To: Marianne Barner (Business Area Manager for Carpets)
By: Alyssa Fukumoto
Re: IKEA Global Finding Challenge
I realize IKEA found an issue with Rangan Export products, one of IKEA's major suppliers, being exposed because using child labor. It was after Rangan Exports had just signed a contract preventing the use of child labor. The German television set that aired the documentary did so in attempts to accuse child labor exploitation and defile the brand's reputation. Intended for IKEA, reputation is important and the negative marketing immediately influenced the financial health from the company mainly because it dealt with general public and regulatory pressures. The application of child labor in some growing countries just like India is still a social dilemma despite efforts to abolish kid labor. Despite laws applied to stop the practice, the laws were inadequately unplaned and prosecution, if any kind of, is almost never harsh. IKEA is confronted with the challenge to stay true to it is social responsibility commitment and ensuring that its products are child labor free. This challenge affects their particular brand image. You must make a decision whether to discontinue the sourcing of carpets coming from India and other suppliers which have been suspected of kid labor exploitation, renew Rangan Exports with IKEA's individual monitoring program, or restore Rangan Exports with the Rugmark program. IKEA has had in past times controlled environmental issues with the formaldehyde disaster in the 1980's. The initial setback was with the IKEA products that emitted more formaldehyde than was allowed by laws. The company quickly established rigid requirements although soon identified suppliers were failing in order to meet the standards. IKEA had to job directly with the glue-producing substance companies and soon found ways to reduce formaldehyde away gassing in its products. In that case IKEA's top selling bookcase series was identified to have higher emission than German laws allowed. This did not include due to the glue but to the lacquer within the bookshelves. IKEA immediately ceased production and sales then corrected the issue before starting distribution. The events motivated IKEA to deal with broader environmental concerns even more directly plus they now work with advocacy groups to promote all their causes. This shows how responsible the business is and it is compatible with it is commitment with the IKEA soul of the " willingness to assume responsibility and to help, on the humbleness ahead of the task, and on the ease of our tendencies. ” Just how IKEA handles the social child labor issues needs to be similar to the method it taken care of immediately the environmental problems. Rangan Export products has been one of IKEA's main suppliers of rugs/carpets for many years in India. IKEA's romantic relationship with Rangan Exports is very important and therefore necessary for IKEA to respond. I see that steps had been taken to talk about the child labor issue. You and a crew did legal research in Geneva; in addition, you went onsite to visit the suppliers. I realize that you are cooperating with NGO's and UNICEF to meet legal requirements and understand the situation. IKEA hired a 3rd part agent to screen child labor practices in India and Pakistan, to conduct randomly audits to make certain there were no children focusing on site. I am aware you had suppliers sign the best document proclaiming that is a supplier employed kids under the legal working age, that the agreement could and would be terminated. I understand that these actions were presumed to protect the company coming from child labor issues from arising. During the past, IKEA hasn't removed on its own from a scenario just because it absolutely was difficult. They have planned through thorough study the root reasons for the problem and tried to repair it. The best technique is to enough time issues from the beginning because whenever they emerge, that they immediately impact the product sales from the company plus the image. IKEA's main approach is to lessen cost among IKEA as well as its customers to own lowest price conceivable. Consumers perceive the...