Global Sourcing Challenge: Indian Rugs and Child Labor - A Case Study Analysis on Ikea

Case analysis
Global Sourcing Challenge: Indian Rugs and Child Labor
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Executive summary
This is a case study analysis on Ikea global sourcing challenges in Indian market carpet industry.
However in large it elaborate on child labor issues in developing market and the way suppliers
action impact focal companies brand image and goodwill. It discusses the way Ikea grew up
from small organization to a multinational global organization, its values and culture system.
Key issue includes child labor, bondage labor being used by suppliers in different market. With
increasing awareness regarding this issue, company is being targeted by media. Therefore, it’s
time to make strict policies towards social responsibilities; take supplier governance at higher
level to serve community at large. This paper includes suggestions for Barner to deal with
present issue and strategies for future.
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Table of Contents
Introduction.................................................................5
Company overview...................................................5
Strong supplier relationship management...............6
Organization culture and values...............................7
Key problems...............................................................8
Options evaluation.....................................................13
Immediate public issues.........................................17
Dealing with Rangan export...................................18
Overall approach Ikea should take.........................21
Company should deal along or allow Rugmark to monitor the case 24
Problem of child labor in India...............................27
Implementation plan..................................................31
Conclusion..................................................................34
Bibliography...............................................................36
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Introduction
Given is the case study analysis on Ikea, it include brief analysis on the company, growth,
procurement and supplier policy and challenges encounter during global sourcing. This paper is a
critical evaluation on issues encountered by Barren, it include brief introduction about company,
its issues, and scenarios encountered and best possible solutions for the same.
Company overview
Ikea was founded by Ingvar Kamprad in the year 1943 in Sweden. In 1951 first furniture store
was open. Key objective of the company was to provide furniture at most competitive price, it
attracted huge competition and threat from other market players. Company started its market
expansion in 1964 with two stores and expanded its market reach to 114 stores with 415 stores in
2018 in 49 locations worldwide. In the year 2016 total revenue of the firm was US$40.906
billion. It deals in ready to assemble furniture, kitchen appliances etc. (Bartlett, Dessain, &
Sjoman, 2006).
Strong supplier relationship management
From 1961 Ikea started outsourcing its business to suppliers with the objective of local
development, it offer long term relationship development through financing suppliers at very
cheap rate, knowledge transfer and technological sharing. In 1990, Ikea had 2300 suppliers in 70
countries; these suppliers were managed by 24 trading services offices in 19 countries.
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