Ikea: Global Sourcing Challenge

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IKEA: Global Sourcing Challenge

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IKEA: Global Sourcing Challenge

IKEA is a world beloved Swedish furniture company that started in 1943 as a mail-order business that offered goods purchased from low-priced suppliers. Its founder, Ingvar Kamprad helped grew IKEA into a multi-billion manufacturer and producer of self-assembled furniture as it is known today (IKEA, 2011). Key to why IKEA products are embraced by people beside quality that can be bought at an unmatched prices are that they are produced in a socially responsible and environmentally friendly way. IKEA’s sourcing strategy is usually credited for maintaining these standards, especially on how well it keeps its relationship with its suppliers from developing countries. It is also said that IKEA has put some manufacturing Code of Conduct for its suppliers called "The IKEA Way on Purchasing Home Furnishing Products" (IWAY). Through the years, IKEA has been constantly evolving its approach to business and its compliance to government regulations. Realizing that adherence to quality standards and being socially committed are vital to its business, IKEA requires manufacturers and suppliers to ensure compliance in terms legal issues, working conditions, prevention of child labor, external environment and forestry management.

Labor and environmental responsibility issues
The success that IKEA was enjoying encountered a setback in 1994 when a German television aired a documentary that directly aimed at tarnishing the brand’s reputation. In the report, it investigation the use of children in the production of carpets by IKEA’s suppliers. For IKEA, reputation is important. The negative publicity generated by the television report immediately impacted IKEA’s financial health as it deals with public and regulatory pressures not only from its home country but also from other nations (Bartlett, Dessain, & Djoman, 2006).

The use of child labor...
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