IKEAs Corporate Social Responsibility and Supply Management - Coursework Example

IKEA’s Corporate Social Responsibility (CSR) and Supply Management IKEA’s Corporate Social Responsibility (CSR) and Supply Management Corporate social responsibility (CSR) is a way a company or organization regulates itself towards business sustainability. Organizations usually set CSR policies to help them regulate their functions by monitoring their businesses. These policies often ensure active compliance with laws, international and national norms, as well as meeting ethical standards (Bidgoli, 2010, p. 204). In most cases, the CRS usually goes beyond meeting set and expected laws and standards to engaging the society for their social good including aiming at improving and maintaining positive affects to the stakeholders and environment (Handfield, 2002, p. 98). Therefore, effective application of the CRS norms and allow often targets positive relationship between the organization or corporate with the employees, investors, consumers, and communities among other stakeholders. Therefore, this essay aims at determining the levels in which IKEA has succeeded in implementing CSR polities towards sustaining its business activities with her stakeholders. It is noted that since the year 2000, IKEA has worked actively towards meeting its set corporate social responsibility towards its business sustainability (Stadtler, Kilger, and Meyr, 2015, p. 160). The first area of CRS that IKEA started channeling its efforts was to meet the social requirement of its stakeholders by complying in its supply chain. In other words, IKEA created effective business relationship with investors and supplies towards sustainable business (Arlbjørn, 2010, p. 105). Additionally, IKEA has made RCS its organizational culture that aims at enduring effective partnership with all stakeholders as it support social issues, protect the environment, and giving back to the society. Notably, IKEA is highly involved in the community development a responsibility that makes it in active interaction with its various stakeholders. IKEA has also set code of conduct within its operation to ensure that its employees interact among themselves and with other stakeholders in socially acceptable manners. IKEA started implementing its code of conduct in the year 2000. In fact, IKEA has realized that code of conduct and compliance have for many years become pillar upon which its business is founded (Handfield, 2002, p. 128). Additionally, the companies has worked with its supply chain towards meeting its sustainability strategy that aims at positive relationship between people and plant. This corporation with the supply chain has made IKEA to emphasis in building a long term and strong partnership with its suppliers to achieve consistent development and results (Stadtler, Kilger, and Meyr, 2015, p. 194). IKEA has since turned its compliance to CSR into a business strategy. For example, it currently working passionately with the society to ensure it does not harm the society in any way and means. In the same spirit, IKEA is working tirelessly with other organization to ensure that it is fighting child labor. IKEA fights child labor with aim of improving the lives of children (Mamic, 2006, p. 136). This is a means of getting back to the society. In so doing, IKEA is working with numerous child right professionals and organizations to discourage exploitation of children, but advocating for their rights to getting quality education as a means of preparing them to better jobs. Notably, IKEA Group has 298 superstores in 37 countries and since it deals home finishing it obviously uses massive materials that may be environmental unfriendly. In other words, the materials it consumes in its business has significant effects to the environment (Arlbjørn, 2010, p. 176). Statics has it that it consumes 0.7 percent world’s total wood, 0.8 percent of cotton, and enormous quantities of palm oil. It also consumes considerable quantities of food products sold in its restaurant stores as well as leather. Despite producing quality goods, IKEA’s business model aims at selling its furniture products at lower prices and making these products accessible to many people around the world (Rhodes, 2005, p. 129). Nonetheless, since IKEA is using enormous amounts of natural or environmental resources, it has also constitute environmental CSR. This has been incorporated towards environmental sustainability programs that include paper recycling, reducing water consumption, using resources sustainably, and minimizing environmental footprints. The environmental CSR aspects is a collaborative effects of both the company and consumers thereby bringing these parties together especially in addressing global climate change affects that may be facilitated with the operations of the company (Stadtler, Kilger, and Meyr, 2015, p. 237). Therefore, IKEA has lowered its environmental effects by lowering the effects of production techniques and recycling most the materials it uses in its production processes. For instance, other than wood, cotton forms that most vital raw material in IKEA’s production line. To ensure its environmental sustainability programs are in place, the cotton in its production line to be originating from highly sustainable cotton production (Mamic, 2006, p. 182). Its better cotton initiative have helped the company to create a larger scale and lasting improvements in cultivation of conventional cotton. This initiative has both social impacts, reduced negative effects on the environment, as well as helped in reducing production costs to farmers. The initiatives have enables IKEA to offer highly competitively priced products thereby satisfying the needs of the consumers as well as quenching the ambitions of IKEA of providing responsibly sourced products to its targeted markets. Additionally, the company has been using its long-term energy strategic approach and oriented sustainability plans to address climate change and shortage of resources. These aspects aim at improving quality of lives of both product producers and consumers (Stadtler, Kilger, and Meyr, 2015, p. 285). For instance, the company has plans of powering its productions processes with solar energy. Moreover, the company is also working on how to reduce health risks that may be facilitated by use of chemical along its line of production that starts with use of chemicals in cotton farms (Rhodes, 2005, p. 146). Among its initiatives towards reducing health risks, the company is working on factors on how it can use less fertilizer and produce less waste materials by maximizing recycling of used or waste materials. Therefore, it is worth noting that IKEA has placed numerous programs and initiatives to ensure it has effective sustainability plans to the society. The company’s sustainability aspects does not only aim at improving the lives in the society, but it also work tirelessly towards improving its performance policies that motivate and increase loyalty of its workers. Through sustainable CSR, IKEA has management to bring many players on board to ensure that the society and its workforce benefit and certain right of humanity and balanced environmental aspects are maintained (Bidgoli, 2010, p. 266). Additionally, the company knows that its current CSR practices are not fully and effectively exploited and applied, it therefore, has employed a team to audit its current CSR policies with the aim of initiative new programs and improving on its current CSR programs to ensure sustainability. The society forms a larger aspect of any company; therefore, a company can only be successful if it has effective and productive relationship with the society that it serves and operates (Mamic, 2006, p. 207); thus, IKEA must ensure sustainable CSR policies are in place towards improving work relationship with its employees and perfect social relationship with the society. Supply Chain Technologies and Communications IKEA is among the world’s leading retailers by sales. The company’s focus is in providing its customers with affordable functional and stylish furniture. It has since tied to eliminate additional activities on its products that would lead to elevated final product costs. The company designs and produces furniture that it disassemble and transport in forms of parts in flat packages (Hawkins, 2006, p. 44). This mode of transportation makes IKEA to sake huge amount in transportation. The actions and decision made at IKEA is made at it center of decision-making. The company have since made great efforts in improving its internal supply chain functions and processes that include packaging, transportation, and warehousing. These improvements aim at cost cutting that it has achieved in greater degrees (Barth and Wolff, 2009, p. 55). It should be noted that the effective supply chain management at IKEA is the greatest element that accounts to its success stories. It mode of transporting finished products and use of pallets in its warehouses including its packaging style and furniture design is note to have lowered the cost of its product prices by 30 percent below numerous competitors. It should also be noted that IKEA has productive and effective relationship with it suppliers among other entities that help them their operations. The good relations with the suppliers among other persons who play part in their production and supply process have made them cut on their production costs (Barth and Wolff, 2009, p. 132). Additionally, the company cuts costs by enabling the customers to supply their furniture and assemble them at home as opposed to transporting for them to their places; this move also helps a means of cost cutting. Therefore, the supply chain systems of the company are effective and cost cutting oriented. Supply Chain Management In most cases, IKEA often determine a product’s target price before they design such products. This mode of pricing before designing was a contrast to the known general method of product designing then determining their prices that is often followed by many furniture manufacturing and selling companies ((Idowu and Louche, 2011, p. 108). In determining the prices, the designers at IKEA often accommodate all cost factors including the cost of raw materials, transportation, and manufacturing as well as the cost of transporting the finished products from the company to the stores. Moreover, the company never design its flat packs to escalate prices, but to save more (Hopkins, 2007, p. 59). IKEA designed flat packs to optimize loads so it could transport many products using few transportations. This is clear means of reducing cost. Additionally, the company uses recycling packages that require minimal helps of raw material. For instance, its use of brown cardboard enables it to cut cost as well as save the environment from excessive pollution. IKEA also offers its customers to unique value propositions that include maintaining long-term partnerships especially with its suppliers (Hopkins, 2007, p. 67). This ensure that there is constant supply of quality raw materials and maintaining effective communication with the suppliers towards quality improvement mechanisms. In addition to effective communication and partnership with numerous supplies towards providing high quality products, the company also offers reasonable prices that do not lead them to compromise quality (Damato, Henderson, and Florence, 2009, p. 73). The high quality material provided to the company at reasonable price have made the company to produce products are reasonable prices thereby making IKEA’s product to command a larger market globally. Furthermore, the company promises to maintain its products high quality at reasonable prices globally, a fact that is attracting more customers to its market space (Barth and Wolff, 2009, p. 251). Therefore, it is worth noting that IKEA communicate to its customers through quality of their products. IKEA also has strong concept based design that often leads to production of functional products but at reasonable costs. These missions are usually achieved at the company through its effective and binding code of conduct that defines relationship between the company and supplies and suppliers among themselves. Finally, the company produces products that are safe and comfortable to users (Idowu and Louche, 2011, p. 147). Additionally, IKEA produces durable goods that give it an elevated competitive advantage over its competitors. Generally, IKEA has effective and elaborate supply management scheme that makes it acquainted with its suppliers and understanding the needs of its customers as well as understanding the economic status of its consumers. Other than sourcing raw materials, designing, pricing, transporting, and implementing elaborate and effective code of conduct, IKEA has embrace the use of technology both in communicating with its consumers and suppliers (Damato, Henderson, and Florence, 2009, p. 188). The company prompt communication through its website has increased in interaction levels with both supplier and consumers. Therefore, shared values through communication is helping the company to add value in its products and services. Notably, IKEA sells to different regions; hence, after designing and producing its products, it supply relationship manager communicates to the relevant or regional manager. If there are issues with the new products or nay other product, the use of internets allows the customers to communicate directly to relevant team that is put in place by the company’s top management organs (Hawkins, 2006, p. 152). Thus, it is through IKEA’s effective and elaborate chain supply management and communication that it produce quality, comfortable, and price friendly products to its customers. Additionally, the company is also reaching new customers through micro blogging and social media platforms. IKEA has numerous supply stages within which logistic roles exist (Idowu, 2009, p. 203). Nonetheless, IKEA must acknowledge that the current supply chain system never require opaqueness; therefore, it must be ready to be transparent in it supply chain and production systems to allow contributions of the stakeholders. Contribution from different quarters on different aspects of management and production with improve service delivery and add value on products thereby improving competitive advantage of the company. List of References Arlbjørn, J. S, 2010, Supply chain management: sources for competitive advantages. Århus, Academica. Barth, R., & Wolff, F, 2009, Corporate social responsibility in Europe rhetoric and realities. Cheltenham, UK, Edward Elgar. Bidgoli, H, 2010, The handbook of technology management. Hoboken, N.J., John Wiley & Sons. Damato, A., Henderson, S., & Florence, S, 2009, Corporate Social Responsibility and Sustainable Business A Guide to Their Leadership Tasks and Functions. Greensboro, CCL Press. Handfield, R, 2002, Redesigning your supply chain: strategies for success. Prentice Hall. Hawkins, D. E, 2006, Corporate social responsibility balancing tomorrows sustainability and todays profitability. New York, Palgrave Macmillan. Hopkins, M, 2007, Corporate social responsibility and international development is business the solution? London, Earthscan. Idowu, S. O, 2009, Professionals Perspectives of Corporate Social Responsibility. Idowu, S. O., & Louche, C, 2011, Theory and practice of corporate social responsibility. Heidelberg, Springer. Mamic, I, 2006, Implementing Codes of Conduct: How Businesses Manage Social Performance in Global Supply Chains. Geneva, Switzerland: ILO, 2006. Rhodes, E, 2005, Supply Chains and Total Product Systems a Reader. Oxford, John Wiley & Sons. Stadtler, H., Kilger, C., & Meyr, H, 2015, Supply chain management and advanced planning: concepts, models, software and case studies. 1. Application of theory / concepts Application of theory / concepts List any theories/ concepts that have been used to inform your entry How have these been applied/ used? 1. Contingency Theory This is the theory for decision-making. 2. Systems Theory This is the understanding of the organization thereby enabling effective resource acquisition, purchase, and allocation. 3. Chaos Theory Managing both internal and external demands that from employees, consumers, and the society How is the case context consistent to the theories/ concepts applied? How is the case context different to the theories/ concepts applied? All these three theories are vital for the case for instance the concepts of contingency theory are used in making vital decision, concepts of system theory are applied in the supply chain and production managements, while the concepts of chaos theory are applied to effective work relation between the company and all stakeholders. Concepts of chaos theory requires the management to put all issues of stakeholder under control yet 100% control of the stakeholders’ issues is impossible. Not all decisions can be made in accordance with the contingency theory’s concepts. Finally, the case cannot apply fully to the system theory especially in using recycled raw materials for production. Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Read More