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Why does a firm such as IKEA spend so much on growth sustainability?

Furniture Giant IKEA's Global Strategy is planning on a strong entry into India, and is considering Brazil as well. All of these economies have a growing middle-class. Even in these countries, IKEA is focusing on "flat packing, transporting, and reassembling its quirky Swedish-styling all across the planet One of IKEA's latest strategies to improve its image is to develop a sounder approach to sustainability. Accordingly, its store roofs are outfitted with solar panels, and it will operate 314 wind turbines in 9 countries, putting the company on tract to be energy independent by 2020. IKEA recycles left over wood scraps from their furniture as well as the soft plastic film used in packaging to make the Skrutt desk pads it sells. It's also starting to phase out non-LED light bulbs in its stores and has begun selling solar panels. With this strategy, IKEA expects to be seen as a company that takes its social and environ- mental responsibility seriously as it expands internationally. But in the process, it also expects to lower its costs. Founded in Sweden, IKEA has pursued a global strategy in developing its well-designed, inexpensive retail furniture strategy. As with most companies pursuing a global strategy. it emphasizes global efficiencies. One particular approach that IKEA has used is to reduce shipping weight by efficient packaging. Efficient packaging and the associated benefit of lower transportation costs is at the heart of IKEA's ability to stay affordable." For example, in 2011 the company cut the price of its Bjursta label dining table to 199 from 279 by making the table legs hollow thus reducing weight and raw material costs. Instead of changing products once they have hit shelves, IKEA is increasingly designing things with packaging and manufacturing in mind from the start. A tradeoff they have experienced is that packaging can become too efficient at the expense of consumer frustration at the complexity of assembly once the product is in the home. So, simple assembly is also an important criteria. In 2015, IKEA plans to open 13 new stores adding to its current total of 315. It is seeking to buy land in India to open its first locations. Furthermore, the firm is ramping up its focus on online shopping, currently available only in 13 of 27 country locations. It saw 1.5 billion online visits in 2014, up from 200 million in the prior year, which also exceeds its visits to physical stores. Ikea is expanding this strategy by increasing its "click-and-collect merchandising approach where people order online and pick-up the merchandise at a physical location IKEA is also focusing on developing city center stores with a smaller range of products compared to its majority of subur- ban store locations. However, the suburban stores will likely be maintained as its central focus. Even when in a suburban loca- tion, IKEA seeks to be within walking distance of transportation hubs such as subway stations Although, IKEA is focused on efficiency, it also takes a long time to study each new country market entry. It focuses on where a growing middle-class is developing. It has entered China, IKEI Face to Face/UPPA/Photoshot The founding CEO of IKEA, Ingvar Kamprad, in front of one of IKEA's store fronts. Sources: S. Chaudhury, 2015, IKEAs favorite design ideas Shrink the box, Wolf Street Journal, June 18,810, B. Kowitt, 2015, How IKEA took over the world, Fortune www. fortune.com, March 13; M. Locker, 2015, IKEA is getting into the wedding business, Time, www.time.com April 20, A. Molin, 2015, IKEA builds momentumn in Europe, Wall Street Journal, wwwws.com, January 29, 1. Sanbur. F. Trianni, & D.Tsal, 2015, Find out why you overshop in IKEA Time, www.time.com, March 17, Zillman, 2015, Here's how IKEA is fighting climate change, Fortune, www.fortune.com, June 11