BUSI1702: IKEA's Organisational Decision Making for Sustainability Case Study

Introduction: Evaluating IKEA's Sustainability Decision: A BUSI1702 Case Study

IKEA has implemented an important change in approach with its organisational choice to focus on environment and promise to transform into an environmentally friendly and environmentally friendly firm by 2030. As a part of an overall strategy to tackle ecological problems and incorporate its company's activities with sustainability practises, IKEA made its choice in 2023.

Essentially, the change symbolises IKEA's awareness of the need to solve the ecological problems arising from the traditional sequential economy, whereby things are generated, utilised, and finally disposed of. The introduction of the circular framework was prompted by an array of global issues and organisational problems.

First, IKEA evaluated how its activities impacted the natural world, focusing on its significant use of resources and waste creation. Due to its substantial reliance on virgin materials, the traditional commercial model brought up emissions of carbon dioxide, depleted natural resources, and contributed to destruction. In time, this continuous strategy was untenable.

Second, the choice was driven by the rising awareness of the serious consequences of environmental degradation. IKEA recognised that it was necessary to act fast to reduce the effects of the changing climate and embraced its duties as a responsibly global organisation.

Additionally, buyers' preferences began to shift towards environmentally friendly items as well as companies. Customers anticipate goods that are environmentally friendly because they place a greater value on environment. IKEA attempted to effectively and positively distinguish itself against rivals in the marketplace as well as meet these standards after recognise this development.

IKEA wanted to change its business model by implementing environmental responsibility, shifting away from the take-make-waste model to a regenerative economy. This change involves lengthening the lifespan of products, promoting recycling and reusing, and creating goods with reused and sustainable materials. IKEA aspires to be climate-friendly by 2030, indicating that it can generate more power from renewable sources than its applications and circle by 2030. it means the company is going to make sure resources are recycled and reused properly. IKEA's dedication to responsible ecological stewardship and its desire to have a significant beneficial impact are demonstrated by this choice.

Stakeholder Analysis

Customers and consumer advocacy groups

Consumer advocacy organisations and those who support them are significant participants in IKEA's sustainability decision-making processes. They are accorded an enormous amount of legitimacy because the items they buy truly influence IKEA's assortment by demanding environmentally conscious remedies (Watling and Ginsburg, 2019). The demand for customers to make environmentally conscious choices continues to grow, as demonstrated by their increasing awareness of their impact on the natural world. Although they might not have a great deal of power separately, considered as a team, their choices will have a bearing on IKEA's goods strategy and market dynamics (Sternberg, 2019). Furthermore, advocacy organisations for customers possess the capacity to influence the general public and IKEA's brand via successful advertising campaigns.

Shareholders and investor

Stakeholders and investors both have a big influence on the environmentally friendly IKEA it chooses to become. While monetary benefits typically make their primary concern, there is an increasing push amongst them to encourage environmental companies. Given their significant financial stake, they're given the ability to influence the company's goals via voting privileges and monetary incentives, This has compelled IKEA to consider sustainability in their future plans.

Suppliers and supply chain partners

Partnerships in its supply chain and suppliers are crucial for the company's goal of sustainability. Their reliability as producers of supplies and support for IKEA products is poor. The importance of adapting to IKEA's environmental objectives lends an additional urgency. The level that a vendor is important in the chain of supply affects the amount of power individuals have; significant vendors have a great deal of affect due to how they conduct themselves influence IKEA's capability to accomplish its environmentally friendly targets and ensure its use of reused and renewable sources of energy (Schildkamp, 2019). IKEA believes close cooperation with these groups of people is crucial for encouraging development in environmentally friendly purchasing and production techniques. It involves open communication and mutually advantageous relationships.

Government and regulatory bodies

Creating environmental guidelines and requirements is extremely acceptable whenever done by governmental departments and regulatory agencies. The type of urgency changes depending on the applicable authority and changing regulations. They have an enormous impact on the way IKEA runs and on conformity due to their considerable power in implementing laws and establishing policies. IKEA needs to comply with these requirements to operate its company responsibly and ethically. In addition, IKEA could advocate for laws that encourage environmental initiatives inside the industry and establish a favourable regulatory climate by actively communicating with government agencies (Derakhshan et.al,. 2019). This method not only guarantees conformity but also creates an inviting environment.

Employees and labour unions

Because of their direct involvement in IKEA's activities, labour unions, as well as staff, enjoy an excellent level of trustworthiness (Yoe, 2019). There is an average need given the urgency in connecting with environmentally friendly procedures and ethical workplace conditions. Even though they might not possess an abundance of power in their personal affairs, they may affect IKEA's corporate practises and standards via labour relations or advocacy, which renders their encouragement crucial for furthering the business's viable task at hand. Increasing staff engagement and autonomy via training and decision-making processes, and developing an environment that promotes sustainability may significantly bolster IKEA's devotion to its goals for the environment.

Local Communities and NGOs

Primarily in regions wherein IKEA works, neighbourhoods and nonprofit organisations (NGOs) have medium to substantial legitimacy. By local impact of social and environmental problems, these differ in severity. They're given a chance to impact the way IKEA runs via local impact, local laws, and possible lobbying efforts. This is particularly noticeable in locations where their worries align with IKEA's objectives regarding the environment (Sternberg, 2019). For IKEA to successfully interact with these various stakeholders, partnerships have to be established with a view of understanding local requirements, solving community problems, and matching IKEA's goals for sustainability with the larger social objectives of those regions. To boost IKEA's positive presence in these areas and win its backing of environmentally friendly initiatives, cooperation could occur in the way of programmes that engage community involvement, sourcing locally, as well as backing for charitable organisations.

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It is feasible to comprehend the numerous responsibilities and effects that different groups of stakeholders play in IKEA's viable decision-making procedure by looking at their traits with regard to of legitimacy, authority, and immediacy. Take into consideration the problems they have becomes crucial for carry out and achieving IKEA's lofty goals by the year 2030.

Decision Evaluation

Understanding if IKEA's decision of concentrating on sustainable has solved the previously mentioned organisational challenges calls for a variety of approaches based in research-based leadership concepts. In order to evaluate the choice's effect on addressing those identified worries, are going to review evidence from professionals, organisations, customers, and research.

• Stakeholder Evidence: It's important to assess how consumers feel regarding IKEA's ecological programme. Reputable news organisations such as the Economist and the Financial Tribune have reported favourably on IKEA's dedication to long-term viability emphasising company endorsement and support from customers. Data from labour organisations that reflect IKEA workers' feelings and worries about the business's environmentally friendly efforts can be revealed by worker surveys. While surveys and news outlets offer invaluable data, their generalisations might not adequately reflect the points of view of an assortment of participants (Baumann, Schmidt and Stieglitz, 2019). Publications from reputable media outlets like the BBC and The Guardian, in addition to that go additionally into stakeholder opinions, indicate how the general public appreciates IKEA's green efforts. In addition, specific expert feedback from environmental organisations or notable individuals in the sustainability field can offer substantial context to comprehend how successful IKEA's tasks are considered to be. Furthermore, analysing feedback from consumers and environmentally friendly item sales data analysis can offer an accurate measure of customer embrace and the effect of a sustainability approach on consumer buying habits.
• Organizational evidence: It is important to examine IKEA's disclosures regarding sustainability on the company's website as well as in its yearly financial statements. Organisation evidence can be demonstrated by the examination of significant performance metrics related to measures of sustainability, including decreased environmental impact, enhanced use of materials that are sustainable, and circularity accomplishments. This could be improved through the use of statistics or additional databases that give a broader industrial context (IKEA and Sustainability: Sustainable Development, 2023). On the reverse hand, relying only on reported organisation information might not have independent confirmation and may even give a biased image. A more comprehensive review of IKEA's sustainable statements and yearly filings might yield details regarding the organization's goals, problems with implementation, and efforts attained towards reaching sustainability. Examining awards or certificates from other organisations for projects that are environmentally friendly and offer outside validation. Improving corporate data clarity may be accomplished through the utilisation of data visualisation tools to demonstrate patterns regarding energy usage, materials purchasing, and decrease in waste. Parallel comparison of examples or accomplishments from firms undergoing similar ecological transitions additionally gives details about IKEA's progress.
• Practitioner Evidence: Professional viewpoints can be obtained from professional journals and professional viewpoints from trustworthy sources such as the Chartered Society of Employment and Development (CIPD) and specific to the industry organisations like CILT or CMS. Critical perspectives on IKEA's sustainable plan and execution might be discovered in reports and professional opinions. For the sake of dependability, the quality and objectivity of the data must be carefully evaluated (Burke, 2022). Research relating IKEA to competition in the sector or standard practises in the sector could provide useful data as well as standards for improvement. Likewise, watching the opening remarks or discussions delivered by sustainable professionals at relevant events could offer knowledge about new approaches or potential obstacles in implementing sustainability procedures.
• Scientific Evidence: Reviewed by experts, academic documents offer empirical support for IKEA's viable practises. Substantial data has been offered by empirical investigations examining IKEA's effects on the utilisation of resources, the environment, and the circular economy activities (Kubiak, Ouda and Samuelsson, 2020). The peer-reviewed journals employed in the above research ought to be recognised by the Certified Association of Business Schools' Scientific Journal Guide. While academic study provides depth, its applicability and relevance to direct organisational consequences might differ. Creating links between different kinds of data provides an extensive overview of IKEA's ecological choices. Positive opinions among stakeholders and organisational metrics could line up with professional judgements as well as research findings, indicating effective problem-solving within the company. Differences among the different kinds of data, however, could draw notice to any gaps or spots which need work (Shrestha et.al, 2019). As an instance, when positive press accounts contradict unfavourable worker survey responses or are not supported by research in academia, it puts into uncertainty the choice's general efficacy. Extending the range of searching for scholarly works from trustworthy sources could lead to detailed assessments of IKEA's environmental efforts. Studies studying the impact on the environment, supply chain processes, or buyer behaviour linked to IKEA's sustainability line of products could yield empirical information which either supports or disputes the efficiency of its business models. The meta-analyses and on-going research investigations which track IKEA's performance in sustainability over the years could give an in-depth awareness of regions which need enhancement and development.

Combining these other sources of information allows for a more thorough examination of IKEA's environmental decision (Joseph and Gaba 2020). It can be used to verify or dispute results in an array of parameters, resulting in an in-depth awareness of the decision's influence on the organisational issues that were originally identified.

An encompassing examination of IKEA's efforts to promote sustainability is backed through assessing attitudes among stakeholders and an array of scientific sources. To arrive at reliable results regarding the choice's effectiveness in dealing with organisational challenges, it is important to carefully investigate any potential prejudices or restrictions inside each piece of information as well as consider the wider picture.

Recommendations

Incorporate stakeholder inclusivity in decision-making

• Good practice: The Participation of each stakeholder is required to be an essential component of decision-making processes (IKEA, People & Planet, 2023). Proactively involving various stakeholders ensures an accurate understanding of problems and points of view, leading to more knowledgeable and lasting choices.
• Poor practices to avoid: Avoiding involvement from stakeholders can end up in decisions that are taken lacking critical points of view that can damage the reputation of a business and lead it to drop enthusiasm for environmentally friendly initiatives (She and Michelon, 2019).
• Theory linkage: This is in keeping with the theory of rationality since it emphasises how crucial it is to systematically take account of every pertinent detail, particularly the views from numerous parties.

Continuous monitoring and adaption

• Good practice: Create a structure for constant evaluation and modification of environmentally friendly projects. Achievement over time requires regular assessments, receiving feedback, and remaining flexible when changing methods.
• Poor practices to avoid: Failing to set up solid systems for tracking and assessing progress can render it hard to identify areas of weakness and change plans in reaction to changes in circumstances.
• Theory linkage: The rational theories focus on the value of changing plans in light of new data and changes in circumstances corresponds with on-going monitoring.

Transparent communication

• Good practice: Make lines between parties about environmental projects open and open. Communication that is open fosters an optimistic view of the business's dedication to sustainability by making sure users are aware of it and serves to build trust (Klein et.al,. 2019).
• Poor practices to avoid: Stakeholders could grow sceptical of the company's commitment to sustainable if a detail about its sustainability initiatives remains confidential or given inadequately.
• Theory linkage: The rationalisation theory's dedication to delivering right and thorough data to all relevant individuals involved with making choices corresponds with open discourse.

Balancing long-term and short-term goals

• Good practice: Create balance between current economic objectives and sustainable growth goals. It is essential to give top priority to initiatives that promote over time sustainability for society and the environment.
• Poor practices to avoid: Companies that emphasise short-term monetary advantages over a longer-term societal and environmental consequence may undermine their dedication to sustainability procedures.
• Theory linkage: The concept of rationality recognises that making decisions needs to take into consideration both the present as well as the future, and combining both immediate and long-term variables is in accordance with this premise.

Employee empowerment and involvement

• Good practice: Engage workers in making environmentally friendly choices to empower individuals. Developing an atmosphere of work where workers participate in the business's conservation efforts increases loyalty and cultivates an atmosphere of shared responsibility.
• Poor practices to avoid: Staff disengagement from initiatives related to sustainability may arise through a lack of involvement in the process of making decisions.
• Theory linkage: The rational the hypothesis falls in line with the empowerment of workers, which recognises the significance of an array of views and specific expertise when making choices.
• Limitations of rational theory: The rational theory contains restrictions even though it provides an organised approach. Decisions may be impacted by things like feelings for others and culture peculiarities, which emphasises the need for an in-depth plan that considers both behavioural and cognitive variables. Behaviourist theories can provide useful insights into rational thinking processes to enhance the way organisations make decisions when it involves sustainability.

References

Books and Journals

• Baumann, O., Schmidt, J. and Stieglitz, N., 2019. Effective search in rugged performance landscapes: A review and outlook. Journal of Management, 45(1), pp.285-318.
• Burke, W.W., 2022. Organization development. In Oxford Research Encyclopedia of Psychology.
• Derakhshan, R., Turner, R. and Mancini, M., 2019. Project governance and stakeholders: a literature review. International Journal of Project Management, 37(1), pp.98-116.
• Joseph, J. and Gaba, V., 2020. Organizational structure, information processing, and decision-making: A retrospective and road map for research. Academy of Management Annals, 14(1), pp.267-302.
• Klein, P.G., Mahoney, J.T., McGahan, A.M. and Pitelis, C.N., 2019. Organizational governance adaptation: Who is in, who is out, and who gets what. Academy of Management Review, 44(1), pp.6-27.
• Kubiak, K., Ouda, S. and Samuelsson, S., 2020. The clash between Ikea's brand identity, ideologies and employees' values. LBMG Corporate Brand Management and Reputation-Masters Case Series.
• Schildkamp, K., 2019. Data-based decision-making for school improvement: Research insights and gaps. Educational research, 61(3), pp.257-273.
• She, C. and Michelon, G., 2019. Managing stakeholder perceptions: Organized hypocrisy in CSR disclosures on Facebook. Critical Perspectives on Accounting, 61, pp.54-76.
• Shrestha, Y.R., Ben-Menahem, S.M. and Von Krogh, G., 2019. Organizational decision-making structures in the age of artificial intelligence. California management review, 61(4), pp.66-83.
• Sternberg, E., 2019. The defects of stakeholder theory1. In Corporate governance (pp. 391-400). Gower.
• Sternberg, E., 2019. The defects of stakeholder theory1. In Corporate governance (pp. 391-400). Gower.
• Watling, C.J. and Ginsburg, S., 2019. Assessment, feedback and the alchemy of learning. Medical education, 53(1), pp.76-85.
• Yoe, C., 2019. Principles of risk analysis: decision making under uncertainty. CRC press.

Online

• IKEA and Sustainability: Sustainable Development, 2023. Online. available through <https://www.researchgate.net/publication/340934225_IKEA_and_Sustainability_Sustainable_Development_Through_the_Lens_of_Individual_Organisational_and_Network_Perspective>
• IKEA, People & planet, 2023. Online. available through https://www.ikea.com/global/en/our-business/people-planet/