Ikea's Global Sourcing Challenge: Indian Rugs

1272 words 6 pages
The case “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A)” is about IKEA’s development from a backyard company to one of the world’s largest furniture retailers, which has to deal with the issues of child labor and how they should behave considering economical issues and the company’s policy!
Conclusions made in this study are only based on the facts given in the case, considering pros and cons of an action.

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 live discussion would give IKEA the possibility to explain themselves and their intention concerning their engagement in India. Especially Marianne Barner could
…show more content…

It is obvious that child labor is deeply implemented in India’s culture as many people are poor and a child’s loan is inevitable to ensure the life of the whole family. This shows that pulling out would not abolish child labor but threaten Indian people even more as a resource of earning money would disappear. In return a negative image could be established towards IKEA for not taking further actions in the Indian market.

Braking up relations with its supplier could cause tremendous public disagreement as a lot of people think that companies such as IKEA, the world’s largest furniture retailer, is just interested in earning profit. Many people share a common view, that these types of company also owe responsibility not only to the shareholders but also to the society. By refusing help an image could be created which would cause not just the loss of sales but also of IKEA's value. Not just sales create the value of a company also its reputation is a valuable good which can cause a huge loss if it is damaged!

In an economical/capitalistic view it would be better to pull out of Indian rugs as it just has a tiny part in IKEA’s turnovers and the risk seems to overbalance the profit. But to fulfill Kamprad’s view “to create a better everyday life for many people” and also the philosophy “in the best interest of the child” it would be better to continue the engagement in India.