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

Table of Content

If I were Marianne Barner, I would use the following strategies regarding IKEA’s continued operations in India. * Avoiding social and environmental issues since from the beginning as when these issues emerge. In my opinion, avoiding the issues at the beginning is the best strategy in the long run. If the problems occur, it may affect immediately to the sales and damage the company’s reputation. For example, in the early 1980s, due to the publicity of formaldehyde problems on IKEA’s products, its sales dropped 20% in Denmark. The IKEA brand image was also destroyed tremendously.

In the case, the company confronted child labor issue and customers perceived that the low price they benefit was due to child labor exploitation in India, customers would react by avoiding products from IKEA that results in a drop in sales. In addition, if the customers lose the trust in the company’s brand, it will take a long period of time and a lot of resource to win back this customer’s loyalty. For example, in case of Nestle, I remembered that one of students in class stop buying all Nestle’s products as long as 10 years since she perceived the Nestle’s milk issue.

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Moreover, I think that the cost of prevention is much less that the cost of damage. As a result, it is imperative that IKEA should be more aware of social responsibility and potential upcoming social issues. * Providing some funds for education of children who relate to IKEA’s child labor issues From my point of view, offering the educational opportunity to these children is the permanent method of eliminating and preventing child labor. I believed that the root cause of child labor comes from the severe poverty.

The parents have no choice and have to bond their children in order to pay off the debts. These children become parts of labor force and miss the opportunity of education to improve their standard of living. As a result, when they grow up, they might remain in the same cycle as their parents (bonding their children to paying off the debt). Therefore, the education is the way to improve the standard of living and overcome the poverty. However, only IKEA could not help all of the children in India.

Then, IKEA should collaborate with the organizations such as UNICEF or ILO to help the children to access the education. Moreover, IKEA should lobby to coerce the government to get involved more actively in the process because the government is the most important organization that could enforce the law and improve the better life for the poor children. Although this strategy increases the cost of production, it is worth doing. It not only improves the life of many children but also increases the image of IKEA as the organization that concern about the living of children. Collaborating tightly with some organizations such as ILO, UNICEF and Swedish Save the Children to prevent the child labor According to my previous recommended strategy, IKEA alone might not be able to solve the child labor issues. Collaborations from many organizations could increase the ability and potential to help the poor children. IKEA is a furniture company without manufactures. It might not be expert in handling with labor issues like child labor but IKEA would have potential to support on finance and provide a job.

Therefore, it should cooperate with other organizations in order to manage the child labor. In addition, I suggest that IKEA should sign up the agreement to use the Rukmark label, the label certifying that the hand-knotted carpets to which it was attached to were made without the use of child labor. I think that both IKEA and Rukmark have the same objective which aims to end illegal child labor in the carpet industry in South Asia. Therefore, by using Rukmark label, IKEA will gain an advantage in using the Rukmark process in control and monitor the production of rugs in India.

Moreover, I think that collaborating with nonprofit organizations such as UNICEF or ILO and Swedish Save the Children will help IKEA gain an insightful in the current situation of child labor and find the way to solve the problems effectively. IKEA should stay in India In my opinion, IKEA should not leave the India only because of the child labor. If IKEA withdraws from India market, it will restrain itself from a big opportunity of cheap labor and put the company at disadvantage position as other competitors like Wal-Mart is accessing the same opportunities to compete for lower product prices.

In addition, I think that by moving into other countries that have the same low cost of labor, IKEA still could not avoid the same problems. Therefore, I suggest that IKEA should stay in India and keep up with the trend and get ahead of the issue and its rivals. The expected impacts according to the previous decisions * The increasing of the cost The procedures and strategies used in order to prevent the child labor make IKEA unavoidable that it will increase its cost of production. IKEA margin in the rug line might be decrease.

However, IKEA can gain the awareness of its brand regarding to the prevention of child labor. Beside the cost of prevention is much less than the cost of reputation damage. Therefore, Marianne Barner should prepare to explain to the IKEA management board about the importance of increasing the cost due to the prevention of the child labor. * Children working in textile firms were thrown out of factories because suppliers feared losing their business if they kept the children on Because IKEA has a stringent requirement about child labor, it will cancel the contract if the supplier uses children to produce the products.

Therefore, I expected that many of children would be forced to lose their jobs. Due to the rampant poverty, these children might have to enter into more severe industry such as prostitution or being a Beggar. As a result, it is vital that IKEA should discuss this problem with its suppliers not to fire the children. On the other hand, IKEA should support the suppliers to act in the best interests of the child such as providing the child the educational opportunity. * Although IKEA provide some educational opportunity, some children could not accept because the whole family depends on the children’s revenue.

In order to improve the living standard of the whole family, the children require an education by getting the proper job that has more wages. IKEA should collaborate with India government and find the way to help not only the children but also other family members. * IKEA has many and diverse suppliers and it might be beyond IKEA’s capability to control and monitor the child labor. In order to solve this problem, I think that appointing the third-party agent is suitable to control and monitor child labor. However, IKEA should select the third-party agent who specializes in the child labor situation in India in order to work effectively.

Conclusion IKEA is such a successful company in furniture industry. “To create a better everyday life for the many people” is one of its strategies. In addition, “A better life” should include the well-being of its workforce. Therefore, child labor is the issue that IKEA could not ignore because it affects to the sales and the reputation. IKEA can turn the threat into an opportunity in the long run by actively involving and publicizing its achievement to let customers appreciate the effort. Afterward, IKEA will soon be better off, with better profit and better brand image.

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IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor Analysis. (2017, Mar 04). Retrieved from


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