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IKEA's Global Sourcing Challenge- Indian Rugs and Child Labor (A) Case Solution

Solution Id Length Case Author Case Publisher
785 657 Words (3 Pages) Christopher A. Bartlett, Vincent Dessain, Anders Sjoman Harvard Business School : 906414
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IKEA, world’s leading retail furniture chain is known for quality at low price. Concern about the environmental and child labor laws is rising; suppliers of IKEA are found in the exploitation of child labor laws which is tarnishing its brand name. Management is trying to find the solution to this changing global scenario.  

Initially Barner should accept the invitation from German documentary producer and send its representative during the launch of this video with proper home work. This move will help the IKEA to defend itself. It is a good opportunity for IKEA to take the benefit of the new clause introduced in the supplier agreement. Through this clause IKEA can make itself clear and can protect its brand name. If IKEA decline to take part in this discussion; it will create negative image for it and will lose the opportunity to stop the negative word of mouth. By participating in this discussion it can explain its initiatives to stop child labor and working which it has done to cope up the child labor. This will help it to attract and retain customers. IKEA should take it as free marketing opportunity and should try to project its softer image in front of the customers.

Case Analysis for IKEA's Global Sourcing Challenge- Indian Rugs and Child Labor (A)

IKEA should reconsider its contract with suppliers and the new clause about child labor should be part of every contract. To enforce this clause it should hire internal auditors in each country. These auditors will visit the production facilities of the suppliers and make sure that the suppliers are not using the child labor. Although child labor is societal phenomenon of developing countries like India and Pakistan which cannot be fully eradicated by IKEA but to protect its brand name it has to take initiatives. At least IKEA can make sure that production facilities of its suppliers in these countries are not using child labor. To make sure of compliance of agreement its auditors should pay surprise visits to these production facilities. IKEA should market this activity through media. It can upload videos of production facilities in these countries on its corporate site. These videos will serve as testimonials to save its brand image. Cost of this initiative will be very low in comparison to brand image loss generated by such incidents.

Monitoring and making its supply chain child labor free is necessary for the survival of IKEA. But to promote its image it should also sign up for Rugmark which will be a certification from independent authority that product is child labor free. This will help IKEA to boost its sales and will create a level of transparency for its customers. It should also get involved itself in eradicating the root cause of child labor and join hands with NGOs like Save the Children. This will expand IKEA’s public interests and help in fixing the more issues. Since Barner has learned the child labor is more complex issue and is beyond the control of IKEA. Joining hands with NGO and marketing this activity under CSR head will help in building good image of IKEA. It should project these initiatives through social media and launch the testimonial of children which are getting benefit from this. In this way IKEA can mitigate the root cause of child labor and also improve its brand image.

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