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CSR - APPLE AND IKEA CASE STUDY

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David Timis

on 13 February 2013

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Transcript of CSR - APPLE AND IKEA CASE STUDY

Think Different Founded in 1977 by Steve Jobs and Steve Wozniak
US based company (HQ in Cupertino, California)
Currently has 72000 full time employees
The worlds most valuable company (Financial Times (08/10/12))
On 29/11/12 the company had 250 US stores and 140 international stores Apple Inc. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings. Products:
iPhone®,iPad®, Mac®, iPod®, Apple TV®

Software:
iOS and OS X® operating systems, iCloud, iWork, iLife CSR PROBLEMS Portfolio Digital Content/ Applications:
iTunes Store®, App StoreSM, iBookstoreSM, and Mac App Store

Product & Support Services:
AppleCare Successful product offering: innovative technology with an elegant, modern design that is simple to use.

Continual investment in research and development. Marketing and advertising is critical to the development and sales of products. Target market: small and medium sized businesses education and governments customers individual consumers Steve Jobs passed away on October 5, 2011. Apple is failing to meet consumer DEMAND

Increasing number of substitutes provided by our competitors
For some customers the price point is too high in comparison to our competitors
Foreign demand: In China sales have tripled over the last year Therefore customers turn to competitors increasingly similar offerings SOLUTION

No short-term solution to this problem (increasing working hours conflicts with the CSR problems) Long-term investment in specific manufacturers.

This helps to build strong, credible relationships with manufacturers without having to manufacture the products themselves. Apple is currently doing this with Foxconn (already invested 10 billion US dollars). Lack of CSR Policies

Bad publicity regarding hazard management practices, working conditions and carbon emissions.

Foxconn Example:
Long working hours, suicides, staff quarters, under age workers. App and iTunes stores accounts for $1.9 billion of Apples annual revenue New CEO - Tim Cook, with 14 years experience in the company. Julian Arteaga
Lorena Perez Hernandez
Valeria Saavedra
David Timis Corporate Social Responsibility Corporate Social Responsibility What is CSR?
Apple Case Study
IKEA Case Study
Conclusion Contents CSR = is the continuing commitment of a business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society in general. CORPORATE SOCIAL RESPONSIBILITY (CSR) 5 areas covered by CSR:

human rights
workplace issues
market-place issues
the environment
the community ‘I no longer believe that CSR is the best way to capture the relationship between business and society or an effective approach for addressing complex social issues such as: hunger, poverty, inequality, corruption, or environmental issues’.

Paul Klein, Forbes Is CSR as we know it obsolete? First step: Commit to social change
Second step: Be accountable
Third step: Create value
Fourth step: Corporate philanthropy Steps towards a brighter future Questions? Description Swedish company, founded in 1943, by Ingvar Kamprad.

Specializes in low price furniture.

Introduced in 1956 packaging in flat boxes, reducing shipping costs and CO2 emissions.

While IKEA designs all its products, the raw materials and labour force used in their production are provided by secondary suppliers. History of Bad Practices… Dutch government sues and condemns IKEA due to very high concentrations of formaldehyde in products.

Share loses 20% of its value. 1980’s Growing criticism regarding the excessive waste caused by packaging.

Accused of dumping Chlorine and PVC by-products in the Baltic sea. 1980’s Wood comprises 75% of the raw materials used by IKEA.

Since 1992, NGO’s like Greenpeace or Robin Wood, started accusing the company of illegal logging in India, Malaysia and Russia. Wood Extraction The 1994 documentary “The Carpet” reveals the use of child labour in Pakistan’s IKEA supplier.
Children as young as 5 are found working in looms in India, Vietnam and the Philippines. Working Conditions Nordic Wood Worker Federation goes to strike. Costumers start boycott on the brand. An article from the Sunday times revealed terrible working conditions for wood workers in IKEA’s supplying lumbers. Working Conditions
As a result from all these scandals the reputation of IKEA was badly damaged.

Several measures have been taken to transform the company into a socially responsible one: Response In partnership with Greenpeace, produces in 1991 its official environmental policy.

Stops using bleach and PVC on its products.

Announces policy commitment to reforestation. As well, a partnership with WWF was established focusing on promoting sustainable wood extraction. In 1992, Following the guidelines of NGO The Natural Step, IKEA launches a structured environmental plan of action. With the aid of the NGO Save the children, IKEA develops a policy against child labour, published in 2000.

Since then, IKEA foundation has funded several projects by save the children. In order to engage deeper in child labour prevention, IKEA becomes a partner and world’s largest corporate cash donor to UNICEF. After meeting woodworker unions, IKEA adopts International Labour Organization standarts for working conditions and produces the IWAY code of conduct. IKEA’s CSR Focus on 3 things: How they…

…use renewable …treat people …help customers energy and protect live a more natural resources sustainable life A) PRODUCT DEVELOPMENT: develop products with minimal environmental impact through out the product life cycle from design to disposal.


SWITCH TO LED
By 2016, all the lighting sold at IKEA will be LED.
LED bulbs use 85% less energy.
LEDs last to 20 times longer. FOCUS AREAS The dishwasher range is currently 22% - 51% more efficient than products on the market in 2008. All fridges and freezers are now 23% - 54% more energy efficient than the product on the market in 2008, reducing customer energy bills.
Ikea has improved insulation and storage features, making it easier for customers to keep food fresh for longer and reduce food waste. IKEA induction hobs use magnetic field technology to heat the pan, not the rest of the hob. This reduces cooking time and energy. B) SUPPLY CHAIN MANAGEMENT/ SUPPLIERS RELATIONS: “The IKEA Way on Purchasing Home Furnishing Products (IWAY)” (in 2000): the code of conduct with detailed specific guidelines on requirements for suppliers:
-abolition of child labor
-legal compliance
-diversification in the workplace
-working conditions of employees
-suppliers working conditions and payments.
-environment compliance
-illegal logging FOCUS AREAS C) ENERGY:
IKEA A HUGE AMOUNT OF ENERGY

Electricity, heating, air conditioning
REDUCE ENERGY CONSUMPTION BY USING RENEWABLE SOURCES:

SOLAR ELECTRIC PANELS, WIND TURBINES FOCUS AREAS In 2003, “Kill-a-Watt-Energy Saving Competition”: which Ikea store across the world could reduce its energy consumption the most.

By the end of the competition:
IKEA had saved energy equivalent to 2,000 households, or two IKEA stores consumption for a year.
KEA store at Ho Chi Minn City in Vietnam won the competition:
- it reduced its electricity consumption by 33%.
- by installing a system that automatically switched off electrical appliances and air conditioning systems after working hours. D) TRANSPORT (trucks and trailers) and DISTRIBUTION (of its products to its stores and for delivering furniture from stores to its customers' homes):
A significant impact on the environment
“IKEA Goes Renewable” (Climate change: reduce carbon dioxide emissions).
“Smart packaging” (the importance of minimizing the packaging). FOCUS AREAS IKEA’s ability to move more products with less miles travelled. LÖVET table (1956) with removable legs, designed so it would pack flat. E) ENVIRONMENTAL. “The Nature Step (TNS)”: Projects and events:
“Better Cotton Initiative”: reduce the water and toxins needed for producing cotton.
“Sow a seed”: - 75% of the raw materials come from wood. - FORESTRY: conservation of forests. -Cooperation with Greenpeace. -Member of the Forest Stewardship Council (FSC).
“Save energy weekend”: promoting the usage of low energy lamps, bicycle riding, etc. FOCUS AREAS This dining table uses bamboo, a fast-growing, renewable resource that is stronger than other types of wood. These pillows use a soft polyester microfibre made from recycled bottles. This chair is made from 100% recycled plastic. F) SOCIAL RESPONSIBILTY:
IKEA+UNICEF +SAVE THE CHILDREN =“Soft Toys campaign”


1€ for every soft toy sold is spent on children’s educational projects. FOCUS AREAS
82€ million donated in 2012 to support children living in poverty.
“In-kind-assistance”: Donations of blankets and food for the victims of calamities.
Social projects helping women and children:
- donation of sofas to Children’s Hospitals;
- donation of toys and furniture to pre-schools.
- 47% of managers are women. "Environment is not just a new fashion, it will not fade away, it is the new reality and we have to adapt to it.” Anders Moberg (ex president of IKEA) The largest electronics manufacturer in the world, with dealings involving Dell and Sony.
Manufacturer of iPhones and iPads
Employs over 900,000 workers, of whom 420,000 employees work at the Foxconn Shenzhen plant (an exclusive supplier to Apple). This plant covers 15 factories, including dormitories, a hospital, a bank, a grocery store and restaurants. The workers live and work inside the complex. Foxconn 1. Excessive Working Hours and Intensive Production Rhythms
Foxconn maintains a military-style management
approach.The workers are not allowed to interact with each other.
Weekly working hours : 70, ten hours above the maximum hours set by Apple’s Supplier Code.
Foxconn workers receive a rest day only every 13 days during peak seasons, contrary to the Chinese legal requirement and international labor standard that at least one day off must be given every seven days Conflicts 2. Problems with Health and Safety Conditions
May 2010: two workers died and sixteen employees were injured during an explosion at Foxconn.
In the same month, workers from Wintek had been poisoned by n-hexane, a toxic chemical used to clean the touch screens of iPhones.
Several media sources reported several cases of suicide at Foxconn. From 2009 to 2010 a total of 13 workers had committed suicide.
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