Business Report: Ikea's Challenges, CSR, and Brexit Impact

This report provides an in-depth analysis of the multinational retail company Ikea, examining key issues the company faces in relation to management theory, with a specific focus on cultural challenges and the application of behavioral management theory. The report also explores Ikea's Corporate Social Responsibility (CSR) practices, linking them to the company's overall strategy and highlighting initiatives such as environmental sustainability and social welfare programs. Furthermore, it investigates the influence of Brexit on Ikea's operations, including its impact on revenue, costs, and pricing strategies. Lastly, the report reflects on the benefits and challenges of team working, drawing from the student's experience in a group presentation and emphasizing the importance of effective communication, decision-making, and problem-solving skills. The report concludes with a summary of the key findings and recommendations for Ikea's future growth and development.

Report

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
COMPONENT 2: Individual Report...............................................................................................1
1. Analysis of the organization and identifying key issue faced by the company in relevance
with Management theory............................................................................................................1
2. Importance of CSR in relation with strategy...........................................................................2
3. Influence of Brexit on organization........................................................................................2
4. Reflection, benefits and challenges on team working.............................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
This study will highlight, key issues faced by the organization with reference to
management theory. It will also examine CSR practice with strategy. Furthermore, this report
highlights, Influence of Brexit on organization. Lastly it includes, benefits and challenges on
team work.
COMPONENT 2: Individual Report
1. Analysis of the organization and identifying key issue faced by the company in relevance with
Management theory.
Ikea is one of the Swedish Multinational private retail company which was founded in the
year 1943 by Ingvar Kamprad. Ikea company mainly deals in furniture products, kitchen
appliances, home appliances home- ware, ready to assemble furniture. Ikea company focuses on
expanding its business all across the globe in order to reach more customers by generating higher
profits.
The key issue faced by the company is that it faces various cultural issue which largely
affect the growth and development of the Ikea company (Shafritz, Ott and Jang, 2015). Every
individual has different beliefs, democracy, religion which makes it difficult for the company to
take into consideration all demographics. Every country has different culture which makes it
difficult for Ikea for future growth and success.
Management theory is a set of specific guidelines which focuses on assisting employees
in delivering best results in order to reach greater heights.
Behavioural management theory: This is an effective theory which helps in maintaining
effective human relations with the customers by understanding each other culture, demographics,
belief, attitude, etc. in order to attain higher performance and productivity in an efficient and
viable manner (Bratton and Gold, 2017). Ikea should have a clear and in- depth understanding of
the local culture within which it's going to establish or has established a business for smooth
functioning. Application of this theory helps in better understanding of each employee and better
equal opportunity in the Ikea which helps in mitigating cultural difference and also leads to
improved productivity.
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2. Importance of CSR in relation with strategy.
Corporate social Responsibility (CSR) is an effective approach used by the company for
the welfare of the society (Unit, 2015). It is important to link CSR with the specific strategy of
the organization in order to deliver higher results to the company. Ikea complies with an
effective CSR practice because it focuses on supporting various local communities by
contributing towards improvement of the environment for which they have planted around 1
million trees across country (IKEA Corporate Social Responsibility, 2017). It also emphasis on
minorities and gender equality where Women in Ikea company represent around 54% which
helps in development of future generation.
Ikea also focuses on efficient consumption of energy by investing on renewable energy,
solar energy and wind turbines by the year 2025 which is beneficial for the future generation and
society. Ikea also focuses on reducing wastage, as it has sold around Skapro Chairs which were
made from 100% recycled plastic. It also focuses on using wood sustainable sourcing to protect
the environment (Crowther and Seifi, 2018). Ikea company also focuses on donating funds on
charity. It has donated around EUR 7.7 million for brighter future for Refugees campaign. Ikea is
making great efforts to make it more sustainable and affordable by the year 2030. It focuses on
more environmental friendly products which benefits the future generation and society.
3. Influence of Brexit on organization.
Brexit is referred to as “British Exit”. Brexit led to fall in the British pound to the lowest
in the past 30 years (Clarke and et.al., 2017). Brexit has a major influence on the Ikea company
as the revenue of the UK company raised unto 5.8% i.e., around £1.8 billion. The cost of the
company also increased to 13.7% due to fall in the value of pound. In result of higher prices., the
company has increased it prices by 3.6% in order to cope up with the cost (Ikea is increasing its
prices - and it's because of Brexit, 2017). Due to Brexit the Ikea company has cost around £40
billion and the profit of the company dived by 26%. Ikea has focused on importing large number
of goods to the customers which eventually results in higher sales for the company (Hobolt,
2016). The Ikea company has increased their share and focuses on increasing the shares by 15%
till 2027. The Ikea company sales has increased to around 6% which in turn results in higher
generation of profits (Ikea raises UK prices after import cost hit from Brexit, 2017).
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4. Reflection, benefits and challenges on team working.
It was a great experience to conduit a group presentation. I have gained immense
knowledge and developed new thoughts in developing various skills in order to reach greater
heights. I have systematically planned everything to carry out the presentation by taking
feedback and opinion from each group member. The major benefits of working in the team
collaboratively is that it helps in effective decision making, conflict resolution and problem
solving. I have established the fact that, an effective team working helps in boosting up the
performance and productivity for carrying out a particular activity and reach higher results.
Teamwork helps in motivating each individual to work according to their talent and interest
which eventually helps in delivering effective and accurate results. Effective teamwork helps in
accomplishment of the activity on time with improved outcomes.
I have evaluated that the major challenge faced by the team was time constraints and
conflict in reaching specific decision. Ineffective communication is also the major challenges in
teamwork which result in improper decision making. I have to develop effective communication
skills in order to understand the viewpoints of each member in the group member which helps in
better achievement of goals. I have to also develop better decision making, influencing skills,
problem solving and analytical skills for improved outcomes.
CONCLUSION
From the above study it has been summarized that, The key issue faced by the Ikea
company is that it faces cultural barriers which mainly result in slower growth and development
of the company. Integration of behavioural management theory helps in understanding each
other culture, demographics, belief, attitude, for higher productivity. Further, Ikea complies with
CSR practice for future sustainability and social welfare. It also concludes that Brexit has
influenced the working of the Ikea company. It has been evaluated that team working helps in
effective decision making, conflict resolution and problem solving.
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REFERENCES
Books and Journals
Bratton, J. and Gold, J., 2017. Human resource management: theory and practice. Palgrave.
Clarke, H.D and et.al., 2017. Brexit. Cambridge University Press.
Crowther, D. and Seifi, S. eds., 2018. Redefining Corporate Social Responsibility. Emerald
Group Publishing.
Hobolt, S.B., 2016. The Brexit vote: a divided nation, a divided continent. Journal of European
Public Policy.23(9). pp.1259-1277.
Shafritz, J.M., Ott, J.S. and Jang, Y.S., 2015. Classics of organization theory. Cengage Learning.
Unit, B., 2015. Corporate social responsibility.
Online
IKEA Corporate Social Responsibility. 2017. [ONLINE]. Available through:<https://research-
methodology.net/ikea-corporate-social-responsibility/>
Ikea is increasing its prices - and it's because of Brexit. 2017. [ONLINE]. Available
through:<https://www.coventrytelegraph.net/whats-on/shopping/ikea-increasing-prices-its-
because-13900724>
Ikea raises UK prices after import cost hit from Brexit. 2017. [ONLINE]. Available
through:<https://www.dailymail.co.uk/wires/pa/article-5081253/Ikea-raises-UK-prices-
import-cost-hit-Brexit.html>
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