it saves resources, simplicity in manufacturing and use, innovative thinking that with the low price poses a challenge for developing new solutions and responsibility that calls the company to perform its activities with regard to the environment, protection of human right and provision of healthy working conditions. Ikea performance in regards to the environment According to Ikea Sustainability report (2014), the company strives to make a positive difference to the industries that produce the key raw materials in its products. Thus, close relationship with the suppliers and other partners enable Ikea to use such materials that are better for people and environment. Such sustainability approach allows the company to preserve valuable natural resources for the future generations. Among the main achievements of Ikea is that it sources 76% of its cotton from the more sustainable sources, supporting the Better Cotton Initiative that trains farmers around the world in more sustainable farming methods. Moreover, the company has developed draft guidelines for responsible leather sourcing; it sources 41% of all wood from more sustainable sources (Ikea Sustainability report, 2014). Komassi and Pal (2013) speak about the other achievement of Ikea in terms of environmental impact. Thus, in order to measure sustainability and classify the products of more and less sustainable, the company has developed Sustainability Product Scorecard that consisted criteria related to the products and the suppliers. Setting a goal where 70% of Ikea sale value should be classified as More Sustainable in 2015, other products which are bigger in number and have smaller sales value were ignored in terms of sustainability improvements. However, marketing managers state that best-selling products have the biggest impact role in shaping the Ikea brand image and thus make all products sustainable will give the company great competitive advantage (Komassi & Pal, 2013). By setting the goals based in the sales value, the company’s improvements should be focused on best-selling products. In order to reach sustainability goals, Ikea’s strategy in short term should be focused in the product level for improvements to find critical articles and reach higher priority for financial aspects. Such can be achieved by improvement in supply and delivery operations, distribution and disposal of products (Sklyarova & Kobets, 2011). Ikea performance in regards to employment It is an important move of every ser4vice business to train, empower and reward its workforce in the way so it would be able and wanted to live the brand and mission of the company where it works. Edvardsson and Enquist (2006) consider that human performance plays an important role for each company to build its service brand, therefore, core values are extremely necessary in sustaining the name of the company. To Ikea these core values are the price for its products, environment approach and social perspective or people. According to the Ikea Sustainability report (2014), the company is working on the consistent structure for basic terms and conditions of employment. Together with the Fair Wage Network, Ikea investigates the existing salary in such operating countries as China, U.S. and Japan. The approach of Fair Wage Network is focused on the wages and such critical things like working hours, social benefits, equity and costs for workers. Besides, according to Brokaw (2012), such companies as Ikea are not searching for the just job-related skills and experience employees. Instead, Ikea expands its selection criteria to cultural fit, assessing people’ personalities and values so to suit the vision of the company. According to the review (Brokaw, 2012), the culture-focused companies such as Ikea are striving to integrate their core values and business principles into the talent management processes such as leadership development, performance management and hiring approaches. Thus, Ikea’s standard job questionnaire pays less attention to the skills and experience, but puts more emphasis on the applicants’ values and beliefs which become the basis for screening and training and development needs. The most vivid achievements for Ikea in terms of relationship toward employees, are that 71% of co-workers had developed the individual development plan. Moreover, the company accounts for 47% of managers to be women. The company has also launched the loyalty program Tack! for its co-workers that will support the retired employees as the additional move to their pension plans. All full-time employees within the country will receive the same amount regardless the department and position. However, with all the achievement that the company has, it should think over new strategies toward its employees so to improve productivity, turnover and customer service. For that purpose, employees should be motivated and encouraged more to contribute the company. Due to the financial crisis and economic instability, the increase of lowest wages would be a considerable step toward strengthening of Ikea’s position as the best employer. According to Kasperkevic (2015), Ikea is already setting the wage floors above the federal minimum. However, its US wage floor rise by 17% or to $10.76 per hour does not influence the staff turnover rate, despite the fact that the staff is pleased with the increase of the wages. Ikea performance in regards to community development Ikea’s ambition is to create possibilities to community and people to obtain the desired products and services at affordable prices (Ikea Sustainability report, 2014). That is achievable through enabling and encouraging employees to participate in the community involvement activities. Edvardsson and Enquist (2008) state that Ikea initiates and supports a lot of activities directed toward community involvement and stakeholder cooperation. Thus, the company aims to improve health and education conditions worldwide and protect environment working in partnership with other companies, trade unions and organizations. Thus, one of the considerable achievements is the collaboration with Indian government that allows Ikea to immunize all children of that country against a wide range of infectious diseases. The program is aimed to reduce the risk of disabilities and other health problems in children and decrease the likelihood that their families will be forced to send their children to work (Edvardsson & Enquist, 2008). With all the initiatives toward Ikea’s desire to make a better society, there is a great task for the company to keep good communication with its customers and all the stakeholders about how the environment can be preserved. Such can be achieved through involvement of bigger amount of people toward the general problems of society, such as use of raw materials and water consumption. However, with the Code of Conduct that Ikea has, it is possible to be a good example for other companies in following the safe, respectful attitude toward people and preserve the environment (Sommer, 2012). The impact and implications of Ikea on society and stakeholders Edvardsson and Enquist (2008) consider that Ikea leadership model in grounded in its culture that forms the basic business principles. Creating and sustaining of strong values-based culture requires a continuous learning and involvement of all the stakeholders in achieving of common goal. Dahlvig (2012) sees that the main Ikea message is directed toward the community and by challenging the views and market factors, it gives the company possibility to communicate its philosophy to the stakeholders and society in general. Such democratic design notion with low prices of Ikea’s products and a simple approach create economic values for the society that are related to Ikea philosophy. In addition, the innovative approach is also an important theme in Ikea’s production and distribution policy. It applies toward its attitude to leadership and those people who by taking responsibility for actions are contributing the Ikea code of conduct. Conclusion In the retail sector, such companies as Ikea will always be paid attention to, since they are constant in their search of better conditions and predispositions for profit, sales growth, and through innovation and respected attribute toward employees, customers and other stakeholders will be recognized as well. Their vision and values, price differentiation, market leadership and strong long-term perspectives influence greatly the community (Dahlvig, 2012). In the last years, when the increasing development of economic globalization has become more visible, the international community showed greater concern about social responsibility of the companies and their performance on social responsibility. Social performance of such big companies as Ikea’s is usually measured in terms of such activities as producing environmental friendly goods and services that people need, creating jobs for the society, paying fair wages and ensuring worker safety (Rao & Krishna, 2004). In this context Ikea encourages a dialogue internally and with its partners in order to share its ideas and best practices with others and the society. Bibliography Brokaw, L. 2012. Ikea: Hiring on values as well as skills. Sloan management review. March 23, 2015, http://sloanreview.mit.edu/article/ikea-hiring-on-values-as-well-as-skills/ Dahlvig, A. 2012. The cornerstones of good business practices. Ivey Business Journal. March 23, 2015, http://iveybusinessjournal.com/publication/the-cornerstones-of-good-business-practices/ Edvardsson, B. and Enquist, B. 2008. Values-based Service for Sustainable Business: Lessons from IKEA. Routledge Edvardsson, B. and Enquist, B. 2006. Service leaders: Values-based service brands: narratives from IKEA. Managing Service Quality. Emerald Group Publishing. Vol. 16 No. 3 Fulfilling Social Responsibility – Extract from Chinese Government Guidelines, 2013. The Charitarian. March 23, 2015, http://www.charitarian.org/corporate/fulfilling-social-responsibility-extract-from-chinese-government-guidelines/ Ikea Sustainability report, 2014. March 23, 2015, http://www.ikea.com/ms/en_US/pdf/sustainability_report/sustainability_report_2014.pdf Kasperkevic, J. 2015. Raising the floor: Walmart, Ikea and Gap lift wages for their lowest-paid workers. The Guardian. March 23, 2015, http://www.theguardian.com/sustainable-business/2015/feb/19/companies-raise-minimum-wages-pay-walmart-ikea-aetna-gap Komassi, E. and Pal, R. 2013. Investigating short term strategies in product sustainability index implementation, a case study at IKEA. 11th Global Conference on Sustainable Manufacturing. March 23, 2015, http://www.gcsm.eu/Papers/40/1.6_210.pdf Rao, R. and Krishna, H. Strategic Management. Excel Books India. Sklyarova, M. and Kobets, T. 2011. Eco-efficiency for sustainability: IKEA’s environmental policy in Russia. Gotland University. March 23, 2015, http://www.diva-portal.org/smash/get/diva2:420853/FULLTEXT01.pdfEco-efficiency Sommer, A. 2012. Managing Green Business Model Transformations. Springer Science & Business Media The Ikea Vision, n.d. The official website for Ikea. March 23, 2015, http://www.ikea.com/ms/en_CA/the_ikea_story/working_at_ikea/our_vision.html Read More