Ikea's Global Sourcing Challenge

“This is the main reason why targeted boycotts of the products of child labor turn out to be counterproductive (at least in the short term): they focus, in a limited geographical area, only on the effects of child labor—its products—but typically fail to investigate the structural reasons for the occurrence of child labor—namely, poverty.”

Child labour is a very real problem in the world today, and although it is declining, progress is happening at a slow and unequal pace. Child labour by the International Labour Organization is defined as “work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development (Diallo, Etienne, & Mehran, 2013, p. 2).” In the most extreme forms of child labour it could account for child enslavement, separation from their families, exposure to serious hazards and illnesses and being left to fend for themselves on the streets (Dinopoulos & Zhao, 2007). In order for certain types of work to be included as “child labour” depends on the child’s age, the type of work,

IKEA does a lot of effort to implement their new company’s strategy for 2020, so called, Positive & Planet Positive Strategy. In spite of IKEA’s commitment to human rights, it is difficult for them to control their entire global supply chain. IKEA with other of retailers, were lighted on having suppliers in India which employ labor. However, IKEA declares that those proves were found in carpets producer from India from only four suppliers. (Max Ebnother, 2014)

When one hears the term “Child Labor”, an image of children making low quality clothing in some dingy third world sweatshop inevitably comes to mind. While this imagery is unfortunately founded in fact, the third world is not the only area complicit with this heinous practice. Truthfully, we, as a nation are also guilty of propagating this heinous practice. For over a century, this nation’s youth were subjugated to exploitation and abuse at the hands of captains of industry in the hopes of extracting every ounce of profit they could. Fortunately, sympathetic individuals recognized the children’s need for advocacy and rose to their defense in the form of organized dissent that appealed to the highest powers of this country to fight for those who could not fight for themselves. In this paper, we will look at what exactly child labor is, the circumstances that gave rise to the widespread acceptance of child labor usage, what working condition these children experienced, and how the United States eventually made its use illegal.

This paper aims to demonstrate a detailed description of the elements of ‘IKEA’ company based on its famous name in the furniture industry.

In her article, “Live Free and Starve,” Chitra Divakaruni uses multiple persuasive appeals, alongside a pattern of evaluation, to drive home her opinion of child labor in Third World countries. Directed at Americans who recently passed a bill banning import of goods made by children, she explains how boycotting these companies may negatively affect the lives and livelihood of children and their families in these nations. Throughout this article, Chitra is able to stay in-touch with her audience by maintaining a back-and-forth balance between support and criticism for the bill with great success.

Kelley illustrates pitiful images of “tiny children” trapped in the “sweating system” which allows these children to be cruelly abused. The powerful language which describes these children as “little beasts of burden” helps her prove her point child labor is making these children lose their humanity. These images of children as “little beasts of burden” show how child labor strips children of their humanity, forcing her audience to be no longer able to ignore the problem in their society. After wrapping around the audience’s hearts with pity-evoking words, she aggressively attacks them all, claiming that they are all part of the system that is turning innocent children into machine-like “beasts” that have to toil throughout the night to satisfy the needs of the adult consumers. Kelley accuses her audience that “no one in this room tonight can feel free from such participation” in the system because they continue to buy the products produced through child-labor, and choose to not vote against it. After reducing this national system problem into a personal problem in her

Kelley wants to pass child labor laws to improve the lives of working children; in doing so she goes into detail describing the horrors children face while working. To emphasize her argument Kelley uses facts, appeals to emotions and syntax to prove to the NAWSA that child labor is awful and there must be laws in place to protect them.

IKEA is the world’s largest furniture store that offers well-designed, functional home furnishing products at low prices. The store offers home furnishings to meet the needs of everyone. The company vision is to create a better everyday life for the many people. Ikea is able to back their vision with their products and prices.

Global sourcing is an important sourcing strategy for IKEA Company. According to Hultman, Hertz and Johnsen (2012), in 2008, IKEA has 54 different sourcing countries and 30 purchasing departments which were located all over the world. With the expansion of its market, IKEA was not satisfied with selling its product only in domestic and Nordic market instead it put its higher goal in global market. Therefore the sourcing market also expanded with the growing market. There were 64% of its products were sourced from European countries which were mainly in eastern part like Czechoslovakia, Rumania and Hungary; China with a 22% share of the supply was the largest single supply market, and Poland with a 16% share (IKEA 2007). However, IKEA also trades off the cost of raw materials and cost of transportation, hence IKEA combined the Global sourcing with local sourcing strategy to lower the total cost.

The case I will analyze and discuss in this case study is “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor”. I will begin with the vision, values, and strategy of IKEA and an internal analysis of the issues that they have faced as of the time of the case. Next, I will detail the issues IKEA faced in the years prior to the Indian rugs and child labor challenge. Then I will describe the Indian rug and child labor problem that IKEA faced

IKEA is one of the largest multinational companies in the world dealing with several products. The company sells and designs furniture appliances and home accessories at an affordable price. Ikea has over three hundred stores worldwide enjoying the good name it has created for itself. While they are one of the most profitable furniture companies in the world there are significant challenges and threats that have been overcome and are still needed to be tackled.

public image and to show that IKEA is serious about the issue of child labor in the supply chain I

In the United States, child labor and sweatshops are illegal, and society frowns upon any business that exploits children in the production of goods. Though most would say that they would not support a company that uses child labor to produce its goods, almost everyone has, in fact, knowingly or unknowingly, supported these businesses in one way or another. Children are involved in the production of many of the everyday goods we import from overseas, including the manufacturing of clothes, shoes, toys, and sporting equipment, the farming of cocoa, cotton, sugarcane, and bananas, and the mining of coal, diamonds, and gold (The U.S. Dept. of Labor). Often, we are blinded to this fact.

The practice of world trade amongst countries has taken over the rate of domestic production. It has led to the free flowing of money across national borders, which opens doors for companies and investors to seek for best rates for financing anywhere across the globe. Such trend is known as globalization and Cullen & Parboteeah (2008) defines globalisation as the worldwide trend of borderless and interlinked world economies, and companies no longer restrain by domestic boundaries and possibly conduct any business activities throughout the globe.