IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor Nathan Johnson Case Analysis MGT 400 – 10/27/09 1) How should Marianne Barner respond to the invitation for IKEA to have a representative appear on the upcoming broadcast of the German Video Production? The offer to have a representative appear on the upcoming broadcast of the German Video Production seems like a total setup. This movie sounds like it is totally geared towards tearing down the corporation’s credibility, etc
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German program planned to take a confrontational and aggressive approach aimed directly at IKEA and one of its suppliers. The best defense is to take this opportunity to fight back. • Since IKEA already signed agreement on not using child labor, they can’t ignore the challenge this program may bring. • IKEA has gained some positive accomplishments to the child labor issue and took actions to eradicate child labor. It is a good chance to further publicize their efforts. • Marianne should prepare herself
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Background: IKEA was founded by Ingvar Kamprad who embedded his strongly held values and beliefs in IKEA’s culture. IKEA was created out of Kamprad’s family kitchen selling goods such as fountain pens, cigarette lighters and binders that later turned into a catalog business operations selling furniture. In developing IKEA’s furniture retailing business model, Kamprad was confronted with a cartel of furniture manufacturers that kept prices high by controlling the Swedish industry. This issue later
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Executive Summary IKEA is a “privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories”. The company was established in Sweden in 1943 by a 17-year-old Ingvar Kamprad, who is one the world's richest people in 2013, the company's name is an acronym that consists of the initials of Ingvar Kamprad, Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Southern Sweden). IKEA is currently
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CHRISTOPHER A. BARTLETT VINCENT DESSAIN ANDERS SJÖMAN IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A) In May 1995, Marianne Barner faced a tough decision. After just two years with IKEA, the world’s largest furniture retailer, and less than a year into her job as business area manager for carpets, she was faced with the decision of cutting off one of the company’s major suppliers of Indian rugs. While such a move would disrupt supply and affect sales, she found the reasons to do
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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
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1. Should Ikea dissolve its relationship with its carpet supplier? I think IKEA should in fact, exit the Indian rug market. While it would translate to higher cost for consumers, it would remove any conflict of interest for both society and management in terms of child labor. With the public knowledge that IKEA rugs have in fact been made using child labor, rug sales will decrease and customers will feel uncomfortable purchasing products with the wonder of whether or not child labor was used to
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Challenge: Indian Rugs and Child Labor (B) After more than a decade spent struggling with the issue of child labor, Marianne Barner felt good about how IKEA had responded. But occasionally, she found herself wondering whether the progress the global furniture retailer had made was real and durable. Just as it had in the mid-1990s, in 2005 the company could still find itself on the defensive in dealing with the issue. Even more troubling to Barner was that after 10 years of working to prevent child labor
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1) How should M. Barner respond to the invitation for IKEA to have a representative? appear on the upcoming broadcast of the German video program? Marianne Barner business manager for IKEA’s carpets should respond with a firm no to the invitation. The German video program would only bring detriment to the company, rather than relief or support for the issue at hand. In comparison to the Swedish program, which did not target a specific company, this German-produced program planned to take a confrontational
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IKEA’s Global Sourcing Challenge IKEA, one of the world’s largest specialized furniture retailers, has been presented with a large issue within their operations. In 1995, a German TV station released an investigative report which exposed one of the suppliers for IKEA rugs for exploiting child labor in their factory. A recent addendum was signed by all IKEA suppliers which forbid the use of child labor (Bartlett & Sjoman, p. 1, 2006), so this incident has called the company to make an action
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