Ikea's Global Sourcing Challenge Case Analysis

...

- What long term strategy would you suggest her to take regarding IKEA’s continued operation in India. Should the company stay or should it exit?

One obvious option that immediately comes to mind is that IKEA should withdraw from India. This completely absolves IKEA from any ties to the child labor situation as it relates to Indian rugs. Monetary losses for this would be very minimal, if any, as rugs play a small role in IKEA’s overall business. But then if IKEA decided not to carry any Asian rugs it could unintentionally boost purchases of rugs that were produced by child labor as these consumers go to competitors that do not have effective child labor policies in place. This could also very easily give the impression that IKEA is running away from the problem rather than attempting to contribute to its solution as a public entity. Furthermore, this option is not a preventative to keep IKEA from being involved in other child labor scandals. Future scandals have the potential to grow in another of the companys segment of the furniture/ home furnishings industry.

Therefore, my recommendation is that IKEA continues to operate in India and that they deal with the long-term problems of child labor by having its own supplier relations rather than continuing the Rugmark partnership. This direction falls more in line to what IKEA has established in its policies, company mission and its culture.

In many communities of India, child labor is an deep-rooted part of its culture. Therefore, a complete solution would include addressing “the root causes such as debt, poverty, lack of access to education, disability and health”. To address these issues I would suggest to Barner that she work with its internal resources to come up with initiatives to stop child labor. The Asian country should also take part in coming up with these initiatives.

Anti-child labor initiatives should include:

- An internal monitoring program or department that ensures its suppliers are in compliance of the no child labor policies

- A mandatory educational program for its Asian suppliers to teach on the harms of child labor and come up with ways to helps its supplier to come up with labor alternatives

- Financial contributions to support childrens education

Once these initiatives are developed, Barner should then work on a training roadshow for IKEAs own employees/personnel. Everyone working for IKEA should be held liable to see these initiatives to their fruition and stand by IKEA’s commitment to help end child labor. These initiatives should also be made known publically. This not only shows their level of commitment to the problem but it also holds them more liable in their stance against child labor.

In order for these initiatives to live long lives, it is important that evaluations/reports of some kind are done quarterly or at the very least twice a year to assess the anticipated decreases.