Contingency Planning and Risk Analysis of IKEA's Move to Adopt Energy Efficient LED Light Bulbs

1.1Discussion on why I chose this specific activity to analysis

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Contingency planning and risk analysis are important activities that managers of today and tomorrow should be aware of. I chose this particular case because it provides a basis to apply learned contingency and risk planning approaches and skills which can improve the sustainability of an organization production and profitability. Environment conservation through the use of green energy is an important approach that can increase the efficiency of any organization. Failure by an organization to create environment friendly products and also use environment friendly products it can lead to negative reputation of the organization and reduction in sales. There are many risks that businesses face while conducting operations. A case study by Salata et al., 2014 notes that the use of LED bulbs will reduce the operating and production costs of an organization while the use of incandescent bulbs increases the production costs, hence, they should be phased out from use in an organization.

According to (Mochon, Norton &Ariely, 2012), a risk can be defined as a situation of uncertainty which has the potential of loss which arises out of external or internal vulnerabilities. In analyzing the underlying risks arising out of IKEA's move to adopt energy efficient LED light bulbs, some of the factors were taken into consideration. According to Profis, 2016, the lifespan of the LED bulbs is determined by the following outlined factors: The manner in which the heatsink is designed has a significance influence in the lifespan of the bulb. Heatsinks that have incorrect surface area and which do not carefully consider the gaps between fins to enable air flow stands to last only for a few years if not one year.

A case study by Lim et al., 2012 notes that the LED bulbs have the least negative effect on the environment compared to the CFLs the case study notes that design faults such as placing fins vertically while instead they are fashioned to be horizontally placed cause heat to rise and instead of dispensing the heat away from the bulb, the heat from the lower fins heat the upper fins even more. Every LED device has a capacitor. Standard electronic capacitors are made from a piece of plastic and this makes them have an average lifetime of about one year especially when regularly used. IKEA however, seeks to design the LED light bulbs with ceramics just as a means of boosting the lifespan of the bulb.

1.2 Discussions on how I decided on the impact measures

After the identification of the risk problems that were being experienced by IKEA the impact measures were important to help reduce the negative implications of the organization production to the environment. From the review of the organization production and sales trends the impact measures could be derived on the organization research and development department which could be tasked to develop environmentally friendly products for the market. The impact measures were also affected by the overall resources disposable by the organization to create an environmentally friendly environment in the organization. The skills and knowledge of the employees and stakeholders of IKEA also played a significant role in the impact measures choice. There was a need to educate the employees, the public and the stakeholders of the organization on the importance of sustainable production and resources consumption through the use of environmentally friendly light bulbs.

The success of the impact measures will be evaluated through the assessment of the number of new LED bulbs installed and also the demand for the LED bulbs over time. The success of creation awareness regarding the need to replace the incandescent bulbs with the LED bulbs will be identified by the assessment of the sales of the LED bulbs. The increase in demand of the LED bulbs and the decrease in the demand of the incandescent bulbs will show a success in the impact measures. Besides, the customers comments on the quality of the new LED bulbs light compared to the lighting of the incandescent bulbs will further show the profitability of the process.

1.3 Discussion on how I identified the individual actions that needs to done

According to the past organization manifestos and strategies there was a significant need for environmentally friendly products and approaches that can be used to improve the products of IKEA to meet the required environmental standards. In addition, previous measures to be used to improve recycling of waste products were analysed which gave an insight on the possible approaches to improve IKEA products to be environmentally friendly. The organization will use internal and external communication channels to create awareness on different avenues and actions that can be carried out to improve the organization and community ability to use environment friendly products. The research also assessed avenues through which it can assess and create new supply approaches to ensure that the suppliers are compliant with the organization contingency measures to improve environmental sustainability. Training of the employees and carrying out educative seminars was put in place with the aim of creating new ideas for environmental sustainability and making the employees contribute to the process of establishing new measures to protect the environment.

When manufacturing LED bulbs, some of the specifications taken into account is the environment in which the led will operate efficiently in. Essentially, this implies that they operate best under certain climatic conditions. When used in hot countries or enclosed area, for example, the heat around them can easily surpass the heat they are fashioned to withstand, and this shortens their lifespan.

Even the highest quality LED light bulbs may surprisingly last for as little as one year (Edge, J. and McKeen-Edwards, H., 2008). From the Qualitative Improvement Plan, adoption of LED bulbs with the aim of lowering the energy usage of the bulbsuffers from a weakness of being unable to precisely estimate the actual lifespan of the LED lightbulb. While developing the QIP, this weakness came out that though the LED lightbulb was the best out of the other two bulb options (incandescent and compact fluorescent lamps (CFLs)). The lifespan of a standard incandescent bulb is estimated to be about 1,000 hours (Hung, T.S., Lai, K.K., Ken, Y., Pai, N.Y., Lin, W.T. and Wu, C.H., 2012). Ideally, this estimate represents the average time to failure because half of them will fail by that point!

What 25,000-hour life mean?

Ideally, this is just an estimate. The exact lifespan is yet to be estimated accurately. LED bulbs utilize nascent technology. One thing is for sure when it comes to LED bulbs, energy saving, durability and longevity are inseparable. As for the LED lamps, they do not burn out. Rather, they just fade away (Xue, H.Y. and Yang, H., 2014). The indication of 25,000 or 50,000 hours by the manufacturer is another way of saying that the light emanating from that product will be at 70percent the level it was when new.

But why 70%?

Lighting industry engineers ascertain that at that level, most household consumers can sense that the brightness is not as it was as when the product was new. That is the reason why it was made a standard. Brightness is subject to the old frog in the boiling water syndrome. Not many people never get to notice the lower level even if they lived with the bulb their entire lives. If nothing else in the lamp fails, like it electronics, it will continue to work until it becomes dim (Bladh, M., 2011). When the LEDs start emitting less light, it is advisable to increase the power to increase its brightness. Unfortunately, this will lower the lifespan of the lamp.

Justification of Choosing to analyze the specific risk and how decisions on its probabilities and impact rating were made

2.1.1Probability: The probability measurement of the likelihood of the occurrence of the risk was considered to be high. The reason behind this rating was due to complexity in acquiring new LED bulbs to replace the incandescent bulbs and the need to come up with an operating plan to phase out the production of incandescent bulbs. The high probability rating is also due to the need to train the employees as well as acquire new facilities and equipment to produce the LED bulbs that are more superior to the incandescent bulbs which are environmentally inefficient and costly because they require more energy. The acquisition of extra funds to set up new production of the LED bulbs and also train the employees is a challenge which increases the probability rating for the risk.

2.1.2 Impact: High: The impact of the risk on IKEA is perceived to be high because it increases the cost of production for the organization and also reduces the sustainability of the organization production activities. The impact is also very high because it will affect the reputation of the organization and the need to maintain a clean environment through the use and creation of environmentally friendly LED bulbs. In addition, the failure of IKEA to switch to the LED bulbs will reduce the competitive advantage of the organization in the market and can reduce in the loss of the organization market share. Hence, the impact is high because failure to carry out the corrective actions the organization profits and sales will reduce.

2.2 Justification of how the specific mitigation and contingency plans were identified

2.2.1 Mitigation Plan: The mitigation activities and plan were reached through an organization analysis to establish the organization financial abilities to establish an education program and also the feasibility of producing new bulbs as well as replacing the existing incandescent bulbs with LED bulbs. Upon the assessment the cost of introducing LED bulbs was feasible in the long term despite the high short term costs due to the need to train the employees as well as acquire new equipment for the production of incandescent bulbs. Shifting from the use of incandescent bulbs to the use of CFL version can be a good move, but because CFL versions contain toxic mercury which is dangerous and life threatening, they fail to qualify as the best alternatives! LED bulbs essentially are the best alternatives since they have zero mercury content plus a long lifespan ranging between 25,000 to 50,000 hours (Crosbie, T., Stokes, M., and Guy, S., 2008). If a LED bulb were to be used for 10 hours a day, it would last approximately 13.7 years. Even as the world seeks to adopt more efficient technology which is environmentally friendly and pollution free, LED bulbs have emerged as not only a good option but the best option! The technology behind the use of LED bulbs is embracing extended bulb life plus reduced power usage used in creating the same amount of light. There is a need for the contractors at IKEA to work around this and probably use thicker cables and this would mean that more power would be needed and this in the overall would negate the appeal of LED lightning which is the main objective of the IKEA. But given the fact that technology is shifting to this new technology, this is an issue that needs to be addressed.

To increase the lifespan of the LED light bulbs, IKEA should consider manufacturing light bulbs using the correct specifications especially the surface area (Ford, R.C., Edvardsson, B., Dickson, & Enquist. B. 2012). When designing the fins, the gaps between them should be spaced in the best manner. Moreover, IKEA ought to monitor and evaluate the final LED light bulbs and ensure that they meet the standards to avoid instances in which horizontally designed bulbs have fins placed vertically. Moreover, the production department o...