Running head: CASE STUDY: IKEA GLOBAL SOURCING 1

Case Study: IKEA Global Sourcing

Eunice Hurh

University of North Texas

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
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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:

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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
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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.
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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