Business Case 1 IKEA
1.How should Marianne Barner respond to the invitation to have an IKEA representative appear on the German video program?
The German video program that determined the child labor issue was happening in Rug Industry in India will significantly harm IKEA’s reputation as they were the direct suppliers to IKEA. Besides, to compare the action of the Swedish program, German video program aggressively aimed at a specific company: IKEA, which will only cause more serious issues. Convention 138, adopted by ILO in 1973 and ratified by 120 countries states “if a supplier employed children under legal working age, the contract will be canceled”. As we saw earlier when there was a chemical issue in book shelves made by IKEA and the problem was aired, IKEA faced 20% drop in sales. Thus, we believe that Marianne Barner should reject the invitation to have an IKEA representative appear on the German video program.
2.What actions should Marianne Barner take regarding IKEA supply contract with Rangan exports?
Rangan Exports is one of the major suppliers of IKEA. If IKEA terminate the contract with Rangan exports, IKEA will face big loss on sales and bear the cost to find other suppliers in order to fill up the gap by losing major supplier. So, it is better for IKEA continually work with Rangan exports and give Rangan a final notice to hire underage workers. Simultaneously, IKEA needs to set up a backup scenario that try to find other suppliers don’t have the child labor issue in India if the child labor issue is not being stopped in Rangan. Moreover, IKEA could level up the investigation into Rangan products before sending them to the retail stores.
3.What long term strategy would you suggest she take regarding IKEA's continued operation in India?
The long term strategy should be in compliance with Ethical and Moral values of the firm.IKEA as a global leader in the furnishing industry should set CSR standards. First, IKEA could collaborate with Rugmark Foundation and Save
The German video program that determined the child labor issue was happening in Rug Industry in India will significantly harm IKEA’s reputation as they were the direct suppliers to IKEA. Besides, to compare the action of the Swedish program, German video program aggressively aimed at a specific company: IKEA, which will only cause more serious issues. Convention 138, adopted by ILO in 1973 and ratified by 120 countries states “if a supplier employed children under legal working age, the contract will be canceled”. As we saw earlier when there was a chemical issue in book shelves made by IKEA and the problem was aired, IKEA faced 20% drop in sales. Thus, we believe that Marianne Barner should reject the invitation to have an IKEA representative appear on the German video program.
2.What actions should Marianne Barner take regarding IKEA supply contract with Rangan exports?
Rangan Exports is one of the major suppliers of IKEA. If IKEA terminate the contract with Rangan exports, IKEA will face big loss on sales and bear the cost to find other suppliers in order to fill up the gap by losing major supplier. So, it is better for IKEA continually work with Rangan exports and give Rangan a final notice to hire underage workers. Simultaneously, IKEA needs to set up a backup scenario that try to find other suppliers don’t have the child labor issue in India if the child labor issue is not being stopped in Rangan. Moreover, IKEA could level up the investigation into Rangan products before sending them to the retail stores.
3.What long term strategy would you suggest she take regarding IKEA's continued operation in India?
The long term strategy should be in compliance with Ethical and Moral values of the firm.IKEA as a global leader in the furnishing industry should set CSR standards. First, IKEA could collaborate with Rugmark Foundation and Save