IKEA Global Sourcing Case Study
Ikea Global Sourcing Case Study
Ama Achiaw
Business Strategy
Executive Summary
IKEA is being forced to make a difficult decision after a German documentary maker announced the prevalence of children working at looms at Rangan Exports, a major supplier of the furniture company. Rangan Exports breached a supply contract with IKEA by allowing child labor in their factory. In previous years, IKEA has encountered problems with child labor and has worked diligently to educate themselves and respond to the problem. The filmmaker of the documentary will be exposing IKEA as an affiliate with the supplier and reporting on their usage of child labor in Pakistan. Executive Marianne Barner, business area manager for carpets, is now faced with the task of potentially dropping one of the company’s major suppliers of rugs. She must also decide if it is beneficial to speak in the German documentary on IKEA’s behalf or find an alternative way to address the situation. The Rugmark Foundation, a company that develops label certification without the use of child labor, is also a resource she could use to combat the problem. Barner must respond to the use of child labor in the Indian carpet industry with a short term decision and long term action.
Background
IKEA was founded in by Ingvar Kamprad. Kamprad started the company at the young age of 17, and as the company began to grow and flourish he focused on certain ideals which he later used to build the company’s vision statement. Kamprad wanted a business that could “create a better life for the many people”. He worked to achieve this goal by offering low prices to consumers whenever possible. Innovation within the company always led to savings for customers which only helped increase his consumer following.
Kamprad is no stranger to opposition and developed different ways to refine his furniture business model after encountering conflict with a cartel of furniture manufacturers and Sweden’s large furniture retailers. He
Ama Achiaw
Business Strategy
Executive Summary
IKEA is being forced to make a difficult decision after a German documentary maker announced the prevalence of children working at looms at Rangan Exports, a major supplier of the furniture company. Rangan Exports breached a supply contract with IKEA by allowing child labor in their factory. In previous years, IKEA has encountered problems with child labor and has worked diligently to educate themselves and respond to the problem. The filmmaker of the documentary will be exposing IKEA as an affiliate with the supplier and reporting on their usage of child labor in Pakistan. Executive Marianne Barner, business area manager for carpets, is now faced with the task of potentially dropping one of the company’s major suppliers of rugs. She must also decide if it is beneficial to speak in the German documentary on IKEA’s behalf or find an alternative way to address the situation. The Rugmark Foundation, a company that develops label certification without the use of child labor, is also a resource she could use to combat the problem. Barner must respond to the use of child labor in the Indian carpet industry with a short term decision and long term action.
Background
IKEA was founded in by Ingvar Kamprad. Kamprad started the company at the young age of 17, and as the company began to grow and flourish he focused on certain ideals which he later used to build the company’s vision statement. Kamprad wanted a business that could “create a better life for the many people”. He worked to achieve this goal by offering low prices to consumers whenever possible. Innovation within the company always led to savings for customers which only helped increase his consumer following.
Kamprad is no stranger to opposition and developed different ways to refine his furniture business model after encountering conflict with a cartel of furniture manufacturers and Sweden’s large furniture retailers. He