IKEA's Environmental Practices: Making Good Business Sense

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Case Details:

Case Code : BECG065
Case Length : 20 Pages
Period : 1992-2006
Pub. Date : 2006
Teaching Note : Available
Organization : IKEA
Industry : Furniture Retailing
Countries : Sweden

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Need for Environmental Initiatives

Though IKEA began taking an active interest in social activities in the early 1970s, its interest in environmental activities can be traced back to the mid-1980s when a new law was passed in Denmark regulating the maximum permissible emissions from formaldehyde off-gassing in particle boards. The government tested IKEA's products and found that the formaldehyde in some of the products was above the limit allowed. IKEA was sued and a fine was levied on it. Sales in Denmark went down by 20% and the company's image suffered as a consequence...

IKEA - Focus On Environment

In order to minimize the use of wood in its furniture, IKEA concentrated on bringing out products made of recycled and reusable material.

Regular training was given to its employees to make them more environmentally conscious. Commenting upon IKEA being an environmentally responsible company, company spokesperson Marty Marston said,

"At IKEA, we're moving toward a way of thinking based on the philosophy that everything we take should be used, reused, and recycled, either by ourselves or nature, in such a way that causes the least possible harm to the environment"...

Environmental Training

IKEA started off with a 'train the trainers' approach to spread environmental awareness across the organization. Trainers chosen from each department attended a weeklong training course. IKEA then decided to provide training to employees involved in product design and those who were in direct contact with the customers from the purchase, distribution, and retail departments. The training modules included basic environmental knowledge according to TNS; background, policy and action plan of IKEA's environment program; and specific training for different groups that were in direct contact with the customers.

Environment Friendly Products

IKEA's major product development activities were carried out in Älmhult, Sweden. As far as possible, IKEA used renewable and recycled raw materials. However, it took care to maintain the functionality and appearance of the product. The design team of the company considered several aspects of the product like price, quality, function, material and technical aspects before designing the product. The team ensured that the products were free from substances that caused allergies or products that were harmful to the health and the environment. The designers were encouraged to review the environmental consequences of their designs...

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