Ikea’s Approach to Environmental and Social Responsibility

IKEA’s Approach to Environmental and Social Responsibility

Tan Boon

Southern Oregon University

BA380

2/13/2016

The case study on IKEA focuses on how they were able to successfully accomplish their goal through their operations management. IKEA was founded by Ingvar Kampard in Sweden in 1943. Kampard had a vision of supplying the community with good design and quality products at affordable prices. IKEA’s approach to business is to be sustainable while advantageous for both the consumers and the environment. The company is organized in a way where raw materials are manufactured into products responsibly in regards to the environment. IKEA has partnered up with multiple organizations that place high values on the people and environment, which makes them stand out from major competitors.  

        The article emphasizes on IKEA’s sustainable issues and their solutions, from the use of resources, without leaving a carbon footprint, added- value manufacturing to building social responsibility. Their biggest sustainable issue is in the supply chain product development. IKEA are always implementing new strategies towards product development. The first stage of the supply chain deals with extracting raw materials and negotiating prices with their suppliers. IKEA maintains a close relationship with their suppliers to ensure the quality of the raw materials and low environmental impact, this was their solution to the use of resources. They tell the suppliers to avoid non-renewable materials. The supplies must meet strict guidelines so the end product does not harm people in any way and does not severely impact the environment. Designers and product engineer uses the “e-Wheel” model, pictured below, which evaluates each product from the initial design stage to being recycled. The checkpoints in the “e-Wheel” use four checkpoints to appraise products; resource extractions, manufacturing, use, and end of life. The case study states that 50% of IKEA’s 9,500 products are created out of wood, which are then recycled and renewed into new products.

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IKEA differentiates from their competitors during the manufacturing process in which they add eco-friendly value and consumers recognize their efforts through various publications. When consumers find out about IKEA’s high economic standards, they tend to feel the positive contributions to the environment when purchasing home furnishing from IKEA. The company implements their value- added business principles through their code of conduct called the “IWAY” as guiding principles that set the tone of their operation.

        I will use IKEA’s code of conduct to generalize several important IWAY requirements as of 2015.  The IWAY’s first regulation states the ban of child labor and any involuntary workers. All employees must show proof of age documentation and are guaranteed safe working conditions with the option to terminate their employment at any time according to the agreed notice period. Clean drinking water and break rooms are also provided.

        IKEA showcase the value of business ethics. The values of trust, integrity and honesty are at the foundation of IWAY and are keys to their sustainable implementation. They have an anti corruption policy within the organization that also extends to the connections of their suppliers. Managers are well trained to recognize any signs of bribery and illegal activities during operations. They are required to keep track of reliable documents and records, making sure operation information are relevant and up to date.