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IKEA’s Global Sourcing Challenge

BUAD497 Strategic Management – Trade Policy (Individual Case)

The Case: IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (Individual Case)

• Read the IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor case study
  • Bartlett, C. A., Dessain., V, & Sjoman, A. (2006). IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A). HBS Premier Case Collection Case # 9906414. Description: Traces the history of IKEAʹs response to a TV report that its Indian carpet suppliers were using child labor. Describes IKEAʹs growth, including the importance of a sourcing strategy based on its close relationships with suppliers in developing countries. Details the development of IKEAʹs strong culture and values that include a commitment ʺto create a better everyday life for many people.ʺ  Describes how, in response to regulatory and public pressure, IKEA developed a set of environmental policies that grew to encompass a relationship with Greenpeace and WWF on forest management and conservation. Then, in 1994, Marianne Barner, a newly appointed IKEA product manager, is surprised by a Swedish television documentary on the use of child labor by Indian carpet suppliers, including some that supply IKEAʹs rugs. She immediately implements a strict policy that provides for contract cancellation if any IKEA supplier uses child labor. Then Barner is confronted by a German TV producer who advises her that he is about to broadcast an investigative program documenting the use of child labor in one of the companyʹs major suppliers. How should she react to the crisis? How should the company deal with the ongoing issue of child labor in the supply chain?
• Read The effect of national culture on the choice of entry mode
• Answer the following questions:
  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?
  2. What actions should she take regarding the IKEA supply contract with Rangan Exports?
  3. What long-term strategy would you suggest Barner 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. Assume you are recommending that IKEA continue to source carpets in India. Would you suggest that Barner:
     • continue IKEA’s own monitoring and control processes or sign-up to Rugmark?
     • 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 labour as Save the Children is urging?

Criteria for Assessment

• You should answer the questions using only information from the case, textbook and course materials. When citing information the following format should be used and you should state at the end of your assignment the following:

“For the completion of the following assignment the following sources were used:

1. Zara: Fast Fashion. The author of the case is Charles Hill and there are a number of references listed at the end of the case.
2. Global Business Today, 3rd Edition, authors: Charles W. L. Hill & Thomas McKaig, McGraw-Hill Ryerson Publications.

• External research is not necessary and is discouraged, but if you do use it, you must use APA format for citations and references.
• Each question is assigned a mark out of 5 (total value of 20 points), which will then be converted to a percentage and given a numerical value out of 15. Assignment marks are based on your ability to present and support your arguments, rather than on whether or not your recommendation was the most “right.” 

Note

1. When referring to a word or phrase from the Case, place in brackets in brackets directly following the word or phrase a C, followed by the page number in the case where the word or phrase can be found.
2. When referring to a phrase or word from the Text, place in brackets directly following the word or phrase a T followed by the page number of the text where the phrase or word can be found.
3. At the end of the citation list place a “No other sources were used for the completion of this assignment”.