Marketing Management

Case Study: IKEA Address Ethical and Social

Responsibility Challenges
A L D I E R M AWA N A B D U S S A L A M
G E RY R E I N H A R D M A N U R U N G
G LO R I A M A G D A L E N A A N G E L LY N B O L LU
HONG SANG SEOB
T U B A G U S H E R M AWA N A M R I L L A H

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About

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IKEA

Ingvar Kamprad, Elmtaryd and

Agunnaryd[1]

Type

Private

Industry

Retail

Founded

lmhult, Sweden (1943)

Founder

Ingvar Kamprad

Headquarters

Leiden, Netherlands

Area served

Europe, Asia, North America, Oceania,

Africa

Key people

Peter Agnefjll (ChairmanandCEO)

Products

Self-assembly furniture

Revenue

29.293 billion (2014)[2]

Total assets

44.667 billion (2014)[2]

Total equity

31.608 billion (2014)[2]

Owner

Stichting INGKA Foundation

Number of
employees

147,000 (2014)[2]

Website

www.ikea.com

Questions
1. Describe how IKEAs values and treatment of
stakeholders contribute to its ethical culture.
2. Ethical issue in IKEA, and relation with complex
organization of IKEA
3. IKEA Reaction to swedish meatball scandal
demonstrate effective crisis management

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IKEAs Value and

Treatment Contribution to
Ethical Culture
IKEA represent a value-based culture, with a mission to create
a better everyday life for the many people.
The company maintains a strong commitment to best business
practices, ethical behavior, and environmental initiatives such as
appraisal & values their employee (VOICE)
Sell eco-friendly products which used renewable and recycled
raw materials
All products must be manufactured in a responsible manner with
as little effect on the environment as possible (IWAY)
Use alternative energy to power its stores (solar cell)
Support numerous cases such as UNICEF and Save the Children,

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IKEA: Ownership Structure

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IKEAs Complex Form

Organization Ethical Issue
With IKEA complex form organization, which is a flat
structure:
Employees will not have many opportunities to receive supervision
and guidance from the manager, make its hard to make sure the
employee work based on ethical standard
Advancement opportunities will be more limited -> fewer
management layers

Run by private company and involved a Dutch nonprofit,

caused critic which said IKEA will be exempt from taxes.
Human Right Issue, IKEA uses Political Prisoner as worker,
Child in India uses child labor,
IKEA violate privacy of employee
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IKEA Social Responsibility

Challenge
IKEAs Reaction to Swedish Meatball scandal
Take the issue very seriously and apologies for the current
situation.
Acknowledge the problem by making a public apology.
Stopped sales of horsemeat-contaminated beef by
pulling/recall the products , and make sure to public that horse
meat not dangerous
Implementing an investigation (DNA testing) to reassure
customers, and dropping the supplier responsible.
Improve supply chain management (ensure the authenticity
of its products)
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