Ikea’s Global Sourcing Challenge: Indian Rugs and Child Labor

2778 Words Aug 28th, 2008 12 Pages
IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor

Jordan de Jong

Case Study _

The case I will analyze and discuss in this case study is “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor”. I will begin with the vision, values, and strategy of IKEA and an internal analysis of the issues that they have faced as of the time of the case. Next, I will detail the issues IKEA faced in the years prior to the Indian rugs and child labor challenge. Then I will describe the Indian rug and child labor problem that IKEA faced
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Many products did not meet the new regulatory standards and IKEA was fined by the Danish government for non-compliance. The case was widely publicized and IKEA was blasted in the press for their environmental ignorance and sales in Denmark dropped by 20%.
Considering IKEA’s commitment to their customers and quality products they could not let this continue. They worked with their suppliers to ensure that their products were up to Danish government standards but they were not able to ensure that all of the particle board met the formaldehyde emission standards. The suppliers contended that the glue in the particle board was causing the high emissions and that the suppliers could not fix it themselves. IKEA then worked with ICI and BASF to reduce the emissions in their glue that goes into particle board. From the way that IKEA not only worked with suppliers to resolve the issue but with sub-suppliers as well we can see that this company takes a great deal of responsibility for their actions.
Several years later in Germany IKEA was once again lambasted in the press for using large amounts of polyvinylchloride (PVC) in packing after it was found that dioxins were dispersed when PVC is burned. The environmental concerns were becoming more and more relevant to IKEA with the formaldehyde issue from 1981 reappeared in 1992, this time in Germany. The new case of

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