IKEA's Global Sourcing Challenge: Social Issues & Economic Impact - Essay Sample

Introduction

The case IKEA's global Sourcing challenge offers comprehensive insights regarding IKEA's development from the establishment of the company to one of the global furniture retailers. In the case, the company has to deal with various social issues such as child labour. They are further caught in a dilemma on how they should address it, taking into consideration both the economic problems and its policies towards child labour issues. The Rangan Export is seen as one of the suppliers of carpets and rugs and uses children as an integral component of its production process (Bartlett, Dessain, & Sjoman, 2006). Thus, the conclusions given are based on the facts presented in this case study, with the consideration of both the pros and cons of various actions.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

How Marianne Barner Respond to the Invitation for IKEA

The decision to accept or decline the invitation depends on its outcome. Marianne Barner should decline the invitation based on the fact that the German-produced product is likely to ask her numerous aggressive and confrontational coin regarding IKEA and its suppliers. Categorically, she should refuse to appear on the upcoming broadcast of the German Video Program. It is important to note that the decision to accept this invitation will be an opportunity for IKEA to respond to child labour issues through public media. In this way, IKEA will be required to provide any information that they will be fully aware of the social responsibility issues and the upcoming future social matters. While all these are evident, the German Video Program will not permit IKEA to have a preview of the video program, which is otherwise planned to direct aggressive and confrontational to IKEA (Bartlett, Dessain, & Sjoman, 2006).

Most importantly, going to the invitation without adequate preparations on the kind of issues and questions that will be possibly asked to be manipulated through video. As such, Marianne Barner should provide a polite refusal or decline towards the invitation. This will also be a chance for her to respond to the video after being allowed to review and verify the authenticity in the video. In the meantime, IKEA should utilize the adequate time they have to conduct an investigation of the truth and grant more policies against the child policies issues for the supplier (Bartlett, Dessain, & Sjoman, 2006).

Action Marianne Should Take

IKEA needs to send the investigation team to assess whether or not the Rangan Exports failed to comply with the ethical standards that it established or laid out. Besides, they should conduct this investigation on all other suppliers to prevent the same issues from happening in future. Based on the fact that this was the second time IKEA was facing allegations about the child labour social issue, they need to support their considerations on social responsibility as well as awareness. The most appropriate action that IKEA should do is to end its contract or relation with Rangan Exports because the latter breached the no labour child regulation. It is important to note that the child labour social is deep-rooted in the practices of the majority of the suppliers; the method should not be blamed on one single company or supplier. Keeping Rangan Exports still as one of their suppliers will prompt it to send a message to other suppliers that IKEA secretly allows child labour social issue while openly condemning it (Jonsson & Tolstoy, 2014). Moreover, any move to keep Rangan Exports will further be against its established child labour policies. In this sense, therefore, breaking up the relationship with the supplier will be an opportunity for IKEA to redeem its lost reputation and keep its right image new.

This decision will, however, have a diverse effect on IKEA as it will be forced to survive only on one supplier. It would be consequently be forced to seek for assistance and advice on other global organizations such as the ILO, UNICEF and other Private organization to assist the affected children and families through the provision of better living and education. With a better education system, it is evident that the entire nation will become rich and be able to provide resolutions towards child labour issue. Therefore, IKEA should provide a public document to state the reasons for the decision and support the policy that prohibits suppliers from engaging in child labour issues (Bartlett, Dessain, & Sjoman, 2006).

Long-Term Strategies

IKEA should adopt several alternatives to address the long-term strategy in India. Primarily, IKEA would consider exiting from India. This move will mean that IKEA will prevent any child labour issue in India suppliers. Some of the products supplied by the Indians suppliers include the rugs and carpets, and which constitute a small portion of the company's business. The losses experienced as a result will significantly affect it (Hultman, Johnsen, Johnsen, & Hertz, 2012). However, there is a possibility that IKEA will lose customers attached to these imported rugs and carpets. It would also give the impression that the company is hiding or running away from a problem, instead of providing a long-lasting solution, especially those that involve child labour issues.

While this argument is justifiable, I would still recommend that IKEA continue operating in India. Although mentioned before, it is crucial to note that the Indian culture and traditions are critical in influencing people's perceptions and their views. The cultures are essential in contributing to the child labour issue (Hultman, Johnsen, Johnsen, & Hertz, 2012). The majority of people in India live under extreme poverty and therefore force their children to provide cheap labour in industries to enable them to earn a living. IKEA's exit and stay from the trade or market will not bring the issue to an end. As such, IKEA should direct its focus on the shareholders such as the UNICEF AND ILO for advisory assistance on how to resolve the child labour issues.

Additionally, the company should consider publishing the articles that relate to their social and environmental responsibilities in their annual reports and periodical catalogue (Hultman, Hertz, Johnsen, & Johnsen, 2009). This move will be crucial in developing a good reputation, faith and image in its efforts to solve the social issues. The establishment of the monitoring team that is tasked with the responsibility of supervising the suppliers' productions will reduce or eliminate the child labour issue.

Recommendation

As a recommendation, I would suggest that IKEA continue to focus on eliminating the use of Child Labour in its supply chain. Besides, it should engage in the broader action aimed at addressing the root causes of child labour as Save the Children is urging. IKEA should direct its focus on the shareholders such as the UNICEF AND ILO for advisory assistance on how to resolve the child labour issues. They should conduct this investigation on all other suppliers to prevent the same issues from happening in future.

References

Bartlett, C. A., Dessain, V., & Sjoman, A. (2006). IKEA's global sourcing challenge: Indian rugs and child labor (A) (pp. 906-415). Boston, MA: Harvard Business School. http://www.academia.edu/download/53950495/Ikeas_A.pdf

Hultman, J., Johnsen, T., Johnsen, R., & Hertz, S. (2012). An interaction approach to global sourcing: A case study of IKEA. Journal of Purchasing and Supply Management, 18(1), 9-21. http://www.academia.edu/download/39748272/An_interaction_approach_to_global_sourci20151106-2731-av4drs.pdf

Jonsson, A., & Tolstoy, D. (2014). A thematic analysis of research on global sourcing and international purchasing in retail firms. International Journal of Retail & Distribution Management. https://www.emerald.com/insight/content/doi/10.1108/IJRDM-05-2012-0046/full/html

Hultman, J., Hertz, S., Johnsen, R., & Johnsen, T. (2009). Global sourcing development at IKEA-a case study. Manuscript, Jonkoping International Business School. https://www.impgroup.org/uploads/papers/7227.pdf