IKEA’s Global Sourcing ChallengeBy: Parina Agarwal, MinHee Huh, Molly McGowan, and King Tan

Issue with Child Labor with IKEA’s Suppliers

Social issue with Child labor

German TV station and Swedish television documentary

Remain or Exit?

IKEA should exit India for the following

reasons…Past Issues

Time

Cost Evaluations

Reputation at Stake

Company’s Mission

Issues with IKEA in the past…

Formaldehyde Incident

2nd Formaldehyde Incident

Pakistan Child Labor Incident

Wasting Time is a mortal sin at IKEA

Pakistan Child Labor Situation

Learn from old mistakes and approach using simplicity

Incur few cost now, and reduce costs in the

futureLoss of suppliers will not stop IKEA

Opportunity Cost

Protecting IKEA Brand and Image

Previous Losses

Promoting good management and building reputation

Past issues hurt reputation

Strong relationships with suppliers

Good management.

“We have always worried more about finding the right management for our suppliers than finding high tech facilities. We will always help good management to develop their

capacity.”

Adhere to the Mission Statement

• “To create a better life for everyday people.”

• Stop bonded labor

• Encourage suppliers

• Start a CHANGE

We recommend to re-enter in the future!

Conclusion

We recommend to exit India because of

Their past

Time

Costs

Reputation at Stake

Company’s Mission

• We plan to return to India but only if they make a change for the better.

Works Cited

Bartlett, Christopher. "IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A).” Harvard Business Review, 2006.

http://www.ikea.com/

http://www.rugmarkindia.org/

http://www.ngosindia.com/