A Detailed Report on IKEA's Business Ethics and Social Responsibility

This report provides a comprehensive analysis of IKEA's business ethics and corporate social responsibility (CSR). It begins with an abstract summarizing IKEA's ethical and social responsibilities towards its stakeholders. The introduction highlights IKEA's global presence, product offerings, and employee base. The report then addresses ethical issues faced by IKEA, including allegations of unethical practices and child labor, and how the company responded. It explores IKEA's code of conduct, vision, mission, and core values, including their sustainability strategy and cost-consciousness. The report applies Carroll's CSR Pyramid to assess IKEA's economic, legal, ethical, and philanthropic responsibilities. Finally, it examines key stakeholder relationships based on power, urgency, and legitimacy. The report concludes by discussing ways IKEA can further improve its CSR practices and ethical conduct.

Running Head: Business Ethics
Business Ethics

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Contents
Abstract.......................................................................................................................................................1
Introduction.................................................................................................................................................1
Question 1...................................................................................................................................................1
Question 2...................................................................................................................................................2
Question 3...................................................................................................................................................3
Question 4...................................................................................................................................................4
Question 5...................................................................................................................................................5
Conclusion...................................................................................................................................................5
References...................................................................................................................................................6

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Abstract
The report explains the ethical and social responsibility of the company IKEA with respect to the
stakeholders of the organization. IKEA is a well-renowned company known for manufacturing
furniture worldwide; the company sells their products at reasonable prices and fulfills their
ethical and social responsibility. Further, it is the corporate social responsibility of IKEA to keep
the interest of stakeholders lied in the business and do not defraud them with the activities. The
report comprises of the CSR of the organization and obligation of the company towards its
stakeholders. It also gives a view of the activities which the company initiated for their members.
Introduction
IKEA is the world's one of the largest company selling furniture at reasonable prices worldwide.
The products of IKEA are well-designed and cheap due to which the customers are insisted to
buy the product of IKEA only. Currently, the company has a huge employee base of 139,000
employees working with them. The company is situated in total 43 countries worldwide. Further,
the report comprises of IKEA's ethical issues, code of conduct, vision, mission and corporate
social responsibilities to fulfill in the global market (Alänge, Clancy, and Marmgren 2016).
Adding to it, the report also gives a view rightful acts which the company shall perform in future
to initiate an ethical code of conducts in the organizational process.
Question 1
Despite earing such good brand image in the market, the company still suffers from ethical issue
which hinders the sustainable growth of the organization. Also to initiating their corporate social
responsibility the company initiated many activities to resolve the issues as well. Further the

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most critical which came in front of the company is that there were some allegations imposed on
the company that they were not following the corporate social responsibility. Additionally, it was
said that the company involved themselves in some activities which were against the human
rights, resulting to which IKEA also agreed on the term that was imposing the German political
prisoners to work for irrespective of their will (Andersson 2017). But the company also
mentioned the fact that the even had happened years ago, but still, it is reflecting the growth of
the organization till as well. Apart from that another issue which was faced by the company
IKEA was that they were pointed out for encouraging the practices of child labor in their
organization by sourcing rugs from an Indian company which was producing goods by practicing
child labor and it was along found in the management that the company is spying in the working
of their employees which in unethical in the corporate world (Singh, Sethuraman, and Lam
2017).
Thus, in order to address the issue, the company adequately answered all the questions which
were raised against the name of the company in the market. In case of the breaching of the
human resource rights, the company stated that the event had happened in the past and no such
practices are being implemented by the company in the current scenario (Crane, and Matten
2016). Additionally, the company also initiated the corporate social activities which favored the
employees and stakeholders of the organization. They showed their extreme responsibility
towards fulfillment of human rights in the organization. The claim was settled by having a word
with the company that no such practices are now continued in the management of the
organization (Stahl, et. al., 2016).
Additionally, to settle the dispute of child labor activities, the company stated that they only
import goods from India by four suppliers only. Along with which the information of those

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transactions with suppliers is clearly mentioned in the audit report of the organization. Further
for the case of spying on the activities of employees, the authorities of IKEA issued the
statement that they respect personal space of every employee and do no hold any such activity in
their management practices (Feldman, and Korn 2017).
Question 2
Talking about the code of conduct and ethical values which they possess, the company IKEA
believes that it is their vision to create a better day to day for the people globally. Also, the
business idea initiated in the organization supports the vision of the organization as it offers a
wide range of well-structured and functional home furnishing to assist the working of an
individual at their home (Văduva, et. al., 2016). Further, the mission statement of the company
stated that they intend to sustain their growth in the long run by investing in the future activities
which can benefit the employees, customers, and stakeholders on a whole. Assisting the vision of
the organization, the company possess core values which are mainly, adapt simplicity in
working, focusing on their own way, cost-consciousness, sustainable development etc. These are
mission, vision and the value statement which the organization adheres in order gain the market
competence (Görg, et. al., 2017).
The context of the above statement, IKEA follows the above mention mission and vision
statement so that to improve the current position of the organization globally. With that respect,
the company initiated activities like sustainability strategy for 2020. In that strategy, the
company decided to produce their products with renewable energy resources so that to maintain
sustainable growth and save the resources for the future generation as well (Martin 2016). To
initiate the systematic growth the company also developed small milestones to achieve so that

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they do not get distracted from their future goals. Assisting the cost-conscious concept of the
organization, IKEA developed means which can help the company to produce the products cost
efficiently, also they manufactured the simple structured product as to decrease its prices and
make them achievable by all. The company constantly reviews their growth in terms of
sustainability so as to look that the management is constantly following the way which they
decided to follow (Grant 2016).
Further to keep the interest of stakeholders lied in the managing activities of the business the
company implemented "a big thank you" event to thank and congratulate the employees and the
stakeholders of the organization. They take the initiative to align the interest of stakeholders
along with the managerial objective of the organization. The company aims to treat all people
equally who connected with the organization system. They call them co-workers irrespective of
their job and position. This process helps the company in commencing equality in the
organization along with good organizational culture (Gummesson 2017).
Question 3
Carroll's CSR Pyramid helps the assessor to review the corporate social responsibility conducted
in a business so as to make sure that these activities are law-abiding, economical and socially
good. In order to be socially supportive, means that an organization shall responsible and
obedient towards the law and apply ethics in the company's activities. The different level of the
pyramid helps the manager to analyze the obligation of the company towards the society and the
environment. Different aspects of the model are economic responsibility, legal responsibility,
ethical responsibility and philanthropic responsibility (Kim, Colicchia, and Menachof 2016).

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Talking about the company IKEA and its rules for the CSR, the company adequately comply the
social norms so as to initiate sustainability in the environment. Further, the analysis of the
company with regards to Carroll's model is discussed below:
 Economic Responsibility: talking about the economic responsibility, it refers to the
responsibility of the organization to produce goods which are suitable for the
consumption of the society and selling them by making a profit for the organization. The
company IKEA has maintained a competitive advantage in the global market so it can be
clearly seen that the company provides differentiated product at reasonable cost and do
not defraud the customers. Even the company supports local communities by operating
their chain stores and provides services like they did in their flagship store of Syria
(Larsson 2016).
 Legal Responsibility: it refers to the responsibility of the corporation to abide the laws
formed in the market by the government or other regulatory. Further, in order to comply
with the legal requirement of the report, the company took the initiative to print their
catalogue on 100 per cent forest stewardship council certified paper. This process
initiated the less use of non-renewable resources. Also, they aimed to sustainably use the
resources and recycle them so as to avoid overutilization of resources (Lili, and Jiaqi
2017).
 Ethical responsibility: talking about the ethical responsibility, it is the responsibility of
the company to initiate activities which are fit for the society and the people, it shall not
harm the interest of the community, and for that purpose the company IKEA donates
their profits to charitable foundations Brighter Lives, so as to initiate better lives for all.

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 Philanthropic responsibility: Philanthropic being the top of the pyramid, focus more on
the luxurious things namely quality of life of employees, community etc. So, as
mentioned earlier the company IKEA organized an event name big thank you so that to
provide recognition to all the stakeholders and thank them for the company's
achievements (Lim 2016).
Question 4
According to the theory defined, the key stakeholders holding different relationships are
discussed below:
 Power: it refers to those people, who are important for the working of the business,
mainly those people who have the power to affect and make changes in the activities of
the business process. The key stakeholders of the company IKEA who have the power to
influence the activities of the business are the employees, shareholders, customers and
government, as they have the power to influence and restrict the activities occurring in
the organization (Yang 2016). Another perspective power refers to the ability of a given
person A to influence other given person B, to initiate activities which the other person
was not willing to do earlier. It shows that the other person has the power to influence the
decision-making process of a person. Similarly, in the company IKEA, they shall
adequately align their interest with the objective of the organization. Also, the seek
approval of these stakeholders in many cases as well (Ngai, and Falkheimer 2017). For
the customers they rigorous safety alarm procedure and return policy along with strict
follow up. This process helped the key stakeholders to act according to their powers.

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 Urgency: it refers to the claim which the key stakeholders shall make in case of
emergency. It refers to the issues or problems of those stakeholders which shall be
analyzed on a prior basis. These issues of such stakeholders are critical and require an
initial focus on the problem. The key stakeholders of IKEA according to this approach
are shareholders and the creditors of the organization. As creditors are the lenders of the
organization so an activity initiated by them is looked after the company on prior basis.
Also, EGM (extraordinary general meeting) can be conducted by stakeholders in case of
emergency. Thus, it can be said that the company proper complies their duty to treat them
ethically (Power 2016). IKEA strived to long term development so that more profit is
derived for both the parties.
 Legitimacy: according to this theory the stakeholders of the organization requires the
attention of managers of the organization so that they get to know about the activities
going in the organization. The key stakeholders according to this approach for the
company IKEA is, employees. IKEA adequately looks after the interest of their
employees as they socially satisfy the requirements of the organization (Rice, Hanoch,
and Barnes 2017). For the employees, the company uses the VOICE survey so as to
motivate them and seek if they are facing as issue.
Thus, in this way the company IKEA fulfills their social responsibility towards the stakeholders
of the organization.

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Question 5
Already the company IKEA is moving on the path of fulfilling the corporate social
responsibility, still, there are some ways in which the company can perform better and growth
beyond the competitive market. The recommendations for the company are discussed below:
 As from the above analysis, it is seen that the company has faced many allegations on
their name for practicing unethical activities which destroyed the image of the
organization in the target market. Thus, in order to coupe up with the situation, the
company shall circulate a disclaimer regarding the ethical practices which they conduct
keeping in mind the interest of the stakeholder of the organization (Savur 2017).
 As IKEA uses natural resources which if once depleted, cannot be formed afterward, thus
the company shall adopt an adequate measure to replace such resources with alternative
products and they shall also aim to recycle such resources so that they can be saved for
the future generation. Apart from that, the company shall also socialize such issues and
its resolution so that other corporates also get to know about the current problems which
the environment is facing (Schlegelmilch 2016).
 In order to keep the interest of stakeholder lied in the business activities, IKEA shall
circulate all resourceful and mandatory information to them so that the stakeholders are
satisfied with the services of the organization. Apart from that, they focus on providing
better satisfaction to them from their product. So the company shall manufacture products
according to the taste and preferences of the customers present in the target market.
 Another way in which the company shall work and maximize the benefits of stakeholders
is that the company shall firstly identify their stakeholders and then analyze their powers
and benefits which they shall receive in the organization. In this way, the company can

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maximize their benefits along with interest of the stakeholders. also they shall monitor
the growth of employees on qualitative as well as quantitative basis.
 Lastly, in order to satisfy the corporate social responsibility, the company shall initiate to
plat more trees so that the environment is saved. This will help the company to produce
more raw materials as well and initiate equal consumption and production of raw material
(Schmeltz 2017).
Conclusion
Thus, in the limelight of above mentioned events the fact that shall be noted that in today's world
it is important for a company to maintain their corporate social responsibility and provide
benefits to the stakeholders of the organization. Similarly, the company IKEA performed their
corporate social responsibility and maintains a sustainable growth in the environment. The
company redressed all the allegations levied and satisfied the stakeholders with their claims.
Also, IKEA followed their vision and mission statement by complying with the plans formed by
them. Thus, in this way the company gained goodwill in the market by involving the
stakeholders in the activities of the organization and providing them adequate services as well.

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Consider Corporate Social Responsibility? A Multi‐country Study in Sub‐Saharan Africa.
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