Csr Case Study On Ikea Management Essay

Csr Case Study On Ikea Management EssayThis report identifies Corporate amicable Responsibility (CSR) as a demanding topic that has move from ideology to reality and is acknowledged as a signifi goatt dimension of contemporary patronage practices and has been recognized as an important tool for subscriber line excerption in the 21st century. This report takes into deep understanding of CSR by depicting a pass map of impression subjects with relate issues and implementation based on the principles of CSR and discusses planly on its characteristics pros and cons theories and approaches justifications and fundamental principles. This report gives an insight on the significance of CSR and examines in particular about the expected key potential gains from its operational usance followed by the discussion on the problems and barriers that CSR generally faces .Finally the report chooses the case study on IKEA and discusses in depth about its CSR experiences by studying its devel opment and scheme dimensions of CSR in corporate favorable agenda(strategic and responsive forms of CSR) and analyses IKEAs responsibilities as integral elements of strategy with a brief discussion on CSR communication. The plan of CSR has widened its scope and its increasing orbiculate demand makes us to realize the responsibilities of a firm with its dimension towards accessible, economic and environmental impacts.INTRODUCTIONThis report identifies Corporate Social Responsibility (CSR) as a hot topic and the reason for choosing CSR is due to its high write earnment in the academic domain and most of us feel CSR as an despotic necessity to define the roles of organizations in Society and apply their responsibilities to their channeles in terms of social, ethical and legal standards. Moreover, CSR has become a globalised concept and achieved business prominence because of its geographical prevalence from US origin to its widespread suitability and establishment in Europe. This report structures the content to understand the concept of CSR by depicting a road map of core subjects with related issues and implementation based on the principles of CSR and discusses briefly on its characteristics pros and cons theories and approaches justifications and fundamental principles. This report gives an insight on the significance of CSR and examines in detail about the expected key potential gains from its operational use followed by the discussion on the problems and barriers that CSR generally faces .Finally the report chooses the case study on IKEA and discusses in depth about its CSR experiences by studying its development and strategy dimensions of CSR in corporate social agenda(strategic and responsive forms of CSR) and analyses IKEAs responsibilities as integral elements of strategy with a brief discussion on CSR communication.UNDERSTANDING CSRThe term CSR seem to be new notwithstanding research predicts that there has been an evolution of its concept t hroughout m whatsoever decades. stylus back in 30s of last century, the focus of commercialiseing was initially on distribution and logistic, that was about how to provide some products at minimal cost. With the total tradeing, the amount of money of attention is to set on the selling systems on the marketing mix comprising the 4 Ps Price, Products, Place, Promotion.Social marketing emerged in the 70s whereby the company regulates on the semipermanent interests of stakeholders internally as well as externally. A stakeholder could be any individual or a group, who can influence or get influenced by behavioral impacts of an organization. The categories of the companys stakeholder be shown in the table belowCompanys Organizational structure and locationInvolvement in the channel activityInternalExternal machinateSh areholders,investors,managers,employeesCustomers,Lenders,Tax agenciesIndirectConsultants,Suppliers,contractorsCommunity,NGOs,MediaGeneral publicProfessional bodiesThe impact of any organization on the society through their operations, products or services rendered by associating with stakeholder groups much(prenominal) as customers, suppliers, employees, investors and community and this can be displayed in the form of a diagram belowSource Mallen Baker (2007)Different terms and ideas are associated and so it is difficult to define CSR due to ambiguity in the CSR field of research. There is always a problem to stick onto universal definition of CSR as the concept tells from mere compliance with law to pure Philanthropy. Corporation refers to group of members acting as an individual, be it for business or elsewhere. Philanthropy has little to do with CSR because unselfishness is about how a company spends its money and CSR is about how a company generates money and how responsibly they conduct their business in doing so.However, European commission identifies CSR as a broad concept and recognizes, CSR as a concept whereby companies integrate so cial and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis(Commission of the European Communities 2001).WHAT CSR IS NOT?1. It is not an alternative for the regulation of companies2. It is not a replacement for how companies should manage their social,ethical and environmental impacts3. It will not give birth the worldCHARACTERISTICS OF CSRThe main features of CSR can be summarised as shown in the table belowFeaturesDescriptionTriple-bottom-linestinting, social and EnvironmentalVoluntaryAll activities are interpreted up voluntarily.Stakeholders integrityConnecting all parties involved.Long-term actionCarrying activities over a long-term period.CredibilityEnhances the credibility of the firm.PROS AND CONS OF CSRArguments for CSRArguments against CSREnhances reputation in society.Solves the problems caused by business in society.Stabilises corporate power with responsibility.Increases long-term profitabilityBeyon d government regulations.Adjusts to imbalanced demands of stakeholders.Improves environmental conditions.Business should be meant for profit maximization.Enforces unequal be among competitors.Stakeholders compelled to hidden cost.Business may insufficiency social skills.Makes to forget the aims of the businessSocial responsibility cannot be a legal responsibility.Places responsibility on the business but not on individual.CSR THEORIES AND APPROACHESThe focus on economic, political, social and ethical aspects in social reality aspects according to Parsons (1961) are primarily based on four features that can be perceived in any social structure such as adaptation to the environment ,goal attainment, social integration and pattern maintenance or latency. This hypothesis led to the classification of CSR theories into four types which can be depicted in the following table with their related approaches.TYPES OF THEORIESAND ITS FOCUSAPPROACHESILLUSTRATIONINSTRUMENTAL THEORIES reduce on the economic aspect of the interaction in the midst of businessand societyAugmentation of shareholder valueThis theory argues that CSR is the only means to the end profits.It is based on wealth creation that is measured by share price.Strategies for competitive advantageSocial investments in the context of competitionStrategies based on the view of firms forthcoming natural resources.Strategies related to the bottom of the economic pyramid.Cause -related marketingConsidering Socially recognised philanthropic activities applied as an instrument in marketing policy-making THEORIES local anesthetic anestheticize on the business power applicable in the areas of politicsCorporate constitutionalismFirms social responsibilities arise from their strength of social powerIntegrative social contractAssumption of the existence of contract between the business and society.Corporate citizenshipThe firm is perceived as a citizen with participation in community.INTEGRATIVE THEORIESFocus on the in tegration of social demandsIssues ManagementFirms response to the social and political issues and their impactsPublic ResponsibilityCurrent legal procedures and public policies are considered as recommendations for social performanceStakeholder instructionStabilizing the firms stakeholdersCorporate social performanceExploring the responses from social legitimacy to social issuesETHICAL THEORIESFocus on the right factor to attain a good societyStakeholder normative theoryConsidering trustful duties towards firms stakeholdersUniversal rightsConsidering the frame spirts related to human rights, labour rights and respect for environmentSustainable development attainment of human progress by accounting present and future generationsThe common good sensation towards the common good of societyJUSTIFICATIONS FOR CSRThe prevailing justifications for CSR are shown in the picture belowMoral obligationAttaining commercial accomplishment in approaches that tribute ethical valueInsufficient assi stance to stabilize complicate competency related to social and economic interests.Varied personal values among managers and stakeholdersLicence to operateDeveloping goodwill to safeguard the consent of Governments and stakeholdersLicences and approvals are bringed for a business to operate.However, this kind of approach will have to compromise in controlling CSR agenda to the externals that lack knowledge about companys operations and competitive positioning.Encourages antisubmarine responses for time being.SustainabilitySelf-interest to encounter the present needs without compromising the future needsEfficiency on environmental issues yielding immediate economic attains.In different aspects other than environmental issues, intangible long-term results give a weak justification for short-term costs.Existing justifications focus on the pressure between the firm and society rather than bringing coordination.These generic rationales give a trivial guidance for taking up company a ctivities.FUNDAMENTAL PRINCIPLES OF CSRCSR mainly relies on three fundamental principles such as Economic, Social and Environmental areas. The purpose of CSR is to integrate business activity with its culture for attaining sustainability in its economic, social and environmental areas. for each one fragment of CSR includes activities, which differ depending on the type of firm and the needs of stakeholders.ECONOMIC AREA The firm is expected to behave as a transparent go- forrad .Positive dealinghip among the investors, customers, suppliers and shareholders is expected. Economic impacts at local, national and international levels should be monitored. Stakeholders and the activities of CSR in the economic area of the market are shown in the table belowEconomic area MarketStakeholdersOwners and investorsCustomers/consumersSuppliers /partnersRegulatory bodiesMediaCSR activitiesCreates ethical codexTransparencyBest practice managementPractice anti-corruptionBuild Stockholders relatio nsBuild Customer/consumer relationsBuild suppliers relationsBuild investors relationsProtect intellectual propertySOCIAL AREA Responding and tackling the behavioral mental attitudes to employees in the working environment and focuses on assisting the local community. The company influences the working standards, education, health safety and develops the cultural aspects. The stakeholders and CSR activities in the social area are shown in the table belowSocial areaStakeholders plow locationLocal communityEmployeesUnionsNon-Profit organizationsPublicCSR activitieswellness safety of the employeesHuman resources developmentGet rid of child labourFollow working standards musical accompaniment laid-off employeesAssurance of jobsSupporting social integrityCorporate volunteerismDonor shipEducating PublicImproving the quality life of employeesCreation of jobs and develop local infrastructure.ENVIRONMENTAL AREA The Company focuses on its impact on ecosystem and elements like land, air and w ater. The company feels its determination to protect the natural resources.Environmental areaStakeholdersGroups related to environmental aspects.CSR activitiesEco-friendly processing and manufacturing products and services.Agreement with regulatory and standards(ISO,EMAS)Renewal of energies policy by recycling and using eco-friendly products.Lessening the environmental impacts.Protecting the natural resources.ROADMAP FOR CSRThe following roadmap depicts the core subjects and CSR implementation based on the principles .Source vi.unctad.org/russiast09/docs/millercsr.pptCORE SUBJECTS AND ISSUESIssues related to core subjects of CSR can be depicted from the following tableCORE SUBJECTSISSUESORGANIZATIONAL organisationShareholder activismPolitical economyCross b fix investments by foreign investorsHUMAN RIGHTSDue attentivenessRisk conditionsEscaping complicityDetermining grievancesInequity and susceptible groups well-behaved rightsPolitical rightsEmployees fundamental rightsSocio-econom ic and cultural rightsLABOUR PRACTICESSocial conversationChild labourForced labourEmployment relationshipsWork conditionsSocial securityHealth and safety at employmentTraining and progress in the employmentENVIRONMENTAvoidance of PollutionMaintenance of resourcesMitigating and adapting climatic veerProtecting the reputationREASONABLE OPERATIONSAnti-corruptionSensible political implicationsGood competitionEncouraging social responsibility in the field of influenceAssessing the value for property rightsCONSUMER ISSUESAwarenessMarket sensingHealth and safety for consumer protectionConsumption sustainabilityConsumer support and solution for disputesData security and privacyEntry to necessary services corporation PARTICIPATION AND IMPROVEMENTEducation CultureCreating employment and developing skillsAdvancement of technologyIncome generationSocial investmentCommunity healthCSR DRIVERSThe key drivers of CSR are discussed in the table belowDRIVERSDESCRIPTIONProfound self-interestGenerate ethical, social and economical cohesion where markets, labour and communities are linked to work together.Social investmentSocial capitalism and contribution to infrastructure has been seen progressively as necessary part of business activity.Transparency and trustPublic perceives business as low ratings of trust. Public expectation about companys openness and accountability leads to prepare a report encompassing their performance in the areas of social and environmental issues.increase public expectations of businessPublic expects beyond the companys contribution to the economy by taxation and provision of employment.In addition to the above key drivers, the following disputation shows general drivers of CSR.Business Risk managementReputation and blemish managementLearning and innovationCost savings and operational efficiencyCompetitiveness and market positioningImproved relations with regulatorsOrganizational transformation and continued improvementIMPLEMENTING CSREach firm is u nique in its operational procedures, its awareness of CSR issues and the amount of work done towards CSR implementation.Therefore different firms adopt different theoretical accounts depending on their CSR approach.However, it adds value to the firm when CSR is implemented in a systematic route by integrating its mission, strategy, cultural, environmental and risk profiles, processes and activities. The following framework for CSR implementation gives scope to build quality and environmental management, which follows the model of plan, do, check and improve based on ISO standards .This flexible framework can be adapted by any firm as suitable for its organization.Implementation FrameworkPHASESSTEPSTASKSPlan1.Perform CSRassessmentGather a CSR management teamWork out the definition of CSRRe-examine corporate documents, processes and activitiesRecognize and connect key stakeholders2. Build up a CSRstrategyDevelop support with experienced managerial staffInvestigate others tasksDesign a format of proposed CSR activitiesBuild the ideas for scheduling and the business case for themFix on areas of roadmap, methodology and focusDo3. Explore CSRcommitmentsTake a glance on CSR commitmentsOrganize discussions with key stakeholdersDesign the group to develop the commitmentsPlan for an introductory draftCheck with interested stakeholders4. Implement CSRcommitmentsBuild an integrated CSR decision-making frameworkPrepare a CSR business planLay down the quantifiable goals and find out the measures of performance expansion slot in the employees and to whom so ever applicable to CSR commitmentsPropose and perform CSR trainingSet up workshop to address the behavioural problemsDesign for setting up internal andexternal communicationsCheck5. Authenticate and report on progressGauge the performanceHold stakeholdersReport on performanceImprove6. rate and EnhanceAssess the performanceDiscover the opportunities for enhancementEngage stakeholdersDouble-check Once a cycle completesGo back to plan and go ahead with subsequent cycleSIGNIFICANCE OF CSRThe issue of CSR initiatives and the perceptions of ethical standards have gained more attention by the management in considering approaches to strategic marketing. Usually, CSR is of growing importance towards managing the business processes and is magnetizing growing company investment. Unfortunately, marketing departments lack the skills to manage even the issues related to reputation thereby narrowing the insights. For example, pharmaceutical companies were criticised in the media for arrogance and lack of transparency. In order to rebuild its reputation, Pfizer took initiative to offer free medicines to those who were laid-off during recession. So marketing strategy expects to look for opportunities for better competitive positioning in market segments through increased customer value integrated with CSR initiatives. Majority of business leaders are focusing on CSR as a tool for specialty and competitive advanta ge leading to generate revenue.CSR is not only important in considering the consumer relationships but also scrutinizes business-to-business relationships (comprising supply chain partners) with stakeholders like investors, government and anteroom groups.CSR is an important business strategy by giving meaning and direction to day to-day operations. Satisfying each of the stakeholder groups allows companies to maximize their commitment to another important stakeholder group-their investors, who benefit most when the needs of these other stakeholder groups are being met.The business succeeds when values within the decision-making process and objectives of the organization are met. Lifestyle brand firms, in particular, need to live the ideals they convey to their consumers.CSR as a strategy is becoming increasingly important for businesses today because of three specific trends shown in the table belowTrends intelligenceChanging social expectationsConsumers and society in general expe ct more from the companies whose products they buy with the regulatory bodies and organizations in place to control corporate excess.Increasing fullnessA society in need of work and inward investment is less likely to enforce strict regulations and penalize organizations that might take their business and money elsewhere.GlobalizationThe Internet fuels communication among like-minded groups to initiate a product boycott.These three trends portend corporate success. The result of this mix is that consumers today are better informed and feel more empowered to put their beliefs into action. CSR is particularly important within a globalizing world because of the way brands are built, at a time when these values and demands are constantly evolving.CSR can therefore best be described as a total approach to business in maintaining brand dominance.KEY strength BENEFITS OF CSRThe benefits to firms, community and environment by practicing CSR can be discussed at length in the following tabl eKEY POTENTIAL BENEFITSDISCUSSIONEfficiency in risk managementCSR oversees and scrutinizes the corporate activities by effectively managing the risks involved in governance, social, economic, environmental and legal aspects in day-to-day complicated market, thereby safeguarding the supply for overall market stability. Impact analysis about a firm by considering the concerns of the parties involved is one of the better ways to tolerate in managing the risks. This ultimately sharpens the decision-making.Enhanced reputation managementReputation of a firm is mainly based on values such as trust, quality, reliability, which rebound the organizations image and brand acknowledgement and so any firm concerned about addressing the CSR issues, can manage their reputation with effective CSR management.Ability to develop the recruitment and retention of staffEffectiveness in CSR policies improvise the human resource management which has direct impact on firms image related to its products a nd services.CSR indirectly aid in executing the programs that enhance the morality and loyalty of employees who are valuable resources for companys performance.Fostering innovation, competitiveness and market positioningCSR gives positive impact in avoiding the risks by tackling diverse stakeholders who are the basic sources for generating ideas for novel products and markets thereby differentiating from its competitor, which result in competitive advantage, thus developing competitive strength based on advanced(a) business models. For instance, a certified firm with social and environmental standards improves the chance to become a supplier to specific retailers.Increased operational efficiencies and cost simplificationsBy implementing CSR, there is always an opportunity to transform waste streams into revenue streams by systematic approach of environmental aspect of renewable energies by reducing costs through recycling. Tangible cost savings signify the reduction in carbon emi ssions.Building efficient supply chain relationshipsA firm is at risk to susceptibility in its supply chain. Companies with like-mindedness can build long-term business relationships with aim to increase their profits by maintaining standards and thereby tackle the risks. large firms encourage smaller firms with whom they are related to take up CSR approach. For example, particular retailers may require their suppliers to adopt certain codes and practices.Improved ability to tackle changeCSR aids as a radar to anticipate the emerging market trends and by regular stakeholder dialogue with customers, a company can respond to any changes that occur in regulatory, economic, social and environmental aspects.Generate robust social licence to function in the communityBetter understanding between citizen and stakeholder recognition of the firms activities and objectives can render enhanced stakeholder relations, thereby giving scope for robust alliances of public, private and civilized soc iety.CSR enhances the social capital.Enhances investmentAs CSR enhances the brand reputation, it leads to raising the companys profile in the investment community. The company value can be improved through further investments.CSR approach drives the financial institutions about incorporation of social and environmental criteria into their project plan leading sharp decision-making of where to invest money and this motivates the investors to look for better CSR management.Better relations with media and government regulatorsCSR indicators act as tool for the governments to decide on obtaining export assistance contracts in some countries. In many cases, though CSR activities are beyond the regulatory requirements, governments considered CSR views to expedite the approval processes for firms in order to meet their sustainability goals by recognizing the business sector engagement as a requirement.Building customer relationshipsIn Cause related marketing the altruistic activities of th e firms can be recognized by morally conscious customers who may be flexible in paying higher prices or in reduced costs may increase their purchasing power and so CSR in broader sense has significant impact in building the long-term customer legitimacy,loyalty,trust or brand equity.Acting as a catalyst for responsible consumptionIn order to combat with the ever changing consumption patterns, company has to play a key role in achieving sustainability by the way it supplies its goods and services in the marketplace to meet responsible consumerism which considers to relate consumer rights and issues and how well the relationship between producers and consumers is received by regulatory bodies.BARRIERS AND CHALLENGESCSR implementation in a competitive world draws certain barriers and challenges which are due to Difficulty in implementing CSR concurrently with other businessConcerns in a balanced and remarkable mannerDifficulty of transparencyLack of clear communicationEconomic thought lessnessVarious instability problems in developing countriesespecially problematic for SMEsComplexity of the issues involved and so difficulty in managing the supply chain and regulating the sub-contractorsComplex set of issues asCSR covers a broad array of direct and indirect businessperformances, achievements, and so its impacts differ fromone business sector to anotherInternational differences that may lead to lack of universal word sense in examining the potential impacts of CSR. Misinterpretation due to CSR being judged differently in many parts of the world depending on different priorities. For example, Chinese consumers interpret social responsibility as safe, high-quality products, while South Africans consider it as a contribution to healthcare and education. In Australia, Canada, Indonesia and the UK the highest priority is to protect the environment. In Turkey, it is believed as an indicator for charitable donation. In U.S, France, Italy and Switzerland and most of Sout h America, the highest priority is towards fair treatment of employees.Complex set of stakeholders appealing to the business for a CSR attitudethe appropriate stakeholders need to be involvedstakeholder involvement is important, yet difficultAlways ambiguity between CSR and financial successLow voluntary acceptance of CSR can lead to green washingLack of devices to measure, monitor evaluate and report theimpactsTwo myths Smaller companies think it the responsibility of the bigger onesandIt is mainly a philanthropic exerciseHigh overheads of implementing and sustaining CSR efforts.No universally accepted frameworksSome of the main internal company barriers to CSR initiatives areExecutives recommending strategic marketing programmes that focus on CSR-based positioning must be aware of the likely barriers and challenges from those who do not believe CSR as a legitimate strategic tool.CASE STUDY CSR AT IKEAThe reason for choosing IKEA as case study of CSR work is to understand its CSR f ocus as a leading company, which ranks as the first in CSR in the Accountabilitys trusty Competitiveness Index 2008 (RCI). IKEA was selected due to its long history and experience in the area and its response to several CSR-related crises and criticisms that has enabled the organization to develop structured policies and a range of collaborations and initiatives with stakeholders and could set an example for companies aiming to develop their economic and environmental sustainability.IKEA is a value-based Swedish furniture giant that has wide recognition for its focus on cost reduction and it is a progressive company that manages to integrate its cost focus with CSR issues. This report discusses in detail about how this integration is possible for IKEA and it is interesting to know its implications for other companies who want to combine CSR into their business practices.The CSR experience gained by IKEA can make other companies to realise that CSR is not necessarily a cost addition but it is a cost-cutter, which imparts increasing knowledge on how companies can be socially responsible. The aim is therefore to analyze the