Case Study: IKEA Global Sourcing
1. How should Marianne Barner respond to the invitation for IKEA to have a representative appear on the upcoming broadcast of the German video program?
Marianne Barner, business manager for IKEA’s carpets, should respond with a firm “no” to the invitation. Barlett, Dessain, & Sjöman (2006) stated that the German video program would only bring detriment to the company, rather than relief or support for the issue at hand. In comparison to the Swedish program, which did not target a specific company, this German-produced program planned to take a confrontational and aggressive approach targeted directly at IKEA and one of its suppliers (Barlett, Dessain, & Sjöman (2006). Moreover, Germany currently brings in the most sales for IKEA with $10.4 and 29.7% (Barlett, Dessain, & Sjöman (2006). Since Marianne Barner’s goal was to stop the issue, accepting this invitation would only bring fuel to the fire.
2. What actions should she take regarding the IKEA supply contract with Rangan Exports?
Marianne Barner knew that IKEA must take on this issue and sign up to an industry-wide response to growing concerns about child labor in the Indian Carpet industry (Barlett, Dessain, & Sjöman (2006). It would be in IKEA’s best interest to force Rangan Exports to comply with the addendum which explicitly forbade the use of child labor on pain of termination (Barlett, Dessain, & Sjöman (2006). Rangan Exports is one of IKEA’s major suppliers, so cutting them off would cost them millions of dollars and hurt sales.
3. What long-term strategy would you suggest she take regarding IKEA’s continued operation in India? Should the company stay or should it exit? (Be prepared to describe the impact of such a decision and how you would manage it.)
4. For those recommending that IKEA continue to source carpets in India, would you suggest that she: Continue IKEA’s own monitoring and control processes or sign-up to Rugmark?
5. Continue to focus only on eliminating the use of child labor in IKEA’s supply chain or engage in broader action to address the root causes of child labor as Save the Children is urging?