Corporate Social Responsibility Case Study On Ikea Management Essay

Corporate affectionate proficienteousness Case story On Ikea Management EssayThis calculate identifies Corporate tender Responsibility (CSR) as a demanding emergence which takes into deep understanding of CSR by render a road map of core subjects with related issues and instruction execution ground on the principles of CSR and discusses briefly on its characteristics pros and cons theories and approaches justifications and fundamental principles. This publish get dones an insight on the signification of CSR and examines in detail sanitary-nigh the anticipate key likely gains from its operating(a) use followed by the discussion on the troubles and barriers that CSR commonly faces .Finally the report chooses the casing study on IKEA and discusses in depth slightly its CSR perplexs by study its development and strategy dimensions of CSR in somatic affectionate agenda(strategic and antiphonal forms of CSR) and analyses IKEAs responsibilities as integral elemen ts of strategy with a brief discussion on CSR intercourse. The concept of CSR has widened its arena and its change magnitude global demand makes us to sort out the responsibilities of a truehearted with its dimension towards accessible, scotch and surroundingsal impactsINTRODUCTIONThis report identifies Corporate well-disposed Responsibility (CSR) as a hot topic and the reason for choosing CSR is payable to its high profile attainment in the faculty member domain and more or less of us feel CSR as an absolute unavoidableness to define the roles of organizations in Society and apply their responsibilities to their line of credites in terms of societal, estimable and legal standards. Moreover, CSR has become a globalised concept and achieved championship prominence because of its geographic prevalence from US origin to its widespread suitability and establishment in Europe. This report structures the content to understand the concept of CSR by depicting a road map of core subjects with related issues and implementation based on the principles of CSR and discusses briefly on its characteristics pros and cons theories and approaches justifications and fundamental principles. This report gives an insight on the signifi tooshie buoyce of CSR and examines in detail more or less the expected key potential gains from its operative use followed by the discussion on the problems and barriers that CSR generally faces .Finally the report chooses the case study on IKEA and discusses in depth about its CSR experiences by studying its development and strategy dimensions of CSR in corporate brotherly agenda(strategic and responsive forms of CSR) and analyses IKEAs responsibilities as integral elements of strategy with a brief discussion on CSR communication. soul CSRThe term CSR seem to be new and research predicts that thither has been an evolution of its concept throughout m either decades. Way back in 30s of last century, the way of marketing was ini tially on distribution and logistic, that was about how to provide some products at minimal cost. With the total marketing, the centre of acception is to set on the selling systems on the marketing mix comprising the 4 Ps Price, Products, Place, Promotion.Social marketing emerged in the 70s whereby the authoritiesal party decides on the long interests of stakeholders interiorly as well as externally. A stakeholder could be all individual or a group, who sewer influence or stir influenced by behavioral impacts of an organization. The categories of the attach tos stakeholder are shown in the shelve below familys organizational structure and locationInvolvement in the Business activity innateExternalDirectShareholders,investors, be intimaters,employeesCustomers,Lenders,Tax agenciesIndirectConsultants,Suppliers, engagementorsCommunity,NGOs,MediaGeneral public nonrecreational bodiesThe impact of any organization on the society through their operations, products or services r endered by associating with stakeholder groups much(prenominal) as clients, suppliers, employees, investors and community and this move be displayed in the form of a diagram belowSource Mallen bread maker (2007)Different terms and ideas are associated and so it is difficult to define CSR due to ambiguity in the CSR topic of research. There is al tracks a problem to stick onto universal definition of CSR as the concept ranges from mere deference with law to pure Philanthropy. Corporation refers to group of members acting as an individual, be it for moving in or elsewhere. Philanthropy has little to do with CSR because philanthropy is about how a company spends its dimension and CSR is about how a company generates m matchlessy and how responsibly they conduct their business in doing so.However, European commission identifies CSR as a spacious concept and recognizes, CSR as a concept whereby companies conflate affectionate and environmental concerns in their business operat ions and in their interactions with their stakeholders on a voluntary basis(Commission of the European Communities 2001).WHAT CSR IS NOT?1. It is not an alternative for the regularisation of companies2. It is not a replacement for how companies should tweak their social,ethical and environmental impacts3. It go out not save the worldCHARACTERISTICS OF CSRThe main features of CSR can be summarised as shown in the table belowFeaturesDescriptionTriple- permeate-line economical, social and Environmental unforcedAll activities are taken up voluntarily.Stakeholders integrityConnecting all parties come to. long actionCarrying activities over a long-run period.CredibilityEnhances the credibility of the firm.PROS AND CONS OF CSRArguments for CSRArguments against CSREnhances report card in society.Solves the problems caused by business in society.Stabilises corporate power with responsibility.Increases long-term profitabilityBeyond government regulations.Adjusts to im equilibrize demand s of stakeholders.Improves environmental conditions.Business should be meant for profit maximization.Enforces unequal cost among competitors.Stakeholders compelled to hidden costs.Business may drop social skills.Makes to forget the aims of the businessSocial responsibility cannot be a legal responsibility.Places responsibility on the business but not on individual.CSR THEORIES AND APPROACHESThe center on on economic, semipolitical, social and ethical aspects in social public aspects according to Parsons (1961) are primarily based on four features that can be perceived in any social structure such as adaptation to the environment ,goal attainment, social desegregation and pattern livelihood or latency. This hypothesis led to the classification of CSR theories into four types which can be depicted in the following table with their related approaches.TYPES OF THEORIESAND ITS FOCUSAPPROACHES parableINSTRUMENTAL THEORIES focus on the economic aspect of the interaction among busine ssand societyAugmentation of shareholder economic valueThis hypothesis argues that CSR is the only message to the end profits.It is based on wealth creation that is measured by share price.Strategies for competitive wagesSocial investments in the context of ambitionStrategies based on the view of firms available natural resources.Strategies related to the bottom of the economic pyramid.Cause -related marketingConsidering Socially recognised philanthropic activities apply as an instrument in marketingPOLITICAL THEORIESFocus on the business power applicable in the field of views of politicsCorporate constitutionalismFirms social responsibilities arise from their strength of social powerIntegrative social contractAssumption of the existence of contract amongst the business and society.Corporate citizenshipThe firm is perceived as a citizen with participation in community.INTEGRATIVE THEORIESFocus on the integration of social demandsIssues ManagementFirms response to the social a nd political issues and their impactsPublic ResponsibilityCurrent legal procedures and public policies are considered as recommendations for social mathematical operationStakeholder wayStabilizing the firms stakeholdersCorporate social performanceExploring the responses from social legitimacy to social issuesETHICAL THEORIESFocus on the right factor to attain a candid societyStakeholder normative theoryConsidering trustful duties towards firms stakeholdersUniversal rightsConsidering the simulations related to human rights, parturiency rights and respect for environmentSustainable developmentAchievement of human impart by be present and approaching generationsThe common goodAwareness towards the common good of societyJUSTIFICATIONS FOR CSR The prevailing justifications for CSR are shown in the picture below clean-living obligationAttaining commercial accomplishment in approaches that tribute ethical valueInsufficient tending to stabilize complicated competence related to soc ial and economic interests.Varied personal set among managers and stakeholdersLicence to operate maturation goodwill to safeguard the consent of Governments and stakeholdersLicences and approvals are deprivationed for a business to operate.However, this kind of approach will afford to compromise in dictatorial CSR agenda to the externals that pretermit knowledge about companys operations and competitive spot.Encourages defensive attitude responses for snip beingness.SustainabilitySelf-interest to encounter the present needs without compromising the future needsEfficiency on environmental issues yielding immediate economic improvements.In other aspects other than environmental issues, intangible long-term results give a weak justification for short-term costs.Existing justifications focus on the pressure between the firm and society rather than bringing coordination.These generic wine rationales give a trivial guidance for taking up company activities.FUNDAMENTAL PRINCIPLES OF CSRCSR mainly relies on three fundamental principles such as Economic, Social and Environmental playing fields. The purpose of CSR is to conflate business activity with its market-gardening for attaining sustainability in its economic, social and environmental areas. Each fragment of CSR includes activities, which differ depending on the type of firm and the needs of stakeholders.ECONOMIC AREA The firm is expected to behave as a transparent enterprise .Positive transactionhip among the investors, nodes, suppliers and shareholders is expected. Economic impacts at local, national and international levels should be monitored. Stakeholders and the activities of CSR in the economic area of the market are shown in the table belowEconomic area MarketStakeholdersOwners and investorsCustomers/consumersSuppliers /partnersRegulatory bodiesMediaCSR activitiesCreates ethical codexTransparencyBest dedicate managementPractice anti-corruptionBuild Stockholders dealingBuild Customer/cons umer relationsBuild suppliers relationsBuild investors relationsProtect intellectual propertySOCIAL AREA Responding and tackling the behavioral attitudes to employees in the working environment and focuses on assisting the local community. The company influences the working standards, education, health safety and develops the cultural aspects. The stakeholders and CSR activities in the social area are shown in the table belowSocial areaStakeholdersWork locationLocal communityEmployeesUnionsNon-Profit organizationsPublicCSR activities health safety of the employeesHuman resources developmentGet rid of child labourFollow working standardsSupporting laid-off employeesAssurance of jobsSupporting social integrityCorporate volunteerismDonor shipEducating PublicImproving the caliber life of employeesCreation of jobs and develop local infrastructure.ENVIRONMENTAL AREA The Company focuses on its impact on ecosystem and elements like land, air and water. The company feels its close to prot ect the natural resources.Environmental areaStakeholdersGroups related to environmental aspects.CSR activitiesEco-friendly touch on and manufacturing products and services.Agreement with regulatory and standards(ISO,EMAS)Renewal of energies policy by recycling and apply eco-friendly products.Lessening the environmental impacts.Protecting the natural resources.ROADMAP FOR CSR The following roadmap depicts the core subjects and CSR implementation based on the principles ofSource vi.unctad.org/russiast09/docs/millercsr.pptCORE SUBJECTS AND ISSUES Issues related to core subjects of CSR can bedepicted from the following tableCORE SUBJECTSISSUESORGANIZATIONAL politicsShareholder activismPolitical economyCross border investments by external investorsHUMAN RIGHTSDue attentivenessRisk conditionsEscaping complicityDetermining grievancesInequity and capable groupsCivil rightsPolitical rightsEmployees fundamental rightsSocio-economic and cultural rightsLABOUR PRACTICESSocial conversationCh ild labourForced labourEmployment relationshipsWork conditionsSocial guarantor health and safety at employmentTraining and progress in the employmentENVIRONMENTAvoidance of PollutionMaintenance of resourcesMitigating and adapting climatic changeProtecting the natureREASONABLE OPERATIONSAnti-corruptionSensible political implicationsGood competitionEncouraging social responsibility in the field of influenceAssessing the value for property rightsCONSUMER ISSUESAwarenessMarket sensingHealth and safety for consumer protectionConsumption sustainabilityConsumer support and solution for disputesData security and privacyEntry to necessary servicesCOMMUNITY PARTICIPATION AND overtureEducation CultureCreating employment and developing skillsAdvancement of technologyIncome generationSocial investmentCommunity healthCSR DRIVERS The key drivers of CSR are discussed in the table belowDRIVERSDESCRIPTIONProfound self-interestGenerate ethical, social and economical cohesion where markets, labour an d communities are linked to work together.Social investmentSocial capitalism and percentage to infrastructure has been seen progressively as necessary part of business activity.Transparency and trustPublic perceives business as low ratings of trust. Public expectation about companys openness and obligation leads to prepare a report encompassing their performance in the areas of social and environmental issues.Increased public expectations of businessPublic expects beyond the companys contribution to the economy by taxation and provision of employment.In addition to the in a higher place key drivers, the following list shows general drivers of CSR.Business Risk managementReputation and check off managementLearning and innovationCost nest egg and operational efficiencyCompetitiveness and market positioningImproved relations with regulatorsOrganizational transformation and continued improvementIMPLEMENTING CSREach firm is anomalous in its operational procedures, its awareness of CSR issues and the amount of work done towards CSR implementation.Therefore variant firms adopt different frameworks depending on their CSR approach.However, it adds value to the firm when CSR is implemented in a systematic route by integrating its mission, strategy, cultural, environmental and endangerment profiles, processes and activities. The following framework for CSR implementation gives scope to build quality and environmental management, which follows the model of plan, do, check and improve based on ISO standards .This tractile framework can be adapted by any firm as suitable for its organization.Implementation FrameworkPHASESSTEPSTASKS image1.Perform CSRassessmentGather a CSR management teamWork out the definition of CSRRe-examine corporate documents, processes and activitiesRecognize and connect key stakeholders2. Build up a CSRstrategy arise support with experienced managerial facultyInvestigate others tasksDesign a format of proposed CSR activitiesBuild the ideas for scheduling and the business case for themFix on areas of roadmap, methodology and focusDo3. Explore CSRcommitmentsTake a gaze on CSR commitmentsOrganize discussions with key stakeholdersDesign the group to develop the commitmentsPlan for an introductory draftCheck with concerned stakeholders4. Implement CSRcommitmentsBuild an combine CSR decision-making frameworkPrepare a CSR business planLay level the quantifiable goals and find out the measures of performanceSlot in the employees and to whom so ever applicable to CSR commitmentsPropose and perform CSR trainingSet up workshop to address the behavioural problemsDesign for setting up essential andexternal communicationsCheck5. Authenticate and report on progress count on the performanceHold stakeholdersReport on performanceImprove6. pass judgment and EnhanceAssess the performanceDiscover the opportunities for enhancementEngage stakeholders double check Once a cycle completesGo back to plan and go ahead with subsequent cycleS IGNIFICANCE OF CSRThe issue of CSR initiatives and the perceptions of ethical standards have gained more attention by the management in considering approaches to strategic marketing. Usually, CSR is of growing importance towards managing the business processes and is magnetizing growing company investment. Unfortunately, marketing departments lack the skills to manage even the issues related to genius thereby narrowing the insights. For example, pharmaceutical companies were criticised in the media for arrogance and lack of transparency. In order to rebuild its reputation, Pfizer took initiative to set up free medicines to those who were laid-off during recession. So marketing strategy expects to look for opportunities for recrudesce competitive positioning in market segments through incrementd customer value integrated with CSR initiatives. Majority of business leaders are centre on CSR as a tool for differentiation and competitive advantage leading to generate revenue.CSR is not only authorised in considering the consumer relationships but also scrutinizes business-to-business relationships (comprising lend chain partners) with stakeholders like investors, government and lobby groups.CSR is an important business strategy by giving meaning and direction to twenty-four hours to-day operations. Satisfying each of the stakeholder groups allows companies to maximize their commitment to another important stakeholder group-their investors, who benefit most when the needs of these other stakeholder groups are being met.The business succeeds when values indoors the decision-making process and objectives of the organization are met. Lifestyle brand firms, in particular, need to live the ideals they convey to their consumers.CSR as a strategy is becoming increasingly important for businesses today because of three specific trends shown in the table belowTrendsDiscussionChanging social expectationsConsumers and society in general expect more from the companie s whose products they buy with the regulatory bodies and organizations in place to experience corporate excess.Increasing affluenceA society in need of work and inward investment is less likely to enforce unappeasable regulations and penalize organizations that might take their business and money elsewhere.GlobalizationThe lucre fuels communication among like-minded groups to initiate a product boycott.These three trends bode corporate success. The result of this mix is that consumers today are better aware and feel more empowered to put their beliefs into action. CSR is particularly important within a globalizing world because of the way brands are built, at a time when these values and demands are constantly evolving.CSR can thusly best be described as a total approach to business in maintaining brand dominance. primeval POTENTIAL BENEFITS OF CSRThe benefits to firms, community and environment by practicing CSR can be discussed at length in the following tableKEY POTENTIAL BE NEFITSDISCUSSIONEfficiency in risk managementCSR oversees and scrutinizes the corporate activities by effectively managing the risks involved in governance, social, economic, environmental and legal aspects in day-to-day complicated market, thereby safeguarding the bring home the bacon for overall market stability. trespass analysis about a firm by considering the concerns of the parties involved is one of the better ways to anticipate in managing the risks. This ultimately nippingens the decision-making.Enhanced reputation managementReputation of a firm is mainly based on values such as trust, quality, reliability, which reflect the organizations image and brand fruition and so any firm concerned about addressing the CSR issues, can manage their reputation with effective CSR management.Ability to develop the recruitment and retention of staffEffectiveness in CSR policies improvise the human resource management which has direct impact on firms image related to its products and s ervices.CSR indirectly help in executing the programs that enhance the morality and loyalty of employees who are valuable resources for companys performance. fostering innovation, competitiveness and market positioningCSR gives positive impact in avoiding the risks by tackling diverse stakeholders who are the basic sources for generating ideas for novel products and markets thereby differentiating from its competitor, which result in competitive advantage, thus developing competitive strength based on innovative business models. For instance, a certified firm with social and environmental standards improves the chance to become a supplier to specific retailers.Increased operational efficiencies and cost reductionsBy implementing CSR, there is always an opportunity to transform eat streams into revenue streams by systematic approach of environmental aspect of renewable energies by reducing costs through recycling. Tangible cost savings signify the reduction in carbon emissions.Buil ding efficient supply chain relationshipsA firm is at risk to susceptibility in its supply chain. Companies with like-mindedness can build long-term business relationships with aim to increase their profits by maintaining standards and thereby tackle the risks. Larger firms encourage small firms with whom they are related to take up CSR approach. For example, particular retailers may beseech their suppliers to adopt certain codes and practices.Improved ability to tackle changeCSR aids as a radar to anticipate the emerging market trends and by regular stakeholder dialogue with customers, a company can respond to any changes that occur in regulatory, economic, social and environmental aspects.Generate robust social licence to function in the communityBetter understanding between citizen and stakeholder recognition of the firms activities and objectives can render enhanced stakeholder relations, thereby giving scope for robust alliances of public, private and civilized society.CSR en hances the social capital.Enhances investmentAs CSR enhances the brand reputation, it leads to raising the companys profile in the investment community. The company value can be improved through further investments.CSR approach drives the fiscal institutions about incorporation of social and environmental criteria into their project plan leading sharp decision-making of where to invest money and this motivates the investors to look for better CSR management.Better relations with media and government regulatorsCSR indicators act as tool for the governments to decide on obtaining export assistance contracts in some countries. In many cases, though CSR activities are beyond the regulatory requirements, governments considered CSR views to expedite the approval processes for firms in order to meet their sustainability goals by recognizing the business sector engagement as a requirement.Building customer relationshipsIn Cause related marketing the altruistic activities of the firms can be recognized by morally conscious customers who may be flexible in paying higher prices or in reduced costs may increase their purchasing power and so CSR in broader hotshot has significant impact in building the long-term customer legitimacy,loyalty,trust or brand equity.Acting as a catalyst for responsible usanceIn order to combat with the ever changing consumption patterns, company has to play a key role in achieving sustainability by the way it supplies its goods and services in the marketplace to meet responsible consumerism which considers to relate consumer rights and issues and how well the relationship between producers and consumers is authorized by regulatory bodies.BARRIERS AND CHALLENGESCSR implementation in a competitive world draws certain barriers and challenges which are due to problem in implementing CSR concurrently with other businessConcerns in a balanced and remarkable mannerDifficulty of transparencyLack of clear communicationEconomic thoughtlessnessVarious instability problems in developing countriesespecially problematic for SMEsComplexity of the issues involved and so difficulty in managing the supply chain and regulating the sub-contractorsComplex set of issues asCSR covers a broad array of direct and indirect businessperformances, achievements, and so its impacts differ fromone business sector to anotherInternational differences that may lead to lack of universal acceptance in examining the potential impacts of CSR. Misinterpretation due to CSR being judged differently in many parts of the world depending on different priorities. For example, Chinese consumers interpret social responsibility as safe, high-quality products, while mho Africans consider it as a contribution to healthcare and education. In Australia, Canada, Indonesia and the UK the highest antecedency is to protect the environment. In Turkey, it is cogitated as an indicator for charitable donation. In U.S, France, Italy and Switzerland and most of South America, t he highest priority is towards fair treatment of employees.Complex set of stakeholders benevolent to the business for a CSR attitudethe appropriate stakeholders need to be involvedstakeholder involvement is important, yet difficultAlways ambiguity between CSR and financial successLow voluntary acceptance of CSR can lead to car park washingLack of devices to measure, monitor evaluate and report theimpactsTwo myths little companies think it the responsibility of the bigger onesandIt is mainly a philanthropic customHigh overheads of implementing and sustaining CSR efforts.No universally accepted frameworksSome of the main internal company barriers to CSR initiatives areExecutives recommending strategic marketing programmes that focus on CSR-based positioning must be aware of the likely barriers and challenges from those who do not believe CSR as a legitimate strategic tool.CASE STUDY CSR AT IKEAThe reason for choosing IKEA as case study of CSR work is to understand its CSR focus as a leading company, which ranks as the first in CSR in the Accountabilitys Responsible Competitiveness Index 2008 (RCI). IKEA was selected due to its long history and experience in the area and its response to several CSR-related crises and criticisms that has enabled the organization to develop integrated policies and a range of collaborations and initiatives with stakeholders and could set an example for companies aiming to develop their economic and environmental sustainability.IKEA is a value-based Swedish furniture giant that has wide recognition for its focus on cost reduction and it is a progressive company that manages to integrate its cost focus with CSR issues. This report discusses in detail about how this integration is possible for IKEA and it is interesting to know its implications for other companies who want to combine CSR into their business practices.The CSR experience gained by IKEA can make other companies to realise that CSR is not necessarily a cost addition bu t it is a cost-cutter, which imparts increasing knowledge on how companies can be socially responsible. The aim is therefore to analyze the relationship between the value addition by CSR for a company to its corporate strategy. Public awareness about IKEAs CSR activities is only through proper communication and so this report investigates on how the CSR is communicated by IKEA. This report d