Ikea: Indian Rugs and Child Labor

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Nathan Johnson
Case Analysis
MGT 400 – 10/27/09

IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor

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 set up. This movie sounds like it is totally geared towards tearing down the corporation’s credibility, etc. If a representative goes, most likely there will be set questions created by the group that made this video in attempt to incriminate IKEA on camera. I would recommend that Marianne Barner thank the German Video Production company for the invitation but to politely decline and say something to the extent that IKEA is currently investigating the operations of its suppliers to ensure compliance with IKEA’s policies. Thereby, as kindly as possible you extend politeness and it is implied that IKEA is now aware of the child labor IKEA is actively seeking to resolve the issue.

2) What actions should she take regarding the IKEA supply contract with Rangan Exports?

The most logical approach towards addressing this issue would be to perform some sort of investigation on ALL of IKEA’s suppliers to make sure that all of them are in compliance. If IKEA singles out Rangan Exports, they could risk some sort of discrimination suit. Additionally, if there are more suppliers in violation of their contract besides just Rangan Exports, these will also eventually come to light in the public eye. If IKEA chooses not to terminate the contract with Rangan Exports and/or other suppliers in violation of their contract, they risk losing respect from the public eye including possible tarnishing of their brand image, etc. These effects can lead to significant losses financially with respect to sales because the public will not want to support a company who condones or allows child labor. It...
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