Word: Case study ikea global sourcing

1. Running head: CASE STUDY: IKEA GLOBAL SOURCING 1
Case Study: IKEA Global Sourcing
Eunice Hurh
University of North Texas

2. CASE STUDY: IKEA GLOBAL SOURCING 2
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?
a. 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?
a. 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. Because IKEA began addressing this issue
in 1994, there should be policies set in place for termination of suppliers that

3. CASE STUDY: IKEA GLOBAL SOURCING 3
decide they don’t want to comply with said addendum. Marianne’s ideal solution
would entail IKEA figuring out a way to keep its contract with Rangan Exports
while making sure children were no longer working at the looms.
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.)
a. Marianne Barner knew that the long-term strategies for IKEA would need to
make differences in the lives of the children and taking a very proactive stand
(Barlett, Dessain, & Sjöman (2006). Many others within the company felt that this
proactive stance would put IKEA at a significant cost disadvantage to its
competitors (Barlett, Dessain, & Sjöman (2006). Getting involved with Rugmark
or Save the Children would be the great long-term strategies for Barner and
IKEA. Also, continuing to stay active and semi-micro-managing its
manufacturing plants in India would provide IKEA with results and knowledge.
Visiting the plants often, unannounced, might scare away some manufacturers,
but that is the cost that must be paid if IKEA wants to avoid child labor issues.
The company should stay and source from India because the people need jobs and
money. Additionally, since India is the biggest purchasing source for carpets and
rugs, exiting from the country would result in major losses (Barlett, Dessain, &
Sjöman (2006).
4. For those recommending that IKEA continue to source carpets in India, would you
suggest that she:

4. CASE STUDY: IKEA GLOBAL SOURCING 4
a. Continue IKEA’s own monitoring and control processes or sign-up to
Rugmark?
i. Although maintaining a monitoring and control process is imperative for
IKEA, the sign-up to Rugmark would results in more sales. Rugmark, a
recently initiated industry response to the child labor problem in the Indian
carpet industry, certifies whether a carpet was made with or without the
use of child labor (Barlett, Dessain, & Sjöman (2006). IKEA was invited
to sign up with Rugmark as a way of dealing with its ongoing potential
problem for child labor problems on products from India (Barlett, Dessain,
& Sjöman (2006). This would be the better solution because this creates a
level of transparency for the consumers and IKEA. Seeing the Rugmark
label on a carpet or rug would communicate that IKEA was not dealing
with child labor anymore and that these products wouldn’t conflict with
their consumers’ morals and beliefs. Thus, the consumers would become
aware and make more purchases based upon this new visible label.
b. 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?
i. Eliminating the use of child labor in IKEA’s supply chain is necessary for
the company’s success, but only focusing on this matter will be wasteful
of time and money. There are many other issues that arise whilst focusing
on the issue of child labor. Engaging in a broader action addressing the
root causes of child labor and teaming with Save the Children would

5. CASE STUDY: IKEA GLOBAL SOURCING 5
expand IKEA’s public interests and fix more issues. Doing what’s best for
the children will include the issue of child labor, so broadening its actions
will also broaden its efforts and results. However, Barner realized that the
more she learned about the issue, the more complex the situation became
(Barlett, Dessain, & Sjöman (2006). Therefore, engaging in efforts to do
what’s ultimately best for the child would simplify the issues. Barner also
stated that the Swedish Save the Children’s expert taught IKEA much
about the issue and emphasized that they must do what’s in the best
interests of the child (Barlett, Dessain, & Sjöman (2006). Since the Save
the Children is such a large organization, getting to the root of the
problems IKEA face on a daily basis will be slightly easier than doing it
on its own.

6. CASE STUDY: IKEA GLOBAL SOURCING 6
References
Barlett, C., Dessain, V. & Sjöman, A. (2006). Ikea’s global sourcing challenge: Indian rugs and
child labor. Harvard Business School. Retrieved from
https://learn.unt.edu/bbcswebdav/pid-338330-dt-content-rid-
1517326_1/courses/MDSE_4660_001_11235W2/IKEA%27s%20Global%20Sourcing%2
0Challenge%20-%20Indian%20Rugs%20and%20Child%20Labor.pdf