Better World Ensured To Future Generation â€Myassignmenthelp.com

Question: Discuss About The Better World Ensured To Future Generation? Answer: Introduction In this research paper emphasis will be given on ethics of the manager and the CSR activities in respect of IKEA with the challenges it faced in those domains and comply them with the mission statement and the corporate governance of IKEA. IKEA is a renowned and popular brand name in the segment of furniture. The company exists in 43 countries including its presence in Europe, USA and other parts of the world. This company is also enriched with big numbers of human resources counting to 139,000 individuals. The company is mainly famous for its low-cost, well designed products by complying with environment friendly use of raw materials and manufacturing business process. IKEA has recorded its annual revenue of around 27 billion Euros or 37 billion USD. This company was established by Ingvar Kamprad in Sweden in 1943 at the age of seventeen. Prioritizing on the design to enjoy competitive advantage, the company has excelled through the entrepreneurship excellence and leadership qualit y of the founder. Most significant ethical issues faced by IKEA Although IKEA is famous for its popularity of products, the company had faced different challenges related to ethical practices of the management during the earlier decades. These issues are raised as phenomenal lapses in ethical practices while dealt with the respective stakeholders. Some of them are discussed below. Human Rights Allegation The company is famous for its strong practice of ethics to highlight its corporate responsibility while human rights are concerned. But some allegation was raised which had put question mark on their ethical practices related to human rights. This is due to the incident took place during communist era of thirty years ago. It was found and admitted by the management of the company that the labor deployed for the manufacturing process of furniture were political prisoners of East Germany. It was also reported that in case of denial of performing such work, the prisoners were punished physically with some brutal mode. This occurrence proved that although the company believed in human rights with its proper maintenance, no such control was found for their global supply chain. It is also reported that the company has engaged child labor for their manufacturing process of rugs in India Stand of IKEA For the first incident of East German Prison labor, IKEA management had agreed with the happening and had ensured that no such occurrence would take place in future as this incident was highlighted as a severe corporate misconduct violating the ground of human rights. For the second incident of deploying child labor for manufacturing rugs by Indian supply chain associates, the company had justified their stand with the claim that the outsourcing of the manufacturing process of rugs is being assigned to four suppliers. As per the audit report of the company, those suppliers were complying with the IWAY standards of IKEA as fixed for deployment of labor. Spying of Employees The Allegation It was reported that IKEA has a tendency to conduct investigation on the employees. This was highlighted through an incident of a female employee in France during her long absence due to sickness. As per the investigation, it was found that the said employee was not actually sick and was fired by the management as per the report of the investigation. As this practice of investigation on employees was a serious offence as per the legislation of France related to privacy of employee, the employee had put charges against the company to the Court. The Judge had imposed a bond of EUR 500,000 against IKEA Stand of IKEA Although it was not commented in public by IKEA regarding this issue, the investigation launched internally by IKEA had caused termination of service of many executives of key positions in France. Quality of product The Allegation In 2013, it was reported that the Swedish meatballs placed in the shelves of European countries were made with ingredients of horsemeat. The same was endorsed by the Czech Republic through the detection of DNA of horsemeat. Stand of IKEA The company had immediately reacted to this occurrence with an investigation and reported that the problem was caused due to supplies made by one Swedish supplier, who had bought the ingredients from Polis supplier. As a corrective measure, the company had withdrawn all such products from the market and also confirmed that horsemeat is not bad for human health. IKEA had lodged a complaint against the supplier with the result of termination of agreement related to that supplier. Later on the Swedish meatballs had again appeared in the market with the preventive measure of making sample DNA test of the ingredients. The company had also taken certain corrective measures to ensure the quality of the ingredients by developing the tracking standard of meat from the place of origin to store through production process(Render, 2012). Corporate Governance The Allegation The complex type of corporate structure is also raised as an ethical issue by the critique. The corporate structure of IKEA was run by a non-profit organization with Dutch origin. It was believed that the same concept was the brain child of Kamprad being the head of the organization. Basic objective of this procedure is to ensure exemption of corporate tax as per normal practice. If the allegation is right, this step is to be reckoned as the unethical practice to evade tax. Stand of IKEA IKEA had strongly denied the accusation with the justification that the corporate finance structure was made in such way that it can prove its firmness along with the mitigation of tax to make the products of the company more competitive so far their price is concerned. The company had provided its audited financial statements for the stakeholders of the company, which, as per the management, can prove its transparency with prudence to the world(Ebnother et al., 2014). Vision, Mission and Code of Practices- IKEA Vision and Mission statement Mission statement of any corporate is comprised of vision, mission and code of practices. The same depicts the objective of that organization. For IKEA, vision and mission statement is same which insists on its corporate objective of creating better life for global people. This statement also confirms the business idea which can support the vision of offering a varied range of functional home furnishing products which are designed as per need and with the affordable price range for most of the people(Jurevicius, 2013). As per the standard of mission statement, IKEAs was awarded with 2 out of 4.5 points which concludes that the company has not taken proper initiative to prepare its mission statement as the same lacks to serve five basic components of mission statement namely markets, concern for survival, employees, technology and public image. The mission statement has not emphasized the contribution of the company to its stakeholders except customers. The main drawback of same mission and vision of any organization is that these two statements do not suffice the purpose of two different types as vision and mission statements are different in nature to be used for different purpose. Mission statement should be directed to more stakeholders. Hence, the same statement used for mission and vision is not serving the basic purpose of explaining the objective of IKEA. Code of Practices- IKEA The code of practices of IKEA is based on the code of conduct of IKEA which is launched in 2000 and is known as IWAY. This concept is instrumental to specify the needs which are meant for the supply chain stakeholders with the exchange value for their supplies of goods and services. IWAY is a macro concept with the micro requirement of industry base supplements with special emphasis put on the issue of child labor. The supply chain associates of IKEA are mandatorily bound to pass on IWAY guideline to their employees and suppliers down the line. IWAY is mainly based on internationally acclaimed conventions with specific declarations. IWAY also emphasizes on UN Universal Declaration of Human Rights of 1948, the International Labor Organization Declaration on Fundamental Principles and Rights at Work of 1998 and the Rio Declaration on Environment and Development of 1992. IWAY mainly concentrates on prevention of corruption and activities which are not legal. This mandate also confirms disassociation of the company from any form of direct and indirect corruption. Through IWAY, IKEA had introduced a corruption policy with the Rules of Prevention of Corruption along with investigation policy which primarily focuses on the dos and donts of the stakeholders including their duty in case they sense any probable corruption or illegal .occurrence. The same is notified through vendor letter to all stakeholders of supply chain with the acknowledgment received from them(Ikea, 2017). Vision and Mission The company has spread its business globally in 43 countries with as many as 389 stores as of 2016 data. The organization has human resource deployed in different segments of its operation process with 139,000 individuals. These data justifies their vision and mission statement of reaching the customers to meet their needs with most affordable prices to match their pocket. Appendix 1 is depicting this fact featured in Appendices(Statista, 2016). Code of Practices The interventions of IWAY application were found effective in case of child labor deployment for rugs manufacturing in India through their internal audit, which confirmed about the baseless criticism in this aspect. For the Swedish meatball fiasco of 2013, the same had been internally investigated through IWAY standard. When the same had been found justified criticism, corrective measures had been taken by the company with necessary steps to stop re-occurrence of such happening(Hhs, 2009). Corporate Social Responsibility- IKEA Sustainability programs of IEKA are mainly taken up to ensure their CSR compliance. As a company, IEKA had focused on CSR, which has a positive effect on the planet and its inhabitants, out of whom human being are most prioritized. The Carrolls Four Part Model is mainly emphasizing on different contributory areas of social responsibilities which are consisting of economic, legal, ethical and philanthropic responsibilities. These four part model is forming a pyramid which is being depicted in Appendix 2(Carroll, 2016). Environment IKEA has generously contributed to the Woodland Trust since 2007 to make funding arrangements for 4,500 tree packs to the UK community through the adopted free scheme which allowed around 150,000 UK individuals to the environmental imapct. Basic objective of such initiative is to ensure better environment, more fresh air for the community and lesser pollution of nature caused by green gas emission. IKEA has arrangement for campaigning to fund 309 acre of new woodland under their project named A Foot of Forest within the geographical area of UK. IKEA has also taken initiative to raise funds from the sensible bunch of customers for pledging a tree for the nearest community for a token donation of GBP 1(Ikea, 2014). Refugees Due to changed global political situation, there are millions of refugees from Middle East had entered Europe since 2015 for better and peaceful life style. IKEA and its Foundation had taken up a Good Cause campaign named Brighter Lives for Refugees through their token contribution from the products sold from their stores to UNHCR, the agency for refugee rehabilitation by UN. As the problem for refugees are more aggravated, the company has taken spontaneous steps to support local organization with the products of basic needs for the newly generated refugees. It is also phenomenal that the workers of IKEA had contributed their honorary service to serve the refugees for their rehab. IKEA is also instrumental for taking up programs with long term duration through their integrated effort by the company workforce(Ikea, 2015). Ethical Responsibilities As per the philosophy of IKEA, human rights are the basic right for every individuals which is sponsored through the vision of the company with the round-the-year activities to ensure ethical environment for the stakeholders like supply chain associates, the customers and the local communities, as well. The employees have high respect for meeting their demand of treatment with fairness and with equality irrespective of the religion, physical ability, ethnicity, age, sexual orientation and gender on a regular basis as routine. The company is following the guideline fixed by UN about human rights and business through IWAY standard and this is applicable for all stakeholders including their community to provide them a global atmosphere which is free from corruption(Ikea, 2015). Legal Responsibilities IKEA is more concerned about the children of the community as they are treated as the best available future resource for the mankind. The company has taken up several steps to protect children by not encouraging child labor. The company believes that children must have the right to get protection from exploitation, abuse or negligence. That is why, IKEA is not practicing child labor for their operation system with the active compliance for preventing and mitigating this bad vice of the business society. The guideline of IKEA fixed through IWAY has endorsed this concept which is as per the international association named as Save the Children with proper guidance from International Labor Organization (ILO) and UNICEF since 2000. In order to promote prevention and mitigation of child labor, IKEA is involved in addressing the basic reason with a detailed approach. IKEA Foundation is supporting UNICEF and Save the Children campaign in around 25,000 localities of India and Pakistan with the expected total target audience of 15 million children by the end of 2017. Economical Responsibilities IKEA believes in the concept of social entrepreneurship and promotes the concept with the objective of better lifestyle in the communities. Social entrepreneurs are handling this instrument in order to face environmental as well as social challenges like reduction of poverty, reforestation and ensured empowerment of female. IKEA feels proud by creating long-term strategic alliance with those stakeholders globally. The company has practiced collaboration with social entrepreneurs which gives impetus by inspiring IKEA with the access to skilled workmanship who traditionally engages themselves in handicraft segment. The handmade products are exclusive with limited in numbers and are displayed and sold from the exclusive IKEA stores with the prime objective to roll back the profit to the basic initiative programs. Economic responsibilities are thus done by the company in order to take care of the global community with the close coordination between the company and the social entrepreneurs by sharing the entrepreneurial experience and with specific unique ideas about upcoming design(Ikea, 2015). Hence, from the above discussion, it is evident that the company is performing its social responsibilities as per Carrolls Four Part Model and thus ensuring the CSR duties with continuance and specific deliverable objectives. Mitchell at el attribute to stakeholder relationship The definition of stakeholder is narrated by Freeman as stakeholder of any organization is specified as any individual or group who has the ability to affect or who may be affected by the objective of the organization. (Freeman, 1984, p.46) With further research on this subject, Mitchell, Agle and Wood had evolved their findings through their article in 1997. They have proposed a new theory which is normative in nature for identifying the stakeholders with three variables- Power, Legitimacy and urgency. As per this literature, power is defined as the variable through which the stakeholder can or already has the gained access as coercion in physical means, utilization in material and normative in respect of esteem, prestige and social means to enable them imposing their will on the organization. Legitimacy is defined as a general concept with the perception that the activities of any individual are expected, appropriate or proper within any organization, which is with socially constructed system of values, norms, beliefs and definitions. Urgency is described as the specific degree by which the claim of the stakeholder can attract urgent attention. That degree is depending upon several variables like time, sensitivity and criticalness of the situation as per the degree of importance of their demand. From the above discussion it is evident that the priority is to be fixed to those stakeholders who have the three variables named as power, legitimacy as well as urgency. These three variables can have the ability to overlap. On the broader definition of such variables, there is micro division of stakeholders in seven different categories which is projected in the Venn diagram given in Appendix 3(Stakeholdermap, 2010). With the above discussion, the stakeholders of IKEA are differentiated as follows: Power- The Board of IKEA and the Managers Legitimacy- The customers, the supply chain associates, and the employees Urgency- The community, the shareholders and the environmental associates Recommendations With the above research, it is evident that IKEA is trying to perform their business with the standard practice as fixed by the IWAY standard. Still the company has enough scope to improve their performance so far their different area of activities are concerned. Although profit is the main criterion for doing business, other aspects affecting society and community should not be ignored. The company is spreading their business globally and has the scope of more business in long term. In order to prove them more responsible towards their different stakeholders, the company has to ensure that they should comply with the global regulation related to maintenance of environment and facilitating mankind in the area where they exist. Recommendations for their ethical and CSR compliance are: More importance to the need of the stakeholders More cooperation with the global associations for environment sensitiveness More application of business acumen with ethical business practice More emphasis on CSR programs for the global mankind. Conclusion It is evident that the company, IKEA is performing its business as per their standard to comply with the needs of UN. More emphasis on security of women and child ensures their effort towards community. Their ultimate focus on the interest of the stakeholders makes the company unique with their business approaches. The company is forwarding towards its long term sustainability by making rectification to their mistakes and honoring the global business norms by ensuring security to the environment by their specific strategies. References: Carroll, A., 2016. Carrolls pyramid of CSR: taking another look. International Journal of Corporate accounting Responsibility, 1(3), Available at: https://jcsr.springeropen.com/articles/10.1186/s40991-016-0004-6. Ebnother, M., Rivera, M. Sawayda, J., 2014. IKEA Address Ethical and Social Responsibility Challenges. [Online] Available at: https://danielsethics.mgt.unm.edu/pdf/ikea.pdf [Accessed 11 September 2017]. Hhs, 2009. IKEA and CSR: Like Hand in Glove? [Online] Available at: https://arc.hhs.se/download.aspx?mediumid=656 [Accessed 11 September 2017]. Ikea, 2014. This is ikea people planet people communities. [Online] Available at: https://www.ikea.com/gb/en/this-is-ikea/people-planet/people-communities/ [Accessed 11 September 2017]. Ikea, 2015. Human rights. [Online] operations at: https://www.ikea.com/gb/en/this-is-ikea/people-planet/people-communities/human-rights/ [Accessed 11 September 2017]. Ikea, 2015. Suppliers. [Online] Available at: https://www.ikea.com/gb/en/this-is-ikea/people-planet/people-communities/suppliers/ [Accessed 11 September 2017]. Ikea, 2015. This is ikea people-planet people-communities refugees. [Online] Available at: https://www.ikea.com/gb/en/this-is-ikea/people-planet/people-communities/refugees/ [Accessed 11 September 2017]. Ikea, 2017. About the IKEA Group. [Online] Available at: https://www.ikea.com/ms/en_JP/about_ikea/our_responsibility/iway/index.html [Accessed 11 September 2017]. Jurevicius, O., 2013. Mission statement of IKEA. [Online] Available at: https://www.strategicmanagementinsight.com/mission-statements/ikea-mission-statement.html [Accessed 11 September 2017]. Render, B., 2012. Teaching Tip: Ethical Issues Facing Ikea and Darden. [Online] Available at: https://heizerrenderom.wordpress.com/2012/11/20/teaching-tip-ethical-issues-facing-ikea-and-darden/ [Accessed 11 September 2017]. Stakeholdermap, 2010. Stakeholder Analysis, Project Management, templates and advice. [Online] Available at: https://www.stakeholdermap.com/stakeholder-analysis/stakeholder-salience.html [Accessed 11 September 2017]. Statista, 2016. Number of stores of the IKEA Group worldwide in 2016, by region. [Online] Available at: https://www.statista.com/statistics/241821/number-of-stores-of-the-ikea-group-worldwide-by-region/ [Accessed 11 September 2017].