Q. What long-term strategy should IKEA take regarding its operations in India?

To be in sync with the rapidly evolving market dynamics, which focuses on social welfare, IKEA
needs to evaluate its long term strategy along the below mentioned points:

A. Supplier Contract enforcement and drafting  

- Future contracts to have a heavy penalty clause (accounting for the damage caused to
IKEA’s brand name), along with termination, for involving child labour
- Along with external, develop internal quality assurance team to monitor and verify the
implementation of the set standards
- Review relationship with external auditing team
- Join the association enforcing the ‘Rugmark’ label, iterating IKEA’s strong stand against child
labour

B. Strengthen and propagate IKEA’s stringent ethical and moral standards

-  Despite weak government regulations, ensure percolation of IKEA’s morals at the ground level
of each supplier system
- Work with the government and the carpet/ furniture industry trade union to systematize the
segment

C. Diversify its supply source from other geographies

- Diversification will protect IKEA’s supply-chain from disturbances caused at any supply end
- It will give flexibility to dissociate with suppliers, violating the contract norms
- Further it will mitigate risk especially concentrated in South Asian nations (as high as 23%;
India: 10-15%)

D. Enforce stringent deadline for disassociation with companies employing child labour

- Zero tolerance towards child labor to be enforced

- Work with suppliers towards implementing IKEA guidelines at the ground level to develop
long lasting relationship with each

E. Engage in social welfare and CSR, fulfilling our responsibility towards society

- Collaborate with child protection NGO programs such as CRY to support the affected
children
- Protect traditional culture and art, while eradicating child labour, through trainings and
developing associations with local skill unions