Monitoring System For IKEA

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Table of Contents

Introduction................................ ................................ ................................ .......................... 3

Monitoring systems and Dimensions................................ ................................ .................... 4

Social dimension ................................ ................................ ................................ ................. 1

Economic dimension ................................ ................................ ................................ .................... 1

Environmental dimension................................ ................................ ................................ ..... 1

Appendix 1 ................................ ................................ ................................ ................................ ...... 1

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Introduction IKEA is a worldwide operating furniture company which has its origin in the south of Sweden and is one of Europes largest privately owned companies (Rosenhauer, S. 2005). IKEA is a privately-held, international house products retailer that sells flat pack furniture, accessories, bathrooms and kitchens at retail stores around the world. The company, which pioneered flat-pack design furniture at affordable prices, is now the worlds largest furniture manufacturer. IKEA was founded in 1943 by Ingvar Kamprad in Sweden. Originally, IKEA sold pens, wallets, picture frames, table runners, watches, jewelry and nylon stockings or practically anything Kamprad found a need for that he could fill with a product at a reduced price. Furniture was first added to the IKEA product range in 1948, and in 1955, IKEA began to design its own furniture. The companys motto is:to create a better everyday life for the many people. As the largest furniture retailers around the world, in less than 50 years the small Swedish furniture retailer, headquartered in Helsingborg, Sweden, has grown to a privately-held, multinational corporation with 201 stores in 32 countries. As at January 2005, IKEA is holding a product range of 18,000 items, made by over 2,000 suppliers in more than 55 countries. IKEAs success can be attributed to enormous experiences in the retail market, differentiation, cost leadership and an impressive founder (Rosenhauer, S. 2005). The sustainability management in the company has become a serious problem in most of the companies in recent world. The following report is going to develop a monitoring system for the IKEA Company. The report focuses on the development of an efficient monitoring system for sustainability management on all IKEA retail stores.

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Monitoring systems and Dimensions Monitoring systems can be the guideline to corporations that based on the logical and significant theory of sustainability by providing a series of useful indicators within three main dimensions (Davidson, K, 2008). According to the monitoring systems, there are three types of sustainability reporting can be referred from the perspective of government, corporations, and other organizations. In the corporation, it is essential to understand how their monitoring systems are constructed and what specific indicators selected to monitor three dimensions (Davidson, K, 2008). The Triple Bottom Lines (TBL) with implications of the social, economic, and environmental dimensions are key components of sustainability to perform good monitoring systems (Davidson, K, 2008). From the theory of TBL or PPP, the contents of three dimensions
concluded in monitoring systems are as follow: i. ii. Social dimension: indicating people in TBL or PPP to be referred in the report of corporations Economic dimension: indicating profit in TBL or PPP

iii.

Environmental dimension: indicating planet in TBL or PPP

The concept of three dimensions can be seen in Appendix 1

A large number of leading corporations have signed up for the Global Reporting Initiative and more than 2000 international corporations now publish reports on their CSR performance (GRI, 2002).

The GRI offers a comprehensive list of social, economic, and environmental indicators to monitor sustainability for application within corporations (Davidson, K, 2008). The GRI addresses internal organizational impacts and also wider external effects on society, the economy and the environment (Davidson, K, 2008).

Social dimensions Social dimensions means an organizations impact on the social system within which it operates. This includes labor practices, human rights and other social issues (Benn & Dunphy, 2007, p225). The extended social dimension becomes a kind of a residual category, too complex to be integrated with the other dimensions on equal footing because it needs internal disaggregation to be operational. Social structures enable as well as constrain human actions. Once adopted, such distinct structure and agency concepts can guard against reductive social theory and help to unveil the full complexity necessary for substantial sustainability strategies (Hak, Moldan & Dahl, 2007,p109).
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According to the theory of Triple Bottom Line or 3P model, people is recognized and emphasized as the primary enabler. Building excellent performance of corporation, it starts with building leadership which means developing leaders with right values and competencies (Zink, 2008, p81). Also, building teams or partnerships should be evaluated. Each team in the corporation develops the personal values and attitude on their performance and have good relationship with each other to perform cooperation. Staff, managers and company are judged by the extent to which they can create competitive advantage by developing the exception of respondents. For IKEA Company, social dimension is the basic dimension to the operation of the corporate. From the perspective of people, the social relationship between the company and the customers and the social relationship between the leader and the team member or the staff needs to be organized as a reasonable developing cycle. Building the social cultural performance in the inner structure of the company is definitely important to maintain the sustainability of the company. IKEA has their basic rules that the employees needs to comply when they communicate with customers which benefit to the company to enhance the brand equity to get the satisfaction of customers. Also, the management of the human resources in each level of the employees is the task of the managers to do because the competitive atmosphere in the company is essential to promote the effectiveness of the employees. This is the main concept of people component in 3Ps theory.

Economic dimension Adoption of a strategic approach means that strategic management accounting places stress on the ways in which organizations match their resources to the needs of the market place, in particular to competitive pressures, in order to achieve established organizational objectives. The conventions of financial accounting have been the subject of criticism because they have a narrow legal perspective on the boundary of corporate activities the legal entity concept. Accounting typically adopts a set of implicit assumptions about the primary and desirability of the conventional business including the primacy of profits and profitability rather than environmental and social concerns. The business case for such change is related to the cost advantages from: having an integrated reporting and communications strategy; the need to portray a balanced performance story that reports bad as well as financial information; and improved confidence of boards and executive in the new reporting model and statements (Schaltegger, Bennett & Burritt, 2006, pp39-41) Economists have developed the concept of utility to capture the essence of satisfying human needs. This goes beyond what is routinely applied in statistical analyses based on gross domestic product (GDP) accounting (Hak, Moldan & Dahl, 2007, p97). According to the theory referred above, the economical dimension is the main component IKEA needs to consider in the performance of the operation. The aim of the company is earning profits as much as
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possible based on the Triple Bottom Line theory. By considering the social and environmental dimensions at the same time, economic dimension or profit dimension should be paid attention to in the process of operating. The approach of getting sustainability from the perspective of economic dimension is focusing on the financial information annually, analyzing the accounting and financial sheets each operating period to balance the costs and profits of the business. Also the new ideas of running the company such as the promotions and the media advertising needs to be considered because the high cost of input.

Environmental dimensions:
Managing sustainability is about trying to reduce the ecological footprint resulted from humans activities lead to serious problems on the Worlds major ecosystems. The observations that the environment has become seriously compromised have failed to stop the continued trend of degradation. Long term in character and involved the perspective of planetary survival. Concepts such as the ecological footprint and ecosystem health have an important role to play in structuring new and comprehensive information systems on the environment (Lawn, 2006, pp283-284). To consider the environmental dimension, the planet is the topic. In order to sustainable in the competitive field, the environmental strategies are essential to IKEA Company to reduce the human footprint resulted from a series of damage activities on planet. For example, the plastic pollution on the ecosystem or the carbonated pollution on the air are big issues all over the world. Every business needs to consider it and find measures to decrease the pollution to be sustainable in the operating. IKEA has solutions to face the problems. Using paper box to package the products to substitute the plastic bags and collect the delivery information to provide the goods and services within the least petro cars. Those solutions cannot solve the serous pollution problems but could reduce the pressure of the environmental dimensions to become the company with sustainability.

Referencing List Bell, S. & Morse, S. (2008). Sustainability indicators: measuring the immeasurable. UK and USA: Earthscan. Benn, S. & Dunphy, D. (2007). Coporate governance and sustainability. New York: Routledge. Davidson, K. (2008). Monitoring system for sustainability. Retrieved 25th May 2011. From: http://digital.library.adelaide.edu.au/dspace/bitstream/2440/63716/1/02whole.pdf Global Reporting Initiative (GRI). (2002). Sustainability reporting Guidelines. Retrieved 25 May 2011. From: http://www.globalreporting.org
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Hak, T. & Moldan, B. & Dahl, A.L. (2007). Sustainability indicators. London: Island Press. Lawn, P. (2006). Sustainable development indicators in ecological economics. Cheltenham: Edward Elgar. Rosenhauer, S. (2005). Profit is a wonderful world: IKEAs strategy behind the profit. GRIN Verlag. Druck and Bindung: Books on Demand GmbH, Norderstedt Germany . Schaltegger, S. & Bennett, M. & Burritt, R. (2006). Sustainability accounting and reporting. The Netherlands: Springer. Zink, K.J. (2008). Corporate sustainability as a challenge for comprehensive management . Germany: Springer.

Appendix 1

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