Ikea

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Ikea

  1. 1. IKEA<br />A Global Sourcing Challenge<br />
  2. 2. Early history of ikea<br />Started by Ingvar Kamprad in 1948<br />Worked out of his family kitchen selling pens, cigarette lighters, and binders<br />Sent out a newsletter and did everything by mailing<br />Started a store in 1951and sold furniture<br />Used the idea of self-assembling furniture and sales skyrocketed<br />By 1955, sales totaled ___?<br />
  3. 3. Managing Suppliers<br />Competitors teamed up and made it difficult for IKEA to survive. <br />They found a supplier in Poland who became IKEA’s largest source for products<br />Followed a principle that they should not own its means of production, but have a long term relationship with the supplier<br />
  4. 4. Worldwide Expansion <br />Expanded soon to Norway, Switzerland, and lastly Germany where it became IKEA’s largest market <br />By 1994, IKEA had 114 stores worldwide<br />http://www.iamcal.com/games/ikea/<br />
  5. 5. Problems start to appear<br />Formaldehyde – used as a binding glue in materials<br />In the 1980s, Danish authorities passed a limit on the amount of formaldehyde allowed in products<br />Tests showed IKEA emitted more than allowed and was fined<br />Sales dropped __%? in Denmark<br />
  6. 6. The Same problem again<br />In 1992, a German newspaper came forth with an article titled “Deadly Poisoned Bookshelves”<br />The lacquer on the bookshelves now contained too much formaldehyde<br />Not counting the cost of lost sales and production, it cost IKEA ___?<br />
  7. 7. Four Environmental Changes<br />Adapting the product range<br />Working with suppliers<br />Transport and distribution<br />Ensuring environmentally conscious stores <br />
  8. 8. CHILD Labor!<br />It was found that a supplier in Pakistan who made carpets had been using child labor.<br />IKEA claims to have been caught completely off-guard <br />
  9. 9. IKEA’s response<br />If the supplier employed children under legal working age, the contract would be cancelled<br />Appointed a third party agent to monitor child labor practices <br />Rugmark Foundation <br />
  10. 10. Child Labor Numbers<br />Human Rights Watch’s estimate in India was between 60 and 115 million child laborers <br />Children as young as 5 were working physical jobs<br />An estimated 200,000 were working in the carpet industry<br />
  11. 11. It happened again!<br />One of their largest suppliers, Rangan Exports, was found using child labor in 1995.<br />A documentary focusing on IKEA was going to be placed on TV <br />IKEA was asked to come talk about the situation at hand<br />

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