The purpose of this study is to investigate how IKEA succeeds in a business world by using Corporation social responsibility (CSR) as a long term strategy. This research considers CSR strategy in terms of how this company can run business by using innovative technologies to increase the products and reduce costs and no damage to the environment. This research uses secondary research methods and primary method to get the information about the CSR of IKEA. And use Internet find out the bases information about IKEA, and look for similar case in books, in order to know more accurate information about its CSR, this research will interview the employee of IKEA. And this study will focus on secondary data base on the information from the company such as announce report.
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In this study will use social analysis, environment analysis and stakeholders analysis explain how IKEA using CSR to run their business. The social analysis will involve three aspects, charity activities, sponsorship and community. Environment analysis including protect climate, water and decrease waste. Stakeholders’ analysis consists of benefits of customer, suppliers and employees.From 1940 to 1950, a root of furniture dealers, Ingvar Kamprad made IKEA furniture retail idiosyncratic. Because he brought in a new idea that self-assembly, advertising, exploration by use a catalogue and furniture. (IKEA, 2011)
Nowadays, CSR is an important part of many business organizations. It is concerned with how a company tries to be beneficial to all its stakeholder groups. Many companies today run businesses with CSR especially big companies. They try to involve in activities that will keep both the business and social environment sound. The effects of CSR cannot be overemphasized. They range from companies running business well to environmental improvements. CSR can also go a long way to improve on product quality and service to customers. And wonder how companies run businesses with CSR in an adverse competitive business world. Today, competitors of some businesses already practicing CSR and beginning to embrace this new philosophy of business.
In this study will present how IKEA has succeeded in a world of business with CSR, such as the social, environment and stakeholders aspects. And this research will investigate why IKEA engages in CSR and what definition this company gives to CSR, and what facts can reflect IKEA’s CSR. There has been so much news out there about IKEA, many consumers and employees satisfied with their good sense of CSR.
Statement of the facts 1. Social 1.1 Charity-social initiative 1.1.1 Mission of IKEA Social Initiative “IKEA Social Initiative was formed in 2005 and is operated by INGKA Foundation to address the company’s commitment to investments in social programmes on a global level. What once started as IKEA’s fight against child labour in the supply chain has developed into a broad commitment “to create a better everyday life for the many” children. The overall mission is to improve children’s rights and opportunities.” (IKEA, 2011)
Task of IKEA Social Initiative The task of IKEA Social Initiative is to handle all global donations for social projects. The current projects are concentrated in South Asia. In these countries the needs of children and their families are great. They are also countries where IKEA has a long business experience. IKEA Social Initiative strives to achieve a lasting change of the situation in areas where IKEA is doing and will continue to do business. “The interventions can be divided into three main areas: Holistic and long-term projects addressing children’s needs to achieve lasting change. In addition, special emphasis is put on the empowerment of women, as they are an important catalyst for change in the community.
Emergency aid – in-kind donations at first, as part of immediate relief actions, and, at a later stage, financial aid for long-term reconstruction projects. In-kind donations, originating from meeting special requests from co-operating organizations or meeting IKEA needs, e.g. overstock.” (Mike ,2011) Partners of IKEA Social Initiative—-UNICEF and Save the Children IKEA Social Initiative has chosen UNICEF (United Nations International Children’s Emergency Fund) and Save the Children as its main partners. Both organizations are specialized in helping children and promoting their rights. The co-operation with these organizations builds on a partnership committed to long term projects designed to create lasting change in the communities.
“During 2000-2007, IKEA Social Initiative supported a UNICEF project to prevent and eliminate child labor in the “carpet belt” in Uttar Pradesh, India, by addressing root causes such as debt, poverty and lack of access to education. During that period 500 villages with over one million inhabitants were included in the project. More than 80,000 children got an education they would otherwise have been denied. IKEA Social Initiative and UNICEF plan to expand the project to cover more than 6,000 villages by 2012.” (IKEA, 2011)
The core strategy of IKEA is to enable the customers and communities to be their advertisers rather than the brilliant advertisements. This does not only need to satisfy their customers’ needs, but also establish a perfect image in front of them. So IKEA believes that business can and should have a positive impact on the communities they serve. Women are key to improving the well-being of children and achieving lasting change in society. This is why all the programs that IKEA Foundation supports include community-based actions that empower women to create a better future for themselves, their children and their communities.
Ikea’s strict quality testing helps the company reduce the defect and waste costs. IKEA has increased the number of controls of manufactured products to ensure that they maintain the same strict safety standards they showed in laboratory testing before being included in the range. In 2008, IKEA invested 150 million dollars in building its first overseas product testing center in china. Since the center began to operation in 2008, the crap rate reduced by 50%, and about 3.5 million defect expenses has been save until 2010. Low defect cost can better support its low price policy, so that IKEA can attract more low-income customers.
The article has referred to the IKEA CSR on three aspects, social, environment and stakeholders. And it has listed many facts to prove IKEA’s CSR. For example, it supported a UNICEF project to prevent and eliminate child labor in the “carpet belt” in Uttar Pradesh, India, by addressing root causes, its share of certified solid wood increased substantially in FY10 to 23.6 percent, from 16.2 percent the year before, and so on.
In the social part, IKEA avoid hiring the children and participating the local community activities. All of these actions can incarnate IKEA attention social. In the environment part, IKEA has talked about the raw material. From its purchasing, can know IKEA pay more attention on the environment sustainability. In the stakeholder part, has talked about the co-work and customer, from these part, can know IKEA try its best to satisfied their co-work and customer. And improve its services continually. IKEA has a good job on CSR. This research has provided some knowledge within the term CSR. However, we think that there are many other interesting areas to study regarding this subject.