Ikea’s Global Sourcing Challenge Indian Rugs and Child Labor

IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor Ethics in Business and Society Professor Stephen Griffith Otis West Tuesday, November 6, 2012 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. In additional to Ikea offering great products, the company also believes in taking responsibility for people and the environment as a pre prerequisite for doing good business. IKEA works actively to reduce its impact on climate change and IKEA products must†¦show more content†¦The International Labor Organization (ILO) is the international organization responsible for overseeing international labor standards. The ILO gives an equal voice to workers, employers and governments to ensure that the views of the social partners are closely reflected in labor standards and in shaping policies. According to ILO, there are more than 215 million child w orkers in the world today, many of them in hazardous environments doing back-breaking work. Millions are forced into slavery or exploited in drug trafficking and prostitution. Most of these children do not attend school or receive the most basic nutrition or medical care that all children deserve (ILO.com, 2012). For a company like IKEA who has operations worldwide, both set of laws affect their business if their suppliers go against the Fair Labor Standards Act or laws implemented by the International Labor Organization. In the case this week one of IKEAs suppliers are using child labor to produce Indian rugs that IKEA sells. Although IKEA is not directly employing these children, the company is employing a third party who is hiring children to produce products for them. This gives consumers a negative perception of the company in a way that says that the company supports child labor when indeed they do not but their suppliers do and therefore, IKEA must take action. A reputation l ike this could affect IKEA sales tremendously. As part of the company’s code of conduct it states thatShow MoreRelatedIkea’s Global Sourcing Challenge: Indian Rugs and Child Labor2782 Words   |  12 PagesIKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor Jordan de Jong Case Study _ The case I will analyze and discuss in this case study is â€Å"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 ofRead MoreIkea Global Sourcing Challenge2551 Words   |  11 PagesIKEAs GLOBAL SOURCING CHALLENGE EXECUTIVE SUMMARY The IKEA Group, one of the world’s top furniture retailers, has emerged as the fastest-growing furniture retailer in the US. Its unique business strategy has given it its strengths for its success today. However, like all strategies, IKEA’s strategy has its own flaws that can pose as weaknesses. IKEA also has a lot of opportunities in the marketplace such as expansions of their company and threats such as competitors in the same industryRead MoreIkeas Global Sourcing Challenge1241 Words   |  5 PagesIKEA’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 amp; Sjoman, p. 1, 2006), so this incident has called the company to make an actionRead MoreIkea Children Labour6495 Words   |  26 Pages14, 2006 CHRISTOPHER A. BARTLETT VINCENT DESSAIN ANDERS SJÃâ€"MAN 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 theRead MoreCase Study of Ikea1445 Words   |  6 PagesCase 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 solutionRead MoreIkeas Global Sourcing Challenge: Indian Rugs Essay1242 Words   |  5 PagesThe case â€Å"IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A)† is about IKEA’s development from a backyard company to one of the world’s largest furniture retailers, which has to deal with the issues of child labor and how they should behave considering economical issues and the company’s policy! Conclusions made in this study are only based on the facts given in the case, considering pros and cons of an action. How should Marianne Barner respond to the invitation for IKEA to haveRead MoreEthical Issue Ikea2982 Words   |  12 Pagescompany was founded in 1943 by Ingvar Kamprad and kept growing tremendously from 2 stores in 1964 to 114 stores in 1994 to 285 stores in 2008 in 36 countries with an additional 26 stores to be opened in 2009 welcoming a total of 522 million visitors. IKEA’s success story is the result of its founders opening store in 1951 to allow customers to inspect products before buying them, using a catalog to tempt people to visit an exhibition. Its key feature of providing self-assembled furniture starting fromRead MoreIkeas Global Sourcing Challenge2533 Words   |  11 PagesIKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A) Case Synopsis IKEA is a â€Å"privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories† (www.worldisyouroyster.com). The company was established in 1943 by Ingvar Kamprad in Sweden when he was just 17 years old. Kamprad himself, who still owns the private company, is rumored to be the world’s richest man. IKEA is currently the worldRead MoreIkea s Global Sourcing Challenge Indian Rugs And Child Labor1532 Words   |  7 PagesIKEA’S GLOBAL SOURCING CHALLENGE INDIAN RUGS AND CHILD LABOR In 1995, Marianne Barner, IKEA’s manager for carpets, faced a difficult situation when one of their Indian rug supplier apparently was involved with the use of child labor in the manufacture of its products for IKEA. Even though they had a contract where IKEA explicitly forbid the use of child labor. These Allegations generated mixed opinion regarding the future of all the Indian carpet suppliers and the company was studying the futureRead MoreIKEA Global Sourcing Challenge: Indian Rugs and Child Labor1176 Words   |  5 PagesProposal Case: IKEA Global Sourcing Challenge: Indian Rugs and Child Labor Summary In this case, it is known that IKEA s procurement model is the mode of global sourcing. IKEA products are shipped to the 26 distribution centres from the trade area after procurement, and then delivered to the shopping malls in the world. IKEA s procurement philosophy and assessment of suppliers mainly include four aspects: continuous price improvement; strict supplier performance and service levels; Ikea’s Global Sourcing Challenge Indian Rugs and Child Labor IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor Jordan de Jong Case Study _ The case I will analyze and discuss in this case study is â€Å"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†¦show more content†¦Another example came in 1985 when IKEA introduced the â€Å"MOMENT† sofa. The â€Å"MOMENT† sofa had a metal frame that was manufactured by a supermarket cart factory. As the company grew through the 1960’s and 1970’s the culture of the company was starting to solidify. Kamprad had a very strong idea of how he wanted the company to operate and be managed. He was eager to share his ideas on management with his staff and thus authored the document, â€Å"A Furniture Dealer’s Testament† in 1976. The document described the nine cornerstones of IKEA culture and his vision statement, â€Å"To create a better everyday life for the many people.† The testament nine cornerstones were as follows: 1. The product range – our identify 2. The IKEA spirit – A strong and living reality 3. Profit gives us resources 4. Reaching good results with small means 5. Simplicity is virtue 6. Doing it in a different way 7. Concentration – Important to our success 8. Taking responsibility – A privilege 9. Most things still remain to be done. A glorious future While the company, CEO, and staff were all dedicated to the nine cornerstones of the business there were still some issues that IKEA would have to deal with, suppliers and sub-suppliers. IKEA ran into trouble in 1981 in Denmark when government regulation was changed with regards to formaldehyde emissions for building products. WhenShow MoreRelatedIkea’s Global Sourcing Challenge: Indian Rugs and Child Labor1548 Words   |  7 PagesIKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor Ethics in Business and Society Professor Stephen Griffith Otis West Tuesday, November 6, 2012 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. In additionalRead MoreIkea Global Sourcing Challenge2551 Words   |  11 PagesIKEAs GLOBAL SOURCING CHALLENGE EXECUTIVE SUMMARY The IKEA Group, one of the world’s top furniture retailers, has emerged as the fastest-growing furniture retailer in the US. Its unique business strategy has given it its strengths for its success today. However, like all strategies, IKEA’s strategy has its own flaws that can pose as weaknesses. IKEA also has a lot of opportunities in the marketplace such as expansions of their company and threats such as competitors in the same industryRead MoreIkeas Global Sourcing Challenge1241 Words   |  5 PagesIKEA’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 amp; Sjoman, p. 1, 2006), so this incident has called the company to make an actionRead MoreIkea Children Labour6495 Words   |  26 Pages14, 2006 CHRISTOPHER A. BARTLETT VINCENT DESSAIN ANDERS SJÃâ€"MAN 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 theRead MoreCase Study of Ikea1445 Words   |  6 PagesCase 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 solutionRead MoreIkeas Global Sourcing Challenge: Indian Rugs Essay1242 Words   |  5 PagesThe case â€Å"IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A)† is about IKEA’s development from a backyard company to one of the world’s largest furniture retailers, which has to deal with the issues of child labor and how they should behave considering economical issues and the company’s policy! Conclusions made in this study are only based on the facts given in the case, considering pros and cons of an action. How should Marianne Barner respond to the invitation for IKEA to haveRead MoreEthical Issue Ikea2982 Words   |  12 Pagescompany was founded in 1943 by Ingvar Kamprad and kept growing tremendously from 2 stores in 1964 to 114 stores in 1994 to 285 stores in 2008 in 36 countries with an additional 26 stores to be opened in 2009 welcoming a total of 522 million visitors. IKEA’s success story is the result of its founders opening store in 1951 to allow customers to inspect products before buying them, using a catalog to tempt people to visit an exhibition. Its key feature of providing self-assembled furniture starting fromRead MoreIkeas Global Sourcing Challenge2533 Words   |  11 PagesIKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A) Case Synopsis IKEA is a â€Å"privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories† (www.worldisyouroyster.com). The company was established in 1943 by Ingvar Kamprad in Sweden when he was just 17 years old. Kamprad himself, who still owns the private company, is rumored to be the world’s richest man. IKEA is currently the worldRead MoreIkea s Global Sourcing Challenge Indian Rugs And Child Labor1532 Words   |  7 PagesIKEA’S GLOBAL SOURCING CHALLENGE INDIAN RUGS AND CHILD LABOR In 1995, Marianne Barner, IKEA’s manager for carpets, faced a difficult situation when one of their Indian rug supplier apparently was involved with the use of child labor in the manufacture of its products for IKEA. Even though they had a contract where IKEA explicitly forbid the use of child labor. These Allegations generated mixed opinion regarding the future of all the Indian carpet suppliers and the company was studying the futureRead MoreIKEA Global Sourcing Challenge: Indian Rugs and Child Labor1176 Words   |  5 PagesProposal Case: IKEA Global Sourcing Challenge: Indian Rugs and Child Labor Summary In this case, it is known that IKEA s procurement model is the mode of global sourcing. IKEA products are shipped to the 26 distribution centres from the trade area after procurement, and then delivered to the shopping malls in the world. IKEA s procurement philosophy and assessment of suppliers mainly include four aspects: continuous price improvement; strict supplier performance and service levels;