"Old is Gold": The Transition Towards a Circular Economy: An IKEA Case Study on how Incumbent MNEs Can Drive the Transition

Abstract

Nowadays, the world is facing a shortage of resources, troubling climate issues, as well as waste and pollution problems. As businesses continue to follow the linear flow of “take-makewaste”, they contribute to further degrade the environment. While companies are becoming aware of this urgency, a new approach that helps facing this problem has gained momentum over the past years: the circular economy. The circular economy is a system that replaces the “end-of-life” concept with the integration of restorative loops of resource. It allows to access a sustainable economic growth that advocates the values and benefits of the environment, the economy, and the well-being of current and future generations. A connected literature review will help readers to have an overall understanding of the topic at hand. Next, to undergo the transition from linear to circular, companies need to adapt their business model to a new circular business model, thus a way to integrate the circular loops and processes into their structure. Particularly, this analysis concerns the transition of incumbents MNEs, such as IKEA, as they have the power and resources to potentially unlock the transition of the whole economic system. To assess the transition, the researchers of the thesis used a case study approach concerning IKEA, supported by an in-depth interview and a questionnaire survey, to investigate the main research question: “How can incumbent firms establish a circular economy system within their operating structure?”. By tackling it through three sub-questions assessing specific matters, the thesis presented useful findings that have been used to draw conclusions for incumbents MNEs to transit towards the circular economy. By and large, the findings of the research support managers in the strategic steps to implement a circular system. Firstly, to start the transition a general appraisal of resources is required, together with an assessment of the company’s current product design, to create a strategic roadmap. Next, the decision on the circular value proposition is outlined: incumbent companies must hold true to their original value proposition in order not to lose their customer base. Lastly, a glocalization approach to deal with country-specific differences is recommended.