Who is IKEA
Over the years, IKEA has grown to become one of the largest retailers of domestic products including carpets and furniture, among other related products. It is currently an international retailer of these household items with operations in over 35 countries across the world.
The company is famous for its low prices and innovativeness in the design of its products (Business and Sustainable Development Global, 2010, para. 1). Nonetheless, the company has also been very keen on ensuring that it creates a good reputation of ecological stewardship and sensitivity to the social matters in the society in the spirit of sustainable development in the 21st century.
This paper uses the United Nations’ definition of the Sustainable Development. It states that this is the progress that allows an organization to meet its current needs and objectives without compromising on the survival or possibility of future generations failing to meet their needs.
Issue to Address
In the 21st century, the issue of corporate social responsibility is increasingly becoming of great concern and importance to organizations. The basic idea behind this concept has been drawn from sustainability development and organizations have a responsibility to care for the societal, environmental and the economic issues related to their businesses.
‘The IKEA Way’ is a phrase that has been coined in reference to the tradition established at IKEA for doing business in a unique way. This is a strong corporate strategy for sustainability. IKEA has developed a reputation of providing innovative products at low prices.
Just like most of the other multi-national companies, IKEA has found itself on the wrong foot being implicated in the indirect use of child labor. The firm also sells carpets from India, Iran and Pakistan but their suppliers use children as a source of labor for weaving their carpets. Over the years, IKEA has employed different measures to address the issue but with very minimal success.
India’s carpet business is booming and currently it accounts for over 85% of the sales. However child labor still remains the major problem. International organizations have tried to intervene by even setting up schools for former child workers but the success has been very minimal.
IKEA launched a very unique anti-child labor campaign which is aimed at empowering the poor women by offering them work in the carpet industries and taking the children from the industry to school. The long-term viability of the project is uncertain though it has received much applause even from IKEA critics, IKEA (2009).
Three Dimensions of Sustainability
As already mentioned, social development has three major dimensions that must be noted whenever sustainability is discussed. These factors are the economic efficacy, social solidarity, and ecological responsibility.
The objectives of addressing these three dimensions is strategic in that sustainability focuses on ensuring that the planet remains viable, that there is equity in and among the different generations and it offers holistic solutions to problems.
This is essentially the recognition of the interdependence that exists between social, economic, and the environmental factors in promoting justice and equity by empowering the public and a developing a sense of global citizenship. Even though one cannot be sure of what the future has in store, a sustainable future is preferable though.
IKEA is striving to ensure that it meets the three dimensions of sustainable development:
Economic: an economically, IKEA has been producing goods on a continued basis and has been managed well and has been able to avoid extreme imbalances among its departments. This is one of the conditions that IKEA uses to ensure that it is able to run smoothly and economically benefit the society is that it seeks empower the people (Harris, 2000, p. 6).
IKEA is a business entity and as such, it needs to make profits for its shareholders. As a result, this has seen the company outsourcing labor from cheaper countries like Indian and Pakistan. However, this form of outsourcing has been faced with a challenge in that children are normally exploited to offer cheapest labor source hence disregarding going to school.
IKEA has taken the initiative to campaign against child labor in an attempt to deal with the suppliers that employ child labor (BSD Global, 2010, para. 3). Besides, the company requires its suppliers to create healthy and safer working environments. They should also pay reasonable minimum wage and compensate their workers for overtime work.
Environment: IKEA recognizes that a sustainable system is that which maintains a steady resource base in which crucial resources like renewable and non-renewable energy sources are not over-exploited leading to their depletion without the creation of substitutes.
The measures that are employed here include atmospheric stability and other functions that builds ecosystem (Harris, 2000, p. 6). At IKEA, the management strives to decrease the levels of environment degrading substances due to the various activities undertaken by the company.
Therefore the company requires its supplies to mitigate those activities that impacts negatively on the environment (BSD Global, 2010, para. 3). This means that they have to cut down the release of wastes and emissions to the environment and strive to create recycling systems for their waste products in a safer manner to avoid environmental pollution.
IKEA also requires its suppliers to depose their wastes or store them in environmentally friendlier manner and avoid use of energy sources like wood. IKEA also does not allow its suppliers to use some prohibited substances like harmful chemical compounds in their production (BSD Global, 2010, para. 4). All in all, IKEA works to ensure that biodiversity is sustained and that the ecosystem functions normally.
Social: the IKEA strategy for the social aspect of sustainability has been to ensure that there is adequate distribution of social services including healthcare, education, political accountability, equal gender representation and empowerment. For this reason, IKEA requires its suppliers to revere the basic human rights and manage their employee with dignity and integrity (BSD Global, 2010, para. 5).
This means they should offer safe working environments that meet the workplace ethics and rights (Harris, 2000, p. 6). In case housing facilities are offered to the company employees, they should be clean, ensure privacy and quietness. There should be no cases of discrimination, restriction of free association of worker, use of physical and mental discriminatory measures. Moreover, there should not be bonded, forced or child labor (BSD Global, 2010, para. 5).
IKEA has been able to observe most of the conditioned aforementioned but child labor in Pakistan and India among other nations has been a great problem. The company has a special program of dealing with this shameful practice where children are exploited to offer labor at a very cheap cost.
Considering the complex child labor matters statute, the company has launched long-term strategy for this issue and has involved the society and other organizations (BSD Global, 2010, para. 5). Currently, it has detached itself from all firms that use child labor.
Measuring the Success
IKEA makes use of its SWOT analysis to work through its objectives of sustainable development and it employees the Key Performance Indicators to measure the success that it achieves or fails to accomplish. IKEA is usually able to note that its campaign is making an impact on the society when it accomplishes that maximal performance of its strength.
This is an important thing to take into account when there is increased utilization of renewable energy sources for production by its suppliers (BSD Global, 2010, para. 2). When the suppliers use raw materials innovatively with very limited waste material left and finally when the company can form long-term partnerships with its suppliers who have met the requirements.
The company’s opportunities show that demand for products that support “green” process is increasing and that cheap price is a competitive strategy especially now that firms are faced with an economic crisis. IKEA will record that it is making progress when there is reduced landfill wastes and reduced water in the process of production (BSD Global, 2010, para. 3).
Another success would be when there is reduced carbon emission in the processes of production and packaging hence mitigating the carbon footprint.
The weaknesses to be improved upon would be the cheaper cost against quality and the size of the company may be problems to manage and communicate. However KPI for success will show that there is a balance between quality and cheap costs of the products and that the company has management to keep its stakeholders informed on the current developments (BSD Global, 2010, para. 3).
In terms of threats, people have less disposable income to purchase products and competition has increased. However with improving sustainable development campaign, the company will improve its reputation and image against competitors hence being able to survive the competition by wining trust of clients.
Conclusion
IKEA is on the right track in its endeavor to ensure that it builds a strong strategy for sustainable development. Despite the fact that the company needs to cut down labor costs and maximize its profits, it has come out strongly in its fight for the rights of workers and the need to preserve the environment. It would be very unethical to deplete all the resources without thinking about the future generation and even further exploiting children for the sake of making profits.
Failure to attend school in order to work further jeopardizes the future generation because the children are future leaders, managers and worker. Without an education in this knowledge-based economy, growth and development is hampered. Therefore the effort by IKEA should focus more on child labor, empowering the children through education and good working condition and compensation.
Reference List
Business and Sustainable Development Global Guide, (BSD) (2010). IKEA, International Institute for Sustainable Development. Web.
Harris, J. (2000). Basic Principles of Sustainable Development. Global Development and Environment Institute Working Paper 00-04, pp. 6-7