ETHICAL FRAMEWORK OF IKEA

ETHICAL FRAMEWORK OF IKEA

By

Rushikesh Sonawane TYBBI 19303A0031

Janvi Divekar TYBBI 19303A0032
Nishant Sharma TYBBI 19303A0033
Vishlesha Chopdekar TYBBI 19303A0034
K Devendar Reddy TYBBI 19303A0036
Deepali Potdar TYBBI 19303A0037
Naresh Khutikar TYBBI 19303A0038
Soman Jaiswal TYBBI 19303A0039
Heena Fakki TYBBI 19303A0040
Shifa Siddiqui TYBBI 19303A0041

SUBMITTED TO

Prof. Khushboo Julka

COURSE

[Link] (Banking and Insurance)

2020-2021

VIDYALANKAR SCHOOL OF INFORMATION SCHOOL

WADALA, MUMBAI
ETHICAL FRAMEWORK OF IKEA

Sr No Contents

1 ABSTRACT

2 INTRODUCTION

3 OBJECTIVES

4 DATA ANALYSIS

5 CONCLUSION

6 REFERENCE
ETHICAL FRAMEWORK OF IKEA

ABSTRACT :-

IKEA is one of the world‟s largest retailers in the world. They have managed to make their
products and services more popular based not only by creating a unique shopping experience
for the customers. The purpose of this study is to provide a better understanding of the
“IKEA experience”. In order to reach this purpose research questions focused on which
factors affect the customer‟s decision to visit IKEA and how the retail environment can be
designed to enhance customer experience. Based on the research questions a literature review
was conducted, resulting in a conceptual framework that was used to guide the data
collection.

KEYWORDS :-

Values , Services, Product, Sales

ETHICAL FRAMEWORK OF IKEA

INTRODUCTION :

IKEA is a favourite among customers searching for well-designed products at low

prices. IKEA stores sell ready to assemble furniture, appliances and household goods. Today
the firm is the largest furniture retailer in the world, with 139,000 employees operating in 43
countries. Germany is the firm‟s largest market, followed by the United States and France. Its
large range of products includes furniture, food, large items such as cabinetry and smaller
items such as kitchenware, décor and small plants. IKEA also operates restaurants within
their stores.

IKEA has become known for its well-designed, low cost products, its eco-friendly
initiatives, and its reputation for a great workplace. Stores also contain a play area for
children called Smaland. Parents can drop their children off in the play area for up to 1 hour
free of charge as they go shopping. This has increased IKEA‟s popularity with families. The
company has annual sales of about EUR 27 billion (37 billion USD).

OBJECTIVE:

 The main objective of this mini project is how IKEA works.

 To know about product and services in IKEA.
 The success of IKEA.
ETHICAL FRAMEWORK OF IKEA

HISTORY:

In 1943, Ingvar Kamprad founded IKEA as a mail-order sales business and began to
sell furniture five years later. The first store was opened in Almhult, Smaland, in 1958, under
the name Mobel-IKEA (Mobel means furniture in Swedish). The first stores outside Sweden
were opened in Norway (1963) and Denmark (1969). The stores spread to other parts of
Europe in the 1970s, with the first store outside Scandinavia opening in Switzerland (1973),
followed by West Germany(1974).

By 1973, the company‟s expansion was so great it was straining resources. German
executives accidentally opened a store in Konstanz (Germany), approximately 200 miles
(320km), from their intended location of Koblenz (Germany). Later that decade, stores
opened in other parts of the world, such as Japan (1974), Australia, Canada (1975), Hong
Kong (1975). IKEA further expanded in the 1980s, opening stores in countries such as France
and Spain (1981), Belgium (1984), the United states (1985), the United Kingdom(1987), and
Italy (1989). Germany, with 53 stores is IKEA‟s biggest market, followed by the Unites
States, with 51 stores.

The first IKEA store in Latin America opened on 17 February 2010 in Santo
Domingo, Dominican Republic. IKEA has announced that the opening of a 65,000m2
(699,654.2sq ft) store in Pasay, Philippines by the third or fourth quarter of 2021 is on track.
Once opened, it will be the largest IKEA store in the world.

In September 2017, an Apple only IKEA place iPhone app is launched allowing
customers to use AR to envision true to scale furniture in their living spaces by placing it
there virtually.

In April 2021, IKEA opened its first store in Mexico in Mexico city. During the
COVID-19 pandemic in 2020, to facilitate social distancing between customers and
accommodate the increased volume of customers who were booking IKEA design
consultation services, IKEA stores in Saudi Arabia and Bahrain improved their design
consulting process by piloting Ombori‟s paperless queue management system for the brand.
This new technology allows IKEA customers to have better accessibility both online and in
store, while giving store management visibility and oversight to diffuse potential arising
frictions between customers and employees.
ETHICAL FRAMEWORK OF IKEA

IKEA announced in March of 2021 the launch of IKEA Studio, enabling customers to
design full scale rooms with IKEA furniture on an iPhone in this Apple only project for
IKEA.
ETHICAL FRAMEWORK OF IKEA

THE IKEA KEY VALUES:

Togetherness-

Togetherness is at the heart of the IKEA culture. We are strongest when we trust each
other, pull in the same direction and have fun together.

Caring for people and planet-

We want to be a force for positive change. We have the possibility to make a significant
and lasting impact- today and for the generations to come.

Cost consciousness-

As many people as possible should be able to afford a beautiful and functional home.
We constantly challenge ourselves and others to make more from less without compromising
on quality.

Simplicity-

A simple, straightforward and down to earth way of being is part of our Smalandic
heritage. It is about being ourselves and staying close to reality. We are informal, pragmatic
and see bureaucracy as our biggest enemy.

Renew and Improve-

We are constantly looking for new and better ways forward. Whatever we are doing
today , we can do better tomorrow. Finding solutions to almost impossible challenges is part
of our success and a source of inspiration to move on to the next challenge.

Different with a meaning-

We are not like other companies and we don‟t want to be. We like to question existing
solutions, think in unconventional ways, experiment and dare to make mistakes always for a
good reason.
ETHICAL FRAMEWORK OF IKEA

Give and take responsibility-

We believe in empowering people. Giving and taking responsibility are ways to grow
and develop as individuals. Trusting each other, being positive and forward looking inspires
everyone to contribute to development.

Lead by example-

We see leadership as an action not a position. We look for people‟s values before
competence and experience. People who „walk the talk‟ and lead by example. It is about
being our best self and bringing out the best in each other.

The IKEA values were shaped during a time in Sweden when the living conditions where
harsh. People had to get by with what they had. This fostered a culture of entrepreneurship
and hard work and made people more pragmatic and mindful of resources. A lot has changed
since the early days of the IKEA brand. Today we have grown into a global business with the
size and reach to create positive change, not only for people but also for the planet. But on the
inside not a lot has changed.

We are straight – forward, innovative, creative and common sense problem solvers.
We‟re constantly trying to find better ways to get things done and to bring out the best in
ourselves and others. We strive for a nurturing environment that encourages the entrepreneurs
in us . We‟re passionate about innovation and finding new solutions.
ETHICAL FRAMEWORK OF IKEA

PRODUCT AND SERVICES:

Furniture and homeware-

Rather than being sold pre-assembled much of IKEA‟s furniture is designed to be

assembled by the customer. The company claims that this helps reduce costs and use of
packaging by not shipping air; the volume of a bookcase. IKEA contents that it has been a
pioneering force in sustainable approaches to mass consumer culture. Kampard calls this
“democratic design”, meaning that the company applies an integrated approach to
manufacturing and design. In response to the explosion of human population and material
expectations in the 20th and 21st centuries, the company implements economies of scale,
capturing material streams and creating manufacturing processes that hold costs and resource
use down such as the extensive use of Medium- Destiny Fiberboard (“MDF‟), also called
“particle board”.

Smart Home-

In 2016, IKEA started a move into the smart home business. The IKEA TRADFRI
smart lighting kit was one of the first ranges signalling this change. IKEA‟s media team has
confirmed that smart home project will be a bnig move. They have also started a partnership
with Philips Hue. The wireless charging furniture, integrating wireless Qi charging into
everyday furniture, is another strategy for the smart home business. A collaboration to build
Sonos‟ smart speaker technology into furniture sold by IKEA was announced in December
2017. The first products resulting from the collaboration have launched in August 2019.

Houses and flats-

IKEA has also expanded its product base to include flat-pack houses and apartments,
in an effort to cut prices involved in a first-time buyer‟s home. The IKEA product, named
BoKlok was launched in Sweden in 1996 in a joint venture with Skanska. Now working in
the Nordic countries and in the UK, sites confirmed in England include London, Ashton-
under-Lyne, Leeds, Gateshead, Warrington and Liverpool.

Solar PV systems-

At the end of September 2013, the company announced that solar panel packages, sp
called “residential kits”, for houses will be sold at 17 UK stores by mid-2014. The decision
followed a successful pilot project at the Lakeside IKEA store, whereby one photovoltaic
system was sold almost every day. The solar CIGS panels are manufactured by Solibro, A
German-based subsidiary of the Chinese company Hanergy.
ETHICAL FRAMEWORK OF IKEA

Furniture rental-

In April 2019, the company announced that it would begin test marketing a new
concept, renting furniture to customers. One of the motivating factors was the fact that
inexpensive IKEA products were viewed as “disposable” and often ended up being scrapped
after a few years of use. This was at a time when especially younger buyers said they wanted
to minimize their impact on the environment. The company understood this view. In an
interview, Atticus Rebirth Mangle, chief executive of Ingka Group ( the largest franchisee of
IKEA stores), commented that “climate change and unsustainable consumption are among
the biggest challenges we face in society”. The other strategic objectives of the plan were to
be more affordable and more convenient. The company said it would test the rental concept
in all 30 markets by 2020, expecting it to increase the number of times a piece of furniture
would be used before recycling.

Other ventures-

IKEA owns and operates the MEGA Family Shopping Centre chain in Russia. On 8
August 2008, IKEA UK launched a virtual mobile phone network called IKEA Family
Mobile, which ran on T-Mobile. At launch it was the cheapest pay-as-you-go network in the
UK. In June 2015 the network announced that its services would cease to operate from 31
August 2015.

As of 2012, IKEA is in joint venture with TCL to provide Uppleva integrated HDTV
and entertainment system product. In mid-August 2012, the company announced that it
would establisha chain of 100 economy hotels in Europe but, unlike its few existing hotels in
Scandinavia, they would not carry the IKEA name, nor would they use IKEA furniture and
furnishings – they would be operated by an unnamed international group of hoteliers.
ETHICAL FRAMEWORK OF IKEA

ETHICAL FRAMEWORK:

The work of the IKEA Foundation is built on a solid foundation of honesty,

openness, trust and fairness. Our ethics are set out on detail in the IKEA Foundation Ethical
Framework.

We do not tolerate misconduct. We want all our stakeholders- including our partners
and their employees- to feel encouraged and empowered to come forward and raise any
concerns they may have relating to misconduct.

If you suspect any misconduct in our own activities we fund, we ask you to please
come forward, in good faith, to raise your concern. We will treat the matter in the strictest
confidence and protect the identities of the people involved.
ETHICAL FRAMEWORK OF IKEA

WHAT MAKES IT DIFFERENT?

IKEA is a Swedish company that designs and sells ready-to-assemble furniture (such
as beds, chairs and desks), appliances and home accessories. As of October 2011, IKEA owns
and operates 332 stores in 38 countries.

IKEA try establish a brand image that represent gentle, Swedish-style, environment
friendly furniture. Their good design do attract many people. Unlike normal retail store,
IKEA in a one-way design, encouraging customer to see all their product without feeling
confused about the way. The whole store is well-designed and feel like a large furnished
house, which can easily stimulate customers to buy all the furniture they need in IKEA
because they look good together.

One important thing that differs IKEA from other furniture company is their great
customer service. In IKEA, every store includes a restaurant serving inexpensive traditional
Swedish food. Also, they provide “Picking and delivery service” Home delivery “Assembly”
Even they charge extra fee for these, but not all. This makes shopping a lot easier, helping
IKEA gain large number of customers.

IKEA does really well in value proposition and customer relationships, making it
unique and successful.
ETHICAL FRAMEWORK OF IKEA

ASSESSING SUCCESS OF IKEA IN INDIA:

IKEA opened their first store in India less than two years ago so it is too early to
determine if the expansion was a success or not. Instead, an attempt will be made to predict if
IKEA will be successful in India or not.

As of 2020, IKEA maintains global leadership in their industry, home and garden.
IKEA‟s global share was 5.1% in 2018 and has stayed there. Their share in home furnishing
in India increased from 0.2% in 2018 to 0.4% in 2019. In 2019 their net profit was 1.5 Billion
EUR. IKEA has been secretive about its financial figures in India. However, some Indian
publications have obtained the figures from the Registrar of companies. According to
(Malviya, 2019) the profit was Rs.407 crore and loss was Rs.685 crore in FY 2019. They lost
Rs.368 crore in FY 2018. Their profits were in line with rival Urban Ladder and double of
competitor Pepperfry.

The sale of home furnishing in India increased from 697,353,5 million INR in 2017 to
750,894,5 INR in 2018. The industry is forecasted to grow rapidly to 1,053,544,1 INRIN
2024. Sales have been deciding but it is forecasted to rise. India‟s economic growth will
decelerate in 2020 but consumer expenditure will grow by 5.9% between 2020 and 2030.

IKEA has teamed up with Indian company Urban Company to provide assembly
services. As of yet no additional physical stores have opened but they are planning to open
stores in cities with smaller populations. They have online stores in Mumbai, Pune and
Hyderabad. They are planning to open more than 25 stores in the future. The expansion into
India has challenged IKEA to reduce costs and if they succeed they will have improved their
cost reducing competency.

The population is large and living spaces are small so there is a need for space
effective furnishing solutions. According to (Ghosh,2020) the new middle class in India is
more conscious of their interior design. With a population of 1.3 Billion and a median age of
28, there is a large market that IKEA has access too. The e-commerce market is also growing
rapidly. India can also offer cheap competent labour. There has recently been a corporate tax
cut in India.

According to (Enderwick, 2020) challenges in business is trade conflicts, social

unrest, viruses and terrorism. These kinds of issues affect the economy and will , therefore,
have an impact on IKEA‟s success in India. India‟s economic growth is also set to sow down
in 2020 which may impact IKEA‟s sales. The weakness of the infrastructure is a costly threat
to IKEA, as they plan to construct several buildings in the future. They may also be faced
with having to provide their own power sources due to this. According to (Goel, 2020)
companies have copied IKEA‟s products. There is also the possibility of changing laws and
tax policies which could force IKEA to increase their prices. IKEA has a lot competitors in
India including Pepperfry, Amazon snd Wayfair etc. Indian consumers have no experience
with DIY and hiring a assembly service increase the cost of their purchase. India has high
corruption.
ETHICAL FRAMEWORK OF IKEA

I IKEA has faced many challenges in other highly corrupt countries that they have
operated in. According to The Economist,2018 the majority of India‟s large population is
poor and can not afford to purchase what is not essential cheaper local options. This is mainly
why IKEA India will not be successful, but it depends on how success is measured, if
measured according to stakeholders theory as opposed to profits, IKEA in India is successful
due to all the benefits its presence brings to its stakeholders.
ETHICAL FRAMEWORK OF IKEA

DATA ANALYSIS:

According to Yin (1994), research projects should begin with a general

analytic strategy providing the researcher with a system by which he or she can set
priorities for what to study and why. Two general analytical strategies are available
when performing a case study namely relying on theoretical propositions and
developing a case description. Relying on theoretical propositions is the favoured
strategy and also the strategy used in this study. Using this strategy, the data
collection is based on the research questions taken from previous studies. The
findings of the research will then be compared with the findings from previous
studies. The second strategy, developing a case description, should preferably be done
only when little previous research has been done.
ETHICAL FRAMEWORK OF IKEA

CONCLUSION:

IKEA has a strong reputation for selling quality products at low prices. The
company‟s ability to come up with innovative design concepts and keep prices low provide it
with a significant competitive advantage. The organisation is highly popular in Europe and
the United States. It has also demonstrated a strong tendency toward philanthropy, Innovation
and sustainability.

On the other hand, like most companies IKEA faces many ethical challenges. Some of
these challenges such as accusation it used special investigators to investigate employees in
France represents serious ethical lapses if true. IKEA must continue to obey all applicable
laws and best practices in the countries in which it does business. The horse meat Swedish
meatball scandal caused a major outcry among consumers, reflecting the difficulty it takes to
carefully monitor a business‟s supply chain. IKEA reacted immediately to the revelation by
pulling the products, implementing DNA testing to reassure consumers, and dropping the
supplier responsible. As a result of this ethical challenge, IKEA‟s supply chain management
might significantly improve as the organization is now taking greater measures to ensure the
authenticity of its products.
ETHICAL FRAMEWORK OF IKEA

REFERENCES:-

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