IKEA
Corporate Social
Responsibility/Sustainability
LIR 554
October 25, 2006
Angela Brosi Julie Gabel
Lynette Buitt Annie StultsDemonstrationIKEA
What is IKEA?
– Home furnishing retailer
– Founded in Sweden in 1943
Named in an acronym after its founder Ingvar
Kamprad in his childhood home and home
town of Elmtaryd in Agunnaryd
History
– First store opened in 1958
– In 2006: 237 stores in 34 different countries
– 504,154,000 visitors to storesIKEA
Business strategy
– Create welldesigned and functional home
products for people at low cost.
– How is this strategy achieved?
Products
The IKEA Shopping Experience
– Stores
– Online CatalogueIKEA and Franchising
Strategy: Allow the IKEA concept to reach more
people through franchising.
Who is involved?
– Owner and Franchiser: Inter IKEA Systems B.V.
How is this strategy achieved?
– Seeks areas of market expansion
– Establishes stores based on secured market
expansion and penetration
– Establishes stores based on understanding of
IKEA concept IKEA’s Business Idea
and Vision
Encourage social and environmental
responsibility
Vision= “to create a better everyday life for
the many people”
– IKEA customers
– Coworkers and employees working
for suppliers
– The environment Corporate Social
Responsibility
Anders Dahlvig President and CEO of IKEA Group
– “The role of business is changing”
– “It is not good enough to do what the law says, we need to
be in the forefront of these [social responsibility] issues”
– “Done in a sensible way, social and environmental work is
good for business…and it is good for business because it
can also support cost efficiency.”
– Awarded the Swedish Award of Good Environmental
Leadership in 2002Low price but not at any price
Our responsibility:
“The aim is to make products
which have minimum impact
on the environment and to
manufacture them in a socially
responsible way.”Code of Conduct
The IKEA Way (IWAY)
– States minimum requirements for social,
working, and environmental conditions
Safe and healthy products
Demands related to forestry
Reduction of emissions
Environmental work
– Compliance and Monitoring
Group (CMG)
Ensure same standards
followed worldwideWhy Social Responsibility?
The Formaldehyde Incident (Late 1980s)
– A popular IKEA bookcase sold in Germany tested with
unacceptable levels of formaldehyde
– IKEA immediately stopped production of the bookcase and
lost tens of millions of dollars due to lack of sales and the
costs associated with finding the source of the
formaldehyde
– This led IKEA to draft an internal environmental policy as
well as implement their goals of stringent supplier and
wood sourcing programs
– Instead of designing a few higherpriced environmentally
marketed products, IKEA concentrated on a stepbystep
tweaking of its best selling products