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Ethical values over money, IKEA shows the way

If you’ve ever visited an IKEA shop, you know how difficult it is to depart promptly. You didn’t realize you needed five new dishtowels, but now you have them. All of this is the brainchild of the late Ingvar Kamprad, a Swedish businessman who dreamed up the concept of a store filled with practical, easy-to-assemble furniture.

IKEA started as a mail-order company in 1943 when Kamprad was 17 years old, sold pens, lighters, and binders to customers in Sweden. Five years down the line, Ikea got into the furniture business. IKEA’s mission became to provide a wide choice of well-designed and functional home furnishings at costs that most people could afford. Customers liked the catalogues, prices, and quality of IKEA furniture, as well as the chance to touch, feel, and view it in showrooms. IKEA had grown to become the world’s largest specialist furniture retailer by the mid-1990s, with over 98 locations in 17 countries. IKEA currently has 456 stores in 50 countries, according to its website.

When it comes to the company’s ethical code, IKEA strives to improve the lives of all of its stakeholders, including customers, employees, suppliers, and community members. It accomplishes this by implementing ten fundamental values, a compelling vision statement, and a supplier code of behaviour. IKEA’s values have guided the company’s actions. For example, the firm aims to avoid using materials from protected forests in its goods, aligning with IKEA’s responsibility principle.

IKEA has a sustainability policy that considers both people and the environment. By 2030, the strategy is to achieve a series of long-term strategic targets aimed at improving IKEA’s impact on communities and the environment. By 2030, the aim is to transform into a circular business and reusability to reduce future waste. For example, IVAR and BROR storage systems are built of wood and can be easily treated or repaired, with more pieces added as needed. As people’s lives and tastes evolve, they might enjoy things like these.

In 1992, however, a German newspaper and television company discovered that IKEA’s best-selling bookshelf series contained emissions that exceeded German law. Instead of disregarding the problems, it is clear that the organization is continually seeking methods to improve its business process. This was IKEA’s response to the social issue; the firm chose to deal directly with the suppliers. The corporation collaborated with many groups, including Greenpeace and the World Wide Fund for Nature, and even recruited inspectors to establish new supplier criteria. The corporation might have easily chosen to disregard the problems and keep making money. It was this time about the company’s use of high quantities of formaldehyde in its products.

The firm looked into ways to deal with the issue. This time, it was the lacquer on the bookshelves, and IKEA promptly halted manufacturing, costing the firm up to $7 million. Although this had a severe financial impact on the company, IKEA’s stakeholders prioritized ethical values before profits. Another issue arose for the international corporation in the early 1980s. Suppliers, however, continued to fall short of the company’s expectations.

Child labour can be considered a clever economic move for domestic and foreign firms; IKEA recognized the negative implications of child labour and how it creates more harm than good.

One year after IKEA began to address the issue of child labour, a German documentary maker uncovered underage children working at Rangan Exports, one of IKEA’s major suppliers.

IKEA also began collaborating with Swedish Save the Children and UNICEF to understand better the issue of child labour in countries such as India and Nepal, where many of their suppliers were situated.

Outsourcing production to other nations raises the likelihood of a company using child labour.

Child labour’s implications must be well understood by both domestic and multinational businesses and how to avoid it at all costs. Many local and foreign corporations, whether knowingly or unknowingly, use children as a significant source of labour. The corporation even hired a third-party monitoring organization to keep an eye on child labour violations at supplier locations. In 1994, a Swedish television program revealed that IKEA used child labour in Pakistan to weaving looms.

Big businesses will continue to face social, political, and economic challenges. IKEA is an excellent example of a multinational corporation whose business actions are influenced by its motivations. It is clear from IKEA’s actions that the corporation values both its customers and the process of producing things for them. The company combated competition corruption and implemented remedies to reduce the company’s environmental effect and unethical child labour practices. IKEA recognizes that consumer trust leads to positive growth, regularly improving its social, political, and economic impact.

IKEA’s ethical values serve as guidance for the company’s decisions. These beliefs seem to be shared by both staff and customers, as many of them are devoted to IKEA.

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Himanwita Mazumdar
Himanwita Mazumdar
Assistant Editor at Business Review Live. Currently pursuing Masters in Media and Communication Studies (MSc) from Savitribai Phule Pune University, India, with a Bachelors degree in English Literature. She specializes in Feature writing.