IKEAs Global Sourcing Challenge: Indian Rugs and Child Labor
Executive Summary:
The discovery of IKEAs major supplier for Indian rugs employing child labor in their
factoriescould be detrimental to the companys brand image and overall reputationif a
strategy is notestablished to address the issue.Therefore, it is important to start planning as
soon as possible.Various alternatives have been considered but the best solution for IKEA
in this situation utilizes the situation as an opportunity to publicize the companys efforts to
address the child labor issue and highlight the companys future plans to bring their
company values to the world. The solution requires IKEA to address the issue with Rangan
Exports head on through direct communication with the supplier regarding the breach in
contract and with regards to their relationship in the future. Should the relationship
continue to struggle, IKEA should consider researching alternative suppliers for low cost
Indian rugs. To portray this situation as an ongoing effort by IKEA to address and improve
the child labor issue around the world, IKEA will need to participate in the German
television show as a portal to publicize their partnerships with worldly organizations
tasked with monitoring and improving conditions for children. Careful planning can put
IKEA on top.
ProblemDiagnosis- Defining the Situation:
Although child labor has been used for centuries, the world has not taken action until fairly
recently. This epidemic first became a worldly problem in 1973 when the International
Labor Organization (ILO) committed 120 countries to abolish labor by children under the
age of 15. Over the past 20 years, other organizations, including the United Nations, have
joined the effort to abolish child labor but this deeply rooted issue is still very much alive.
(The timeline below highlights the worlds efforts to address child labor.)
As more activists and organizations join together to rid the world of child labor, companies
that unknowingly purchase from suppliers who use child labor will most certainly get
caught in the cross fires. IKEA is the first to take a stand and defend their decisions related
to choosing certain suppliers. Activists will use these types of situations to create public
awareness of the issue. As Ingvar Kamprad vision states, this will be IKEAs moment to
assume responsibility and to help. Rather than back away and choose a new supplier,
IKEA can confront this head on and use this social issue to create a Public Relations
Project for helping the worlds children.
