IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor
The long term strategy recommended for IKEA
If I were Marianne Barner, I would use the following strategies regarding IKEA’s continued operations in India.
* Avoiding social and environmental issues since from the beginning as when these issues emerge.
In my opinion, avoiding the issues at the beginning is the best strategy in the long run. If the problems occur, it may affect immediately to the sales and damage the company’s reputation. For example, in the early 1980s, due to the publicity of formaldehyde problems on IKEA’s products, its sales dropped 20% in Denmark. The IKEA brand image was also destroyed tremendously. In the case, the company confronted child labor issue and customers perceived that the low price they benefit was due to child labor exploitation in India, customers would react by avoiding products from IKEA that results in a drop in sales.
In addition, if the customers lose the trust in the company’s brand, it will take a long period of time and a lot of resource to win back this customer’s loyalty. For example, in case of Nestle, I remembered that one of students in class stop buying all Nestlé’s products as long as 10 years since she perceived the Nestlé’s milk issue. Moreover, I think that the cost of prevention is much less that the cost of damage. As a result, it is imperative that IKEA should be more aware of social responsibility and potential upcoming social issues. * Providing some funds for education of children who relate to IKEA’s child labor issues
From my point of view, offering the educational opportunity to these children is the permanent method of eliminating and preventing child labor. I believed that the root cause of child labor comes from the severe poverty. The parents have no choice and have to bond their children in order to pay off the debts. These children become parts of labor force and miss the opportunity of education to improve their...
Please join StudyMode to read the full document