Sustainability at IKEA Group Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Sustainability at IKEA Group Case Solution

Key facts

IKEA is famous for its cutting-edge designs for appliances, furniture and its indoors layout work, which is often related to the green concept. Besides, the corporation is well-known for its interest in operation details, cost-cutting, and non-stop product development.

Nowadays, IKEA owns and performs in 373 shops in 47 countries. The company manages 1046 suppliers in 52 countries. The main financial principle of the IKEA Group is to grow by using their asset, and the company wants to double the sales to 50 billion euros by 2020 worldwide and requires an increase of 10% in its sales revenue on an annual basis.(Adam Hudson, 2017).

Problem statement

The issue lies in the supply chain sustainability because it contradicts to the growth strategy of the IKEA group, because the company’s recent goal or strategy is to minimize the transportation costs by procuring wood as well as selling wood products near consumer markets. But, on the other hand; the growth strategy of IKEA’s group targets the emerging markets, where it faces sustainability issues due to the lack of well-developed supply chains. AsIKEA’s current strategy is to maximize its sales at the minimum cost by 2020;its aim of "low cost" is only applicable to the upstream supply chain. The company won’t sell the product at low prices and it also aims to keep the product differentiation intact. It has planned on having an expansion in the emerging markets like Japan, China, and India;so there is an issue of alignment.(Analysis of Sustainability at IKEA, 2020)

Theories

IKEA launched the strategy of “People and Planet Positive”for sustainability.Its supply chain revolution is designed to support the clients' green lifestyles. For the highest echelon; it is the company's resources and power independence. As a result, IKEA considers owning more forests, pushing for higher procurement standards and utilizing more particleboard and reclaimed wood. IKEA also has solar panels installed in its stores. IKEA has committed to provide its customers with a better lifestyle. (A comparative study of naturalizing sustainability in product development, 2016) LED lighting fixtures are used to beautify the low-intensity areas while also increasing the products’ life-duration. IKEA's ultimate goal is to encourage the practice of community. The adoption of IWAY sourcing is on the rise(IKEA sustainability strategy).

Alternatives

To resolve the conflict; the company needs to align with both of its goals. So there are 3 alternatives for the alignment of sustainability and growth strategy through which IKEA can solve the issue of customer-orientates by implementing local customization. As an example, IKEA, Indian household furniture meeting provider, has taken into account the culture shock when it comes to inhabitants embracing ready-to-assemble furniture. Meanwhile, in-home assembly brings good fortune to an IKEA group of professionals who pay home visits and are familiar with the Indian lifestyles. Currently, IKEA has collaborated with local social enterprises to design handicrafts for its products, ensuring that they remain fashionable.

Another option for alignment is to use multiple techniques for timber procurement. Having forests is a technique of being self-sufficient in raw resources and maintaining a consistent quality while employing extra reclaimed wood and particle board, which can help in keeping the costs down and maximizing the timber usage.

Finally; as IKEA is unwilling to compromise on products’ quality it incorporates an appropriate proportion of wood in its products goods. The sole component does not have any aligns with the enterprise version, which is a massive upfront expenditure required to expand the particleboard and recycled timber manufacturing capability. It contradicts IKEA's profit-maximizing objective. IKEA must invest in it in order to attain long-term viability...............................

Sustainability at IKEA Group Case Solution

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