5. Strategic Corporate Social Responsibility- Ikea

Question 1

Shared value

Answer 1

• Shared value = Policies or operating practices/ Enhance the competitiveness of any company/ Advancing economic and social conditions in the communities in which it operates
• Maximize the value for the society and maximize the value for the corporation at the same time

Question 2

Stakeholder expectations

Answer 2

• Not all stakeholders are equal and have the same expectations
• Stakeholders expectations vary along two dimensions = 1. Degree of interaction between stakeholders and the organization = Deep vs. shallow relationship/ 2. Structural positioning (Locus) = Internal vs. external
• Stakeholders’ trust in organizational behaviors is based on perceived organizational = 1. Managerial competencies/ 2. Technical skills/ 3. Transparency/ 4. Integrity = Comply with ethical standards/ 5. Benevolence = Interaction with individuals/ 6. Identification = alignment with organizational values

Question 3

Stakeholder expectations matrix

Answer 3

• Locus Internal + Interaction Deep = Transparency/ Identification/ Managerial competence/ Benevolence (Most important?)
• Locus Internal + Interaction Shallow = Managerial competence/ Identification/ Integrity (Most important?)
• Locus External + Interaction Deep = Technical skills/ Identification/ Benevolence (Most important?)
• Locus External + Interaction Shallow = Technical skills/ Identification/ Integrity (Most important?)

Question 4

Stakeholder management vs. stakeholder engagement

Answer 4

• Identifying critical stakeholders
• Identifying their (ethical expectations)
• Balance different expectations = Management
• Justify your strategy = Management
• Identifying points of contact = Engagement
• Opening a dialogue with them = Engagement
• Integrate/ modify your strategy = Engagement
• Keeping the interaction active = Engagement

Question 5

Ikea Case- Main goal

Answer 5

• Bonus sales
• 200 new shares
• Moving in new emerging markets (Russia and China)
• Design a strategy to create maximum shared value for IKEA, suppliers, customers and social community

Question 6

Ikea Case- Sustainable strategy

Answer 6

• People and planet

- Using new energies

Question 7

Ikea Case- Value proposition

Answer 7

• Prices low

- Quality up

Question 8

Three levels of CSR performances

Answer 8

• 1. Instrumental level = Corporation’s ability to address customers’ demands/ Skills and competencies to deliver high quality products
• 2. Transactional level= Corporations’ integrity/ Corporations comply with legal and moral rules of the societal context/ Transparency and fairness
• 3. Transformational level = CSR at the core of business strategies and operations/ Transcend (übergreifendes) self-interest and creative value for society/ Proactive behavior = Drive a change in society and contribute to its well-being/ E.G. Corporation in the tobacco industry could never reach this level because it must change their business model
• Generally = It’s about the impact of the company by combining company and industry strategies to drive a change

Question 9

Driving transformative social change

Answer 9

• Social change = Systemic transformation over time of patterns of thoughts, behavior, social relationships, institutions, social structure
• Positive social change = Change that leads to positive impacts on than those initiating the change project/ individuals, Society, Benefits, Environment, People, Organizations

Question 10

Components of social change

Answer 10

• Motivation
• Opportunity creation
• Capabilities development

Question 11

Examples of social change

Answer 11

• Changes in consumers’/ market players’ behaviors
• Changes in the welfare system
• Changes in the social inclusion of marginalized categories

Question 12

Is IKEA’s sustainable strategy instrumental, transactional, or transformative?

Answer 12

• Transformative
• They even have a CSO (Chief sustainability manager)
• Have an impact on communities
• Increase the Supply chain standard
• Own forest/ More practical boards/ More recycled wood/ Improve industry standards

Question 13

Which strategy should IKEA pursue?- Ambitious industry targets PRO

Answer 13

• Flexibility
• Change industry standards
• Leverage huge network
• Few certified supplier

Question 14

Which strategy should IKEA pursue?- Recycled wood PRO

Answer 14

• Cheaper and high environmental impact

- Huge investments in factories and operations

Question 15

Which strategy should IKEA pursue?- Vertical integration CON

Answer 15

• Control resources and impact
• Inconsistent with business model and distort resources and attention from core business
• Fixed cost and operational risks

Question 16

Which strategy should IKEA pursue?- Particle board CON

Answer 16

• Cheaper and environmental impact
• Bad perception and compromise with quality
• Inconsistent with IKEA’s value proposition

Question 17

Important takeaway Class 5

Answer 17

• CSR strategy must be consistent with value proposition and business model
• Organizations can reach CSR by combining company and industry strategies
• Market leader can get the first mover advantage (IKEA)
• Difference between stakeholder engagement and stakeholder management
• For a company it is important to create a competitive advantage through the business strategy that is including CSR
• Polluter = Smaller/ medium enterprises can be more normative in product innovation ??