IKEA’s Global Sourcing

Challenge: Indian Rugs and

Child Labor (A)
By
Group 2
Deepa Puranik 18070
Pranav MG 18078
Vishnu Menon R 18086
Athul Vinod 18095
Srinivas Prasad 18110
Veena Shravani 18113
Nisarga Ganesh 18116
Introduction
 IKEA mainly faced 2 kinds of issues:
1. Environmental Issue
2. Social Issue

Environmental Issues:
Issues 1. Formaldehyde emission issue in
Denmark in 1980
• 20% decrease in sales in Denmark
2. Formaldehyde issue in Germany in
1992
• Lacquer on bookshelves
• Loss of $6-$7 million
 Social Issues:
• Child Labour in Pakistan in 1994
• A Swedish Television documentary
showed children in Pakistan working at
weaving looms.
• A deeply embedded problem – Marianne
Cont… found out that very large no of Indian
children as young as 5 yrs old worked in
Agriculture, mining, quarrying,
manufacturing etc.
• Child Labour in India in 1995
• A German TV showed children working
at looms at Rangan Exports in India.
Recommendations/Solutions

• Terminate the contract with Rangan Exports

• Take appropriate legal actions, also take
advice/help from the ILO (International Labour
Organization)
• Find a new supplier that aligns well with the
IKEA’s values and ethics
• Perform CSR activities in India & Pakistan such
as free education for children up to the age 18
and providing free mid day meals etc.
• Collaborate with Rugmark Foundation
 • As of June 2019, there are 433 IKEA stores
operating in 52 countries
• The IKEA website contains about 12,000
products and there were over 2.1 billion
visitors to IKEA's websites in the year from
September 2015 to August 2016
• The company is responsible for
Latest News approximately 1% of world commercial-
product wood consumption, making it one
of the largest users of wood in the retail
sector
• IKEA opened its first India Store on Aug 9,
2018 and the country’s largest retail space
in Hyderabad while providing employment
to 950 people in the store alone
 • IKEA is also connected to Mysore. MAS
Furniture – Mysore based
manufacturing company headed by
Shabbir Vagh
• Must follow IWAY policy – IKEA Way
of doing things
Cont… • Must have certain amount of green
cover
• Must have healthy male to female
ratio in the factory
• Pay parity based on merit and
experience rather than gender