Case Study of Ikea

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Case Study of IKEA’s Global Sourcing Challenge In 1995, IKEA met a problem that its main supplier, Indian rugs, used the child labor to produce products, although they had signed an attachment of the contract to ban employing child labor. In addition, a German documentary maker was about to broadcast the problem of child labor on German television and also invited an employee from IKEA to have a live discussion in the TV program. Marianne Barner, the leader of IKEA, must find a great solution to this serious issue to both save her business and the corporation’s brand image. In this issue, IKEA was not the one who produced products, so they might not realize the use of child labor in the process of production. In addition, child labor…show more content…
Moreover, customers will trust IKEA’s products because the label can indicate products are produced without child labor. However, working with the third party is also of some risk. For instance, if IKEA allows Rugmark to monitor the process of production, they will learn about some internal information about IKEA, such as the way to manage suppliers. The foundation has members such as manufacturers and retails. If they know this kind of internal information, they might utilize it. To be worse, if this information is leaked to IKEA’s competitors, IKEA will be uncompetitive. Another disadvantage is that if the third party asks IKEA to pay for supervision, it might be costly. Another way is to stop the relationship with these suppliers which use child labor and find some other partners. In this method, it can help IKEA get rid of the blame for using child labor. When IKEA does not sell the products which are produced by child labor, the issue will not hurt IKEA any more. But it is also of high risk. Child labor is a social issue embedded in Indian culture. If IKEA would like to find some suppliers without using child labor, it is almost impossible for IKEA to find suppliers in India. As a result, IKEA must target at other countries such as China or Vietnam which might have cheap labor force. However, searching for suppliers is very time consuming. In addition, if the labor force in other countries is not as cheap as that in India, the

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