Ikea’s Global Sourcing Challenge: Indian Rugs and Child Labor

* IKEA’s management philosophy; “Our vision is to create a better everyday life for the many people. Our business idea is to offer a wide range of well-designed, functional, home furnishing products at prices so low that as many people as possible can afford them.” and all its activities is founded on its mission of offering wide variety of functional furniture for the house, of a quality and at

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)

In IKEA, the Unsolicited Proposal came from many directions. Firstly, in 1952 the boycott by Swedish retailers to IKEA, obliged to IKEA to seek new sources of furniture. Second, the Swedish furniture market demand fall by the early 1970s. Third, IKEA had identified as we said before two big markets to

This assignment had to be written for the class of Management and Organizations at Stenden University, course IBMS, first year. We had a group of 6 and had to work it out together. We were enjoying getting into the world of IKEA, the world’s most furniture store on the market.

Tanglewood is a retail store known all over the regions and over seas. Each region enjoys its own culture and values, which distinguishes from others. The pattern and the process of Tanglewood has to be similar, however, internal department methods will run depending on the regions culture. On page 12 of the Tanglewood case book its states that “ If you tell someone exactly what to do, you’re only getting half an employee. If your given someone the space to make their own decisions, your getting a whole person”. I encourage this philosophy to be spread and worked with among all the regions. Tanglewood like other stores has the same tools, clothing, equipment, electronics and much more. These retailers have to be engage in both over seas out sourcing and off shoring by hiring high tech and talented, sufficient employees to deal with this globally and locally that will help Tanglewood reach and exceed competitive levels among others.

Global sourcing is a technique of strategic sourcing in the global strategy, which is an effective approach as a part of organization’s procurement section. The objective of global sourcing is to develop global efficiencies in the delivery of a product or service for the firms achieving a sustainable competitive advantage and this is an important weapon have been focused in the 21st Century. The well-known organization, Hennes and Mauritz (H&M) is one of the largest international fashion retail and production house with the great deal of businesses all over the world. In the today’s competitive market and

Today’s world is facing strong influence of globalization in each and every aspect of our lives. It is expressed through: free trade agreements, foreign direct investments, international trade, facilitated movement of labour, capital and resources, as well as a strong competition that eventually gives more power to customers. In addition, it resulted in the economic boom of the developing countries, with substantial dominance of China that mainly benefit from their massive labour force, its low cost and high comparative efficiency. This phenomenon has impacted all industries around the world. In particular, furniture production is going through a trend of moving to China that “in 2002

IKEA understands the value of its employee and is always focuses on developing the strategy to create satisfied and committed workforce who in return contributes to the wellbeing and future success of company. The two main factors, in this case for IKEA, for leading in management would be Leadership and Motivation.

The services and products offered by IKEA provide value to its customers in various ways. For one, the products and services are very affordable. The products and services are not priced highly and therefore, the average customer can enjoy them. At the same time, the products are of high quality. From IKEA’s slogan “low prices but not at any price”, it is clear that the company prices its products lowly but that does not mean that the quality is compromised. IKEA satisfying its customer’s needs through providing them value for their money as they provide quality products that will last for a long time, and at affordable costs. The fact that the company has set the minimum acceptable standards for its wood, implies that it is also keen on quality and on the environmental impact of its action of making furniture ( Edvardsson, Enquist & Hay, 2006).

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.

This model is relating to Primark. Primark source globally, they don’t have their own factories that make their own products. They work with around 700 suppliers and all of their suppliers are from China, India and Bangladesh to Turkey and Eastern Europe. They take worker welfare seriously and they make sure that suppliers must follow the Code of Conduct to make products in good working conditions. Every factory of the suppliers is carefully inspected against the code before Primark replace and order with a supplier. If there is an any issues or problems they find in the products they will sent their inspected team to check all the products.

IKEA is considered to be a low cost, high quality producer in the furniture industry, therefore it is important to

4) For those recommending that IKEA continue to source carpets in India, would you suggest

Apparel and shoe manufacturers continued to offload the more costly yet easily replicated part so their business models to concentrate on brand building, marketing, sales and attaining greater distribution channels globally. These are the pressures all apparel and shoe manufacturers face, and it is particularly challenging in the athletic show industry (Kynge, 2009). Adidas, Converse, Nike and Reebok have been outsourcing production of their shoes for in some cases nearly three decades. Nike was one of the leaders in this strategy, seeing to create a more efficient supply chain and also drop the labor and union costs of manufacturing in the U.S. (Boje, Khan, 2009). Adidas, Converse and Reebok have all followed Nike's lead, with Adidas benefitting from the fall-out generated when investigate reports showed Nike using child labor throughout Pakistan and Vietnam (Boje, Khan, 2009). All four of these companies share a common prioritization of manufacturing operations, yet none of them with the exception of Nike has a comprehensive Corporate Social Responsibility (CSR) program in place to ensure ethical compliance to global standards of outsourcing in their industry (Nike Investor Relations, 2012). The intent of this analysis is to compare and contrast the four companies mentioned and their outsourcing practices. Their reasons for choosing to outsource are very much the same; the industry is shrinking

Founded on this and Kamprads own views Ikea has grown exponentially and sits as a world leader in management. Scandinavian management were equality, communication, cooperation, trust and consensual decision making are vital elements in the concept. Managers are focused on their employees and feel that they need to satisfy them in order to motivate them. This motivation has proven to lead to better productivity and performance of the organization. Swedish managers are indeed focused on human resources and are practicing Scandinavian management. Scandinavian management is necessary on the Swedish market as it increases the chances for having a productive company with satisfied employees and customers.