Read article 'Ikea puts it all on the Table with SR' pg 3 and give your thoughts (one paragraph for 150-200 words) [Ch1] 2. read article 'Best Buy in Stakehold

08 Jun Read article ‘Ikea puts it all on the Table with SR’ pg 3 and give your thoughts (one paragraph for 150-200 words) [Ch1] 2. read article ‘Best Buy in Stakehold

Posted at 16:38h in Business & Finance /Management by

1. read article "Ikea puts it all on the Table with SR" pg 3 and give your thoughts (one paragraph for 150-200 words) [Ch1]

2. read article "Best Buy in Stakeholder Communication" pg 61 and give your thoughts (one paragraph for 150-200 words) [Ch 2]

1. read article on "Ikea puts it all on the Table with SR" pg 3 and give your thoughts

2. read article on "Best Buy in Stakeholder Communication" pg 61 and give your thoughts

IKEA is a favorite among customers searching for

well-designed products at low prices. IKEA stores

sell ready-to-assemble furniture, appliances, and

household goods. Today the firm is the largest fur-

niture retailer in the world, with 139,000 employees

operating in 43 countries. Germany is the firm’s

largest market, followed by the United States and

France. Its diverse variety of products includes furni-

ture, food, large items such as cabinetry, and smaller

items such as kitchenware, decor, and small plants.

IKEA also operates restaurants within its stores.

IKEA is highly focused on design, viewing it as

a competitive advantage. For instance, IKEA stores

have been designed intentionally to what some

describe as a maze that encourages shoppers to

go through the entire store. Some customers find

themselves lost or retracing their steps. This strategy

allows shoppers to see a wide variety of IKEA items,

possibly leading to impulse or add-on purchases.

IKEA was founded in Sweden in 1943 by Ingvar

Kamprad. The culture of the company heavily

reflects Swedish culture, which values hard-working,

friendly, and helpful people. These values helped

create IKEA’s vision, which is “to create a better

everyday life for the many people,” according to the

company’s website. IKEA aims to accomplish this

not only through selling affordable home furnishing

products, but also by helping people around the

world. One way that IKEA hopes to help people is

by helping the planet, by reducing carbon emis-

sions and creating sustainable energy through solar

panels that they sell.

Corporate social responsibility (CSR) is a large

factor in IKEA’s company culture. IKEA uses CSR to

expose its employees to new challenges. Employees

at IKEA are encouraged to mentor young students,

assist senior citizens, and other altruistic actions. By

volunteering for these tasks, employees can learn

valuable skills that they can transfer to their jobs.

IKEA has also found that CSR is a powerful recruiting

tool. Many potential employees look for employers

who share their values. Through CSR, IKEA can help

its community while attracting better talent.

In 1982, IKEA launched the IKEA Foundation.

Initially, the foundation focused on architecture and

interior design, but then it expanded to fight for

children’s rights and education. Recently, the IKEA

Foundation awarded a grant of $2.3 million to the

World Resources Institute to help bring clean elec-

tricity to 1 million people in India and East Africa. In

these areas, many schools, clinics, and agricultural

facilities are without power. The grant will be used to

create a map that shows the demand for electricity

in these areas. Once this map is created, the World

Resources Institute will be able to better identify

areas in need of electricity and other resources.

Another focus for IKEA is reducing carbon emis-

sions. In fact, IKEA’s long-term goal is to become

carbon positive, which means they will remove more

carbon dioxide than they create. IKEA is already

moving toward this goal by switching to electric

delivery trucks. The company plans to switch to

only electric trucks in major cities like New York and

Paris and is committed to completely switching over

to electric trucks in every location by 2025. IKEA

has already invested around $2 billion in renewable

energy. By 2030, IKEA plans to cut emissions from

stores by 80 percent and reduce emissions from

deliveries and customer travel by 50 percent. These

are lofty goals, but the company has invested con-

siderable resources into becoming carbon positive.

For IKEA, CSR is at the very core of its heritage

and current culture. IKEA aims to create value for

customers by selling stylish, low-cost home furnish-

ing products. However, the company doesn’t stop

there. It also feels that to sustain the planet, it must

reduce its environmental impact and encourage its

customers to do the same.1

IKEA Puts It All on the Table with Social Responsibility

Chapter Objectives �O Define the concept of social responsibility

�O Trace the development of social responsibility

�O Examine the global nature of social responsibility

�O Discuss the benefits of social responsibility

�O Introduce a framework for understanding social responsibility

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Responsible Business Debate

Best Buy Excels in Stakeholder Communication Issue: Is communication the key to stakeholder satisfaction?

Best Buy was founded in 1966 by Richard Schulze. Ranking 72 on the Fortune 500 list, it is known for its discounted, high-quality products, customer-centered approach, sustainable outreach, and extensive recycling program. The success of Best Buy over the years can be attributed to a variety of factors, including savvy business decisions and services to increase employee and customer satisfaction.

As primary stakeholders, customers and employees have a major impact on the continued existence and profit of Best Buy; therefore, their satisfaction is a high priority. To meet stakeholders’ interests, Best Buy has implemented methods to foster communication with both customers and employees. The company uses its website to learn more about its customers’ needs and preferences, and customers can use that website to rate every product purchased. It was this type of communication that led Best! Buy to develop its first Corporate Social Responsibility Report in 2007. The report was a response to its customers’ repeated concerns over sustainability, particularly in the area of electronics. It showed customers that the company had received and understood their concerns. Electronic waste was filling landfills, and customers wanted to see this problem addressed. In response, Best Buy implemented a wide-scale electronics recycling program. The company has set a goal to cut carbon emissions by 60!percent in the next year and to be carbon neutral by 2050.

After a period of stagnant growth, Best Buy hired a new CEO, Hubert Joly, in 2012. Under Joly, Best Buy once again became a growth company. Research has shown that Best Buy’s advertisements tend to have more of an impact when they highlight products, which is prompting the company to engage in more product-oriented adver- tising campaigns. For example, the company introduced a

service called “Assured Living” in 2017, which uses smart home technology to allow millennials/caregivers to look in on their aging parents while permitting the seniors to live independently. To communicate this new service to consumers, Best Buy has developed a website and has advisors that can offer more detailed information to customers about the technology. Best Buy’s current CEO, Corie Barry, will work to continue this growth.

Best Buy invests in different platforms to foster its communication with employees. For example, Geek Squad forums provide a way for all Best Buy employees to exchange information and share ideas. In addition, Best Buy has conducted a multitude of interviews with employees to determine issues with usability of the store’s products. In response to these interviews, according to vice president of retail operations, Shari Rossow, Best Buy has invested in everyday products familiar to employees to cut back on necessary training, make employee duties easier, and help employees focus more on customer service than learning arduous programs. This not only benefits the employees, but also benefits customers and Best Buy as a company.

Stakeholder satisfaction is crucial to the success of any business, and communication with stakeholders is the key to that satisfaction. Best Buy has proved that it can listen to its stakeholders and will implement initiatives based upon their feedback. This communication has been integral in allowing Best Buy to develop strong stakeholder relation- ships, allowing the company to compete against online rivals and adapt to an increasingly digital world.

There Are Two Sides to Every Issue 1. Communication is the most important factor in stake-

holder satisfaction. 2. Though communication is critical, it is one of many

factors in stakeholder satisfaction.

Sources: Courtney Reagan, “Best Buy CEO Sees ‘Growth Opportunities’ Ahead, Wall Street Isn’t Buying It,” CNBC, September 19, 2017, https://www. cnbc.com/2017/09/19/best-buy-ceo-weve-fixed-what-was-broken-now-focus-is-on-growth.html (accessed January 6, 2019); Adrianne Pasquarelli, “Why Best Buy Is Reorganizing Its Marketing Team,” AdAge, April 21, 2017, http://adage.com/article/cmo-strategy/buy-reorganizes-marketing-team/308756/ (accessed January 6, 2019); Jeff Bullas, “How Best Buy Energized 170,000 Employees with Social Media,” jeffbullas.com, http://www.jeffbullas.com/how- best-buy-energized-170000-employees-with-social-media/ (accessed January 6, 2019); Best Buy, “Corporate Responsibility and Sustainability,” 2018, https://corporate.bestbuy.com/sustainability/ (accessed January 6, 2019); Corinne Ruff, “Why Best Buy Is Investing in Employees,” Retail Dive, February 7, 2018, https://www.retaildive.com/news/why-best-buy-is-investing-in-employees/516497/ (accessed January 6, 2019); “Fortune 500,” Fortune, 2018, http:// fortune.com/fortune500/list/ (accessed January 6, 2019).

Chapter 2 Strategic Management of Stakeholder Relationships 61

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Chapter 2

Strategic Management of Stakeholder Relationships

Ferrell, Thorne, Ferrell: Business in Society 7/e © 2021 Chicago Business Press. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

2-‹#›

2-1 Define stakeholders and understand their importance

2-2 Distinguish between primary and secondary stakeholders

2-3 Discuss the global nature of stakeholder relationships

2-4 Consider the impact of reputation and crisis situations on social responsibility performance

2-5 Examine the development of stakeholder relationships

2-6 Explore how stakeholder relationships are integral to social responsibility

2-‹#›

Why do you think stakeholders are important to industries and organizations?

2-‹#›

Customers	Employees	Investors
Stockholders	Suppliers	Government
Communities

They not only are influenced by businesses

They have the ability to affect businesses

2-‹#›

Stakeholders

Constituents who have an interest or stake in a company’s products, industry, markets, and outcomes

2-‹#›

Adam Smith (A founder of capitalism)

Created the concept if of the invisible hand and spoke about self-interest

However, went on to explain that this common good is associated with psychological motives and that each individual has to produce for the common good

A notion of capitalism that reemphasizes stakeholder concerns and issues

In the 21st century, Friedman’s form of capitalism is being replaced by Smith’s original concept (now called enlightened capitalism)

Acceptance of enlightened capitalism may occur faster in developed countries

Theodore Levitt wrote that although profit is required for business, profit is not the purpose of business

Norman Bowie noted that focusing on profit alone can create an unfavorable paradox that causes a firm to fail to achieve its objectives

2-‹#›

enlightened capitalism

a theory of capitalism originally proposed by Adam Smith as “promoting the happiness of mankind” that emphasizes stakeholder concerns and issues

What power (if any) do you think stakeholders have over organizations?

2-‹#›

stakeholder engagement

the process of involving stakeholders who may be affected by an organization’s decisions or that may influence the content or implementation of the organization’s decisions

Stakeholder Issues and Interactions

New reforms to improve corporate accountability and transparency also suggest that stakeholders such as suppliers:

Can play a major role in fostering responsible decision making

2-‹#›

Banks

Law

Firms

Public Accounting Firms

Identifying Stakeholders

2-‹#›

Primary Stakeholder

They are fundamental to a company’s operations and survival; these include shareholders & investors, employees, customers, suppliers, and public stakeholders, such as government and the community

Secondary Stakeholder

They do not typically engage in direct transactions with a company and thus are not essential for its survival; these include the media, trade associations, special-interest groups, and competitors

Cannot be ignored

For example, sometimes the media can have more of an impact than a primary stakeholder

2-‹#›

stakeholder orientation

the degree to which a firm understands and addresses stakeholder demands

2-‹#›

Comprises three sets of activities

The organization-wide generation of data about stakeholder groups and assessment of the firm’s effects on these groups

The distribution of this information throughout the firm

The organization’s responsiveness as a whole to this intelligence

stakeholder orientation

the degree to which a firm understands and addresses stakeholder demands

First, relevant stakeholder communities should be analyzed on the basis of:

The power each enjoys

The ties between them

Next, firm should characterize the concerns about the business’s conduct that each relevant stakeholder group shares

Finally, the company should evaluate its impact on the issues that are important to the various stakeholders it has identified

This intelligence should be circulated throughout the firm

2-‹#›

A stakeholder orientation is not complete unless it includes activities that actually address stakeholder issues

Stakeholder orientation can be viewed as a continuum, in that firms are likely to adopt the concept to varying degrees

2-‹#›

A stakeholder has power to the extent that it can gain access to coercive, utilitarian, or symbolic means to impose or communicate its views to an organization.

Coercive power—the use of fear, suppression, punishment or some type of restraint (issue is emotionally charged & somewhat controversial)

Utilitarian power—financial or material control or based on a decision’s utility or usefulness (boycotts & lawsuits)

Symbolic power—the use of symbols that connote social acceptance, prestige, or some other attribute (letter-writing, advertising messages, & websites)

2-‹#›

Legitimacy is the perception or belief that a stakeholder’s actions are proper, desirable, or appropriate within a given context

Gained through the stakeholder’s ability and willingness to explore the issue from a variety of perspectives and then to communicate in an effective and respectful manner on the desire for change

Extremist views are less likely to be considered legitimate because these groups often use covert and inflammatory measures that overshadow the issues and create animosity

2-‹#›

Urgency is the time sensitivity and the importance of the claim to the stakeholder

Stakeholders exercise greater pressures on managers and organizations when they stress the urgency of their claims

Time sensitivity usually heightens the stakeholder’s effort and may compress an organization’s ability to research and react to a claim

How do you think a firm’s reputation relates to its stakeholder relationships?

2-‹#›

Corporate reputation, image, and brands are among the most critical aspects of sustaining relationships with constituents

Investors

Media

Government watchdogs

Customers

Financial analysts

Company’s reputation is affected by every contact with a stakeholder

Companies can take decades to build their reputation and one mistake can cause significant reputational damage

Reputation Management

2-‹#›

Reputation Management

The process of building and sustaining a company’s good name and generating positive feedback from stakeholders

Reputation Management Process

Process of reputation management involves four components that work together:

2-‹#›

Identify how the organization wants to be viewed by stakeholders

Determine how stakeholders evaluate the company and their impressions of its image

Evaluate other’s impressions of organizational performance

Understand the company’s reputation

Most firms will, at one time or another, experience crisis situations

How a company reacts to the situation is indicative of its commitment to and implementation of social responsibility

The acceptance and implementation of reputation management strategies may bring challenges to the marketplace of ideas

An ideas marketplace assumes that ideas compete against one another for truth and acceptability

2-‹#›

What could a company facing a crisis do to satisfy its stakeholders & protect its reputation?

2-‹#›

Ethical Misconduct Disaster (EMD)

Unexpected organizational crisis that results from:

Employee misconduct

Illegal activities (fraud)

Unethical decisions that significantly disrupts operations and threatens or is perceived to threaten the firm’s continuity of operations

Organizational crises are far-reaching events that can have dramatic effects on both the organization and its stakeholders

2-‹#›

Stressful	Uncertain
Emotional	Demanding context

2-‹#›

Crisis Management

The process of handling a high-impact event characterized by ambiguity and the need for swift action

Crisis usually leads to both success and failure outcomes for a business and its stakeholders

Provides information for making improvements to future crisis management and social responsibility efforts

Requires a firm’s leadership to communicate in an often:

Crisis Management Process

Fundamental difficulty that a company faces is how to communicate effectively to stakeholders during and after a disaster

Crisis events are often so chaotic that a company’s leadership may not be certain of the cause of the situation before the media and other relevant groups demand a statement

2-‹#›

Crisis Management Process

2-‹#›

First

Leadership should express concern and/or remorse for the event

Second

Organization should delineate guidelines regarding how it intends to address the crisis so that stakeholders can be confident that the situation will not escalate or reoccur

Third

Company should provide explicit criteria to stakeholders regarding how each group will be compensated for any negative effect it experiences as a result of the crisis

Firm’s leadership should try to communicate as much accurate information to stakeholder groups as possible to minimize their uncertainty

When firm fails to do so, its credibility, legitimacy, and reputation in the eyes of stakeholders often suffer

The needs of various stakeholder groups may conflict

Firms have the responsibility to manage the competing interests of stakeholders to ensure that all stakeholder groups are treated fairly in the aftermath of a crisis

2-‹#›

Why do you think that developing strong relationships with stakeholders is so important?

2-‹#›

Instead of just pursuing one-time transactions

Companies are now searching for ways to develop long-term and collaborative relationships with their customers and business partners

2-‹#›

Some investments are tangible, such as buildings, equipment, & other elements dedicated to a particular relationship

Other investments are less tangible, such as the time, effort, trust, and commitment required to develop relationships

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08 Jun Read article ‘Ikea puts it all on the Table with SR’ pg 3 and give your thoughts (one paragraph for 150-200 words) [Ch1] 2. read article ‘Best Buy in Stakehold

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