Introduction
IKEA is a private company that manufactures home products such as beds, home accessories, and appliances. The company is a worldwide leader in the furniture industry with a presence in 41 countries across the globe. IKEA has set sustainability and environmental goals, which form a solid foundation for its strategy in the global market arena1. These goals combine social, economic, and environmental concerns that are crucial in the realization of the company objectives.
IKEA is committed to meeting the needs of its stakeholder. The main stakeholders of IKEA includes not-for profit companies such as Clean Cargo Working Group (CCWG) and WWF. Other significant stakeholders are suppliers and employees. These stakeholders ensure that IKEA achieves its promise of creating a meaningful life for its customers2.
IKEA provides an excellent example of managing its stakeholder. Since it is a global company, IKEA shares information and knowledge with these stakeholders, which helps it, gain relevant knowledge about its obligations in the market. In order to achieve its objectives as well as those of the stakeholders, IKEA has put an emphasis in respecting the provisions of Global Compact Principle 1 and Principle 8. Principle 1 holds respect for workers, whereas principle 8 places much emphasis on environmental responsibility.
The choice of the two principles is based on the vision of the company. IKEA believes that the growth of the business can only be based on respect of workers and environmental stewardship both at the home country as well as abroad. The respect for the environment and the rights of the workers is a precondition for the company’s future growth. My expertise as a marketing consultant will be useful in providing a thorough analysis of the approaches that will help IKEA achieve its objectives, as well as those of the stakeholders.
Lessons
In order to make an informed decision, it is crucial to look at two examples of companies that have fully implemented the two principles3. For instance, Ashley Furniture has a rich history of business success because it observes the first principle of human rights.
The company has developed innovative market concepts to produce quality products, as well as state-of-the-art manufacturing methods, which have made it rank high in the market. In order to make the employees understand their rights, the company had adopted education as a way of empowering its employee to understand their rights4.
As opposed to IKEA, Ashley has adopted strategies to maintain human rights through offering comprehensive benefits to employees5. These include both medical and dental insurance. Ashley furniture has a Director of Home Store Human Resources, who is responsible for resolving Human Resources policies and procedures, as well as employee relations problems.
He is also responsible for directing recruitment efforts in the selection and hiring areas to embrace applicant of diverse cultural backgrounds. It also includes succession-planning programs to identify and prepare her employees for progression within the organization. In observing principle 8, the company is devoted to environmental protection by supporting tree planting through distribution of trees yearly6.
Thus, in implementing principle 8, Ashley has done a lot to ensure environmental management preservation and conservation through promotion of tree planting to minimize deforestation. Comcraft furniture is also one of the best furniture companies in the world. While being a leading producer in Furniture Company, Comcraft is committed to ensuring human rights are observed by offering formal education to employees as opposed to IKEA7.
Comcraft ensures that those who have excelled in their inherent skills, work ethics and abilities are given incentives and wage packages that motivate employees. It ensures sustainable development through incorporating sound economics and practising social responsibility and integrating sustainable guidelines in their operations.
The company has developed a strong philosophy and practices that provide tangible means of maintaining and adding products that are environmentally friendly8. Thus, in order to achieve principle 8, Comcraft has made an effort to reclaim and recycle all used metals within the facility. This incorporates the use of environmentally safe and sustainable materials, design for materials, for recycling and re-utilization, including recycling and composting9.
Recommendations
Corporations should implement principle 1 and principle 8 to have a higher competitive advantage since they are concerned about human welfare, as well as, environmental protection. Thus, it is essential to observe the two principles to avoid lawsuits that may occur from polluter pays principle, or actions that may lead to lack of employee retention in the work place10.
Companies that observe corporate social responsibility have been termed as corporate jargons. Indeed, a corporation that invests time and money to observe this principle becomes more competitive, those which do not. Therefore, corporations should be able to spell out their human rights obligations in order to avoid contradictions with an incentive to make bigger profits. Indeed, numerous benefits accrue when companies observe principle 1 and principle 811.
Benefits for stakeholders
Primarily, by ensuring corporate social responsibility through observing principle 1 and principle 8, corporations are able to develop new strategies to improve their products and services, and ensure a more efficient production process that eventually leads to a strong reputation and improved brand identity12.
This is better understood in the way firms integrate social, environmental and economic concerns in their business values, culture, and strategic operations in a transparent and accountable manner, hence, establishing better practices within corporations, and the creation of wealth and improvements in the society13.
Risks for stakeholders
There are considerable risks when stakeholders perceive that a corporation is only engaging in public relation exercises, but is unable to demonstrate concrete actions, that contribute to real social and environmental benefits.
Stakeholders risk a reduced reputation management, reduced competitiveness and market positioning, since social responsibility investment at all levels is a proof that there is the development at the market place both in social and environmental aspects, which are related to, information that supplements financial decisions of investments14.
Implications to the company
This also affects corporations because lack of implementation of principle 1 and 8 may lead to poor anticipation and lack of efficient management in an ever expanding spectrum of risk15.
Conclusion
Principal 1 and 8 are extremely vital since they result into misalignment between corporations and corporate social responsibility strategies that are importantly traced on how firms structure, fund, and ensure their core competencies to become socially enhanced through understanding how they can benefit or harm their stakeholder.
Works Cited
Carver, R. James et al. Retailing. New York: Cengage Learning, 2010.
Corporate Social Responsibility. A Guide to Better Business Practices, Business for Social Responsibility. London: Education Fund, 2007
Fisher, C. D., L. F. Schoenfeldt, and J. B. Shaw (2009). Human Resource Management, New York: Houghton Mifflin Company.
Freeman, R. Eliud. Strategic Management: A Stakeholder Approach. Englewood Cliffs, NJ: Prentice-Hall, 2006.
Hartline, Michael and Ferrell, C. Oliver. Marketing Strategy. New York: Cengage Learning, 2010.
Hill, C.W.Lawrence. International Business: Competing in the Global Marketplace, New York: The McGraw-Hill Higher Education Press, 2008..
Kamprad, Ingvar and Torekul, Beril. IKEA: the story of Ingvar Kamprad & IKEA, the worlds leading homeFurnishing company. New York: HarperCollins, 2005.
Kapoor, R. Jack. Et al. business. New York: Cengage Learning, 2009
Lewis, Elen. Great Ikea: a brand for all people. New York: Marshall Cavendish, 2008.
McBrewster, John, et al. IKEA. New York: VDM Publishing House Ltd, 2009.
Footnotes
1 Kamprad, Ingvar and Torekul, Beril. IKEA: the story of Ingvar Kamprad & IKEA, the worlds leading homeFurnishing company. (New York: HarperCollins, 2005), p. 56.
2 Kapoor, R. Jack. Et al. business. (New York: Cengage Learning, 2009), p. 14
3 Lewis, Elen. Great Ikea: a brand for all people. (New York: Marshall Cavendish, 2008) p. 45.
4 Freeman, R. Eliud. Strategic Management: A Stakeholder Approach. (Englewood Cliffs, NJ: Prentice-Hall, 2006), p. 108
5 Lewis, p. 49.
6 Corporate Social Responsibility (2007): A Guide to Better Business Practices, Business for Social Responsibility. (London: Education Fund) 111-116.
7 Freeman, R. Eliud. Strategic Management: A Stakeholder Approach. (Englewood Cliffs, NJ: Prentice-Hall, 2006), p. 109
8 Lewis, P. 52.
9 Hill, C.W.Lawrence. International Business: Competing in the Global Marketplace, (TheMcGraw-Hill Higher Education Press, 2008), p. 96
10 Hartline, Michael and Ferrell, C. Oliver. Marketing Strategy. (New York: Cengage Learning, 2010) p. 245.
11 McBrewster, John, et al. IKEA. New York: VDM Publishing House Ltd, 2009.
12 Carver, R. James et al. Retailing. (New York: Cengage Learning, 2010), p, 11
13 Hill, P. 98.
14 Gossy, Gregor. 2008. A Stakeholder Rationale for Risk management: implications for corporate finance decisions. (New York: Gabler Verlag, 2008), p, 35.
15 Hill, p. 102