IKEA And The Current Ethical Issues

The philosophy states “ Our vision is to create a better everyday life for the many people. Our business idea is to offer a wide range of well-designed, functional, home furnishing products at prices so low that as many people as possible can afford them.” IKEA needs to create products following this motto but have these products molded to the tastes and styles of the U.S. population. The prices must still be low but IKEA must force the message that even though the price is low that does not mean the quality of the product is poor. This message will be key for expansion in the U.S. to be a success. IKEA must maintain their shopping experience as that is a strong competitive advantage, and tweak their philosophy so it fits the American lifestyle. If they do this then they will have success in expansion.

As explained in the “bargaining power of consumers”, it is hard to substitute the products that are offered by IKEA. This is further intensified by the fact that IKEA has formed a brand perception that makes it stand out amongst its

IKEA’s social responsibility and sustainability is continuing to grow and progress according to Chief Sustainability Officer, Steve Howard. IKEA wants their business to have a positive impact on the world so they have implemented a strategy called the People & Planet Positive strategy which focuses on 3 areas (IKEA Group, 2014). The first area of focus is to get customers on board with living a more sustainable life at home

Sequentially, the report accounts Ikea’s business ethics and corporate social responsibility and the procedures being used to achieve their public reputation.

IKEA´s mission statement: IKEA offers a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible can afford them"

In IKEA’s history two different modes of entry were used. Both were met with big success and allowed IKEA to enter new markets very easily, and in a secure way.

Corporate Social Responsibility is about how a corporate entity acts towards its corporate citizens. Demonstrating social responsibility can be delivered in different ways by the corporate entity. IKEA believes in creating everyday a better life for its people which includes IKEA co-workers, IKEA customers, its suppliers and community

IKEA is a unique Swedish furniture company. The company we so widely recognize today for selling good quality budget friendly Scandinavian style furniture began in 1943 as merely selling pens picture frames and wallets. Ikea was founded by a then 17year old Ivor Kampard, of the farm Elmtaryd near the small village of Agunnard in Smaland, hence giving rise to the name IKEA. This area is know for its thrifty and hard working ethos and Kampard very much incorporated this into his business venture. His innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by simply using cost-cutting solutions that did not affect the quality of products.

IKEA was truly built from the ground up. It was started in 1943 by Ingvar Kamprad when he was 17 years old, from a shed on the family farm. In the beginning, the company sold fish, Christmas magazines, and seeds to eventually add pens, then furniture to its product list. In the beginning the company had used the milk truck as part of its delivery system to get orders to the train station. In 1953 when the milk truck changed it route, it was no longer available to get items to the train station. This motivated Ingvar to invest in a nearby idle factory and convert it into a warehouse. By this time, with the help of the free catalog which started back in 1949, the business was

Once IKEA identified and understood the consumers (i.e. abandoning metric measured appliances and beds for American standards of size and comfort), they were able to double revenues, from $600 million in 1997 to $1.27 billion in 2002. From this analysis, it is possible to infer that IKEA combined their already successful cost leadership strategy with the properly identified needs of its target market, the American consumer. With this modification of the value chain, IKEA increased revenues and is pointed in the right direction to achieve their growth goals for 2013. As seen in Appendix 1, their projected growth is well into 8% per year, in relation to total projected growth.

Highly competitive market brings IKEA weaknesses such as magnitude of the global business that is or isn’t capable of managing stakeholders, product differentiation, suppliers’ issues of not abiding by IKEA Group Code (IWAY code) in to limelight. Other weaknesses of IKEA i.e. ineffective communication and information exchange with its consumers and stakeholders due to huge scale of business operations are also identified (Johansson et al., 2008).

IKEA’s clear vision is to offer well designed and useful home furnishings at low prices so many customers will be able and capable to afford them. IKEA designs exclusive products that meets firm requirements for task, well-organized delivery, excellence and has a good impact on the environment.

IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market. Most of its stuffs believed IKEA will massive growth throughout the world in the coming decade because IKEA could provide what customer wanted: good design, and good made contemporary furniture with an affordable price. In one word, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. (Jones, 2013)

A mission statement describes the objective of a company or an organization. It shortly defines the overall goal and clarifies why the company exists (Griffin,1990). A mission statement should indicate some core points..

IKEA’s strategy before the mishaps in America could be characterized as going against the norm charting their own path to success using low priced manufactures to secure lower selling prices aimed to target those who were of older age and of middle class standing. Their new strategy was to target those of a younger demographic, young married couples, college students, and 20-30 something singles. By reemphasizing design, promoting through hip quirky advertisements, and encouraging consumers to do away with their old furniture, IKEA revenues doubled in a four-year period. IKEA today has adapted somewhat of a local customization strategy where their store layouts will resemble that of many local household layouts as proven by their success in China where they failed to expand beforehand. They also keep their prices extremely low in some areas as China by sourcing a large percentage of products in the area of operation.