Sustainability at IKEA Group

Case Assignment

Throughout this semester you are expected to complete 5 case study assignments, each worth 5% towards
your final grade; these require you to read the case, provide a thorough response to the case problem,
challenge or questions and participate in the survey and discussion board to share your perspective.

This is an individual assignment, while you may discuss this case with classmates, each individual student is
required to answer in their own words and submit their own assignment in Brightspace. Plagiarism, copying or
cheating will not be tolerated and if caught, both students will receive a zero for this assignment.

To get full credit for this assignment, please ensure you do the following:
1. Complete the case questions listed below within this document (also attached for ease of download and
editing) in the format provided. Submit your final analysis under the Assignment Tab in Brightspace by
Wednesday 11:59pm of the week it is due.
2. Complete the discussion by sharing your perspective under the Discussion tab within Brightspace by
Wednesday 11:59pm of the week it is due.
3. Respond to two other classmates' thread with thoughtful responses: either challenging their differing
opinion using facts within the case that helped sway you otherwise or agreeing with their perspective
but supporting with additional evidence by Sunday 11:59pm of the week it is due.

IKEA Case Analysis:

1. (15 Points) Ikea’s Order Winner dimension or competitive advantage is their low price point -
how do they accomplish this? Give at least two examples.
IKEA is committed to providing high-quality products at accessible prices. The company carefully determines
the cost of each product, which influences both the design and materials used. By collaborating closely with
global manufacturers, IKEA maximizes efficiency from the production stage through to delivery. To further
reduce costs, IKEA purchases materials in bulk, often securing discounts from suppliers. The company also
produces items in high volumes and employs vacuum flat packaging to optimize space during shipping and
storage. This innovative approach helps keep transportation and storage costs low, allowing IKEA to maintain
its focus on affordability.

2. The case describes four options IKEA can pursue to manage environmental impacts of its wood supply
chain: 1) Increase forest ownership, 2) Increase targets/stringency of standards, 3) Shift its product
designs from solid to particle board and 4) Shift from virgin wood to recycled wood.
a. (30 Points) What are the pros/cons of each option? Fill in the table below with your answers.

Advantages Disadvantages
1) Increase Forest Ownership - control over sustainable - high fixed costs
practices and FSC certification - Lengthy forest rotation
compliance periods(50-80 years), may
- Secures wood supply in regions exceed lease terms
with limited regulatory oversight - Additional management attention
- Reduces dependency on required, risks IKEA being
external suppliers viewed as a wood trader
 2) Increase targets/stringency - shows strong public commitment - may limit options, increasing
of standards to sustainability enhancing their costs
reputation - Requires ongoing partnerships
- Increases FSC certification, and advocacy for certification
boosting sustainable wood (resource intensive)
supply - Some regions lack sufficient
- Reduces risk exposure in high FSC-certified wood, possibly
risk regions leading to supply shortages
3) Shift its production designs - improves resource efficiency - consumers might perceive as
from solid to particle board (more wood per log is used, lower quality
reducing total wood required) - Limited availability of production
- Lightweight particle board in regions like China and India
reduces transport costs by requires investment in local
allowing fuller truckloads capacity
- 20% cheaper than solid wood - Not all designs can use it,
limiting applicability
4) Shift from virgin wood to - cheaper in markets with ample - significant investments needed
recycled wood supply and regulations promoting to adapt board plants to process
recycling recycled wood
- Lowers environmental impact by - Availability of recycled wood is
reducing reliance on virgin wood inconsistent globally
- Enhances their sustainability - Transportation costs may
profile, appealing to eco- increase if recycled wood is
conscious consumers collected far from production
sites

b. (30 Points) If you could pursue just one of these, which would you pursue and why?
If I could pursue just one of these options for IKEA, I would choose increasing forest ownership. By
directly managing forests, IKEA would gain full control over sustainable practices, especially in regions where
regulations are less strict, like Russia. This approach allows IKEA to set its own standards, address concerns
about conservation, and actively protect high-value forests. Plus, owning forests means a more stable, reliable
wood source, which helps reduce dependency on fluctuating markets and external suppliers—a big win for
IKEA’s long-term supply chain stability. The upfront investment for forest ownership is substantial, and
managing forests is a complex task, especially with long forest rotation periods. But the benefits of this
approach outweigh the challenges. By focusing on areas with shorter growth cycles or leases that match
rotation periods, IKEA could see more immediate returns. Also, having control over its timber supply means
IKEA could trace each piece of wood more accurately, aligning with consumers’ growing demand for
transparency in product sourcing. While taking direct responsibility for forest practices can bring accountability
risks, working with NGOs and local groups would help build trust and ensure a balanced approach to
conservation. Overall, investing in forest ownership aligns with IKEA’s goals of sustainable sourcing, brand
transparency, and long-term supply chain security.

3. (5 Points) - Delivery of content - submitted this document filled out on time, sentences were correct
and properly written, answers flowed and were easy to follow
4. (20 Points) - Engagement in case discussion by participating in the discussion board with your
individual perspective and thoughtful challenges or insight when responding to two classmates.