IKEA case
Case Study: IKEA Global Sourcing
1. How should Marianne Barner respond to the invitation for IKEA to have a representative appear on the upcoming broadcast of the German video program?
a. Marianne Barner, business manager for IKEA’s carpets, should respond with a firm “no” to the invitation. Barlett, Dessain, & Sjöman (2006) stated that the German video program would only bring detriment to the company, rather than relief or support for the issue at hand. In comparison to the Swedish program, which did not target a specific company, this German-produced program planned to take a confrontational and aggressive approach targeted directly at IKEA and one of its suppliers (Barlett, Dessain, & Sjöman (2006). Moreover, Germany currently brings in the most sales for IKEA with $10.4 and 29.7% (Barlett, Dessain, & Sjöman (2006). Since Marianne Barner’s goal was to stop the issue, accepting this invitation would only bring fuel to the fire.
2. What actions should she take regarding the IKEA supply contract with Rangan Exports?
a. Marianne Barner knew that IKEA must take on this issue and sign up to an industry-wide response to growing concerns about child labor in the Indian Carpet industry (Barlett, Dessain, & Sjöman (2006). It would be in IKEA’s best interest to force Rangan Exports to comply with the addendum which explicitly forbade the use of child labor on pain of termination (Barlett, Dessain, & Sjöman (2006). Rangan Exports is one of IKEA’s major suppliers, so cutting them off would cost them millions of dollars and hurt sales. Because IKEA began addressing this issue in 1994, there should be policies set in place for termination of suppliers that decide they don’t want to comply with said addendum. Marianne’s ideal solution would entail IKEA figuring out a way to keep its contract with Rangan Exports while making sure children were no longer working at the looms.
3. What long-term strategy would you suggest she take regarding IKEA’s continued operation in
1. How should Marianne Barner respond to the invitation for IKEA to have a representative appear on the upcoming broadcast of the German video program?
a. Marianne Barner, business manager for IKEA’s carpets, should respond with a firm “no” to the invitation. Barlett, Dessain, & Sjöman (2006) stated that the German video program would only bring detriment to the company, rather than relief or support for the issue at hand. In comparison to the Swedish program, which did not target a specific company, this German-produced program planned to take a confrontational and aggressive approach targeted directly at IKEA and one of its suppliers (Barlett, Dessain, & Sjöman (2006). Moreover, Germany currently brings in the most sales for IKEA with $10.4 and 29.7% (Barlett, Dessain, & Sjöman (2006). Since Marianne Barner’s goal was to stop the issue, accepting this invitation would only bring fuel to the fire.
2. What actions should she take regarding the IKEA supply contract with Rangan Exports?
a. Marianne Barner knew that IKEA must take on this issue and sign up to an industry-wide response to growing concerns about child labor in the Indian Carpet industry (Barlett, Dessain, & Sjöman (2006). It would be in IKEA’s best interest to force Rangan Exports to comply with the addendum which explicitly forbade the use of child labor on pain of termination (Barlett, Dessain, & Sjöman (2006). Rangan Exports is one of IKEA’s major suppliers, so cutting them off would cost them millions of dollars and hurt sales. Because IKEA began addressing this issue in 1994, there should be policies set in place for termination of suppliers that decide they don’t want to comply with said addendum. Marianne’s ideal solution would entail IKEA figuring out a way to keep its contract with Rangan Exports while making sure children were no longer working at the looms.
3. What long-term strategy would you suggest she take regarding IKEA’s continued operation in
References: Barlett, C., Dessain, V. & Sjöman, A. (2006). Ikea’s global sourcing challenge: Indian rugs and child labor. Harvard Business School. Retrieved from https://learn.unt.edu/bbcswebdav/pid-338330-dt-content-rid-1517326_1/courses/MDSE_4660_001_11235W2/IKEA%27s%20Global%20Sourcing%20Challenge%20-%20Indian%20Rugs%20and%20Child%20Labor.pdf