Ikea’s Global Sourcing Challenge: Indian Rugs & Child Labor

IKEA’S GLOBAL SOURCING CHALLENGE: INDIAN RUGS & CHILD LABOR
IKEA’S case presents us, up to what extent does corporate social responsibility in an organization can impact and effect on the normaloperations and decisions of a company. Also the social and economic impact that a company can have in new environments. Here we have a case of child labor exploitation and the consequences of it.
Thesituation started in 1994, when Marianne Barner the product manager at the moment, was surprised by a Swedish TV report that portrayed how one of their carpet suppliers were incurring in this childlabor practice. Much of IKEA's growth relied on its sourcing strategy based on its close relationships with suppliers in developing countries.
Then, Marianne implemented a strict policy that providesfor contract cancellation if any IKEA supplier uses child labor. IKEA's company is known for having a strong culture and values that include a commitment "to create a better everyday life for manypeople." The company also, responded to the constant and strong regulatory and public pressure developing a set of environmental policies that helped in the nurturing of relationships with organizationssuch as Greenpeace and the World Wildlife Fund.
The fact is that even if they were taking good actions by cancelling the contracts and having their protection policies, IKEA was running the risk oflosing important suppliers and also, having these actions did not guarantee anyhow, that other suppliers and the rug ones would stay under the law. It is in IKEA’s interest to find a solution that isethically correct as well as being a benefit to the company and its shareholders.
The managerial decisions taken by Barner were very strong and affected the company in the short and long term. Thisshows us the importance of having a corporate social responsibility in dealing with issues that might be violating the law and have the power to impact a company’s global ethical standards.
One of...