Mgmt 6213 - Ikea Case Study

08 July 2016

MGMT 6213

Week 4, Assignment 1

Dear Mr. Ingvar Kamprad,

        As you are aware IKEA is facing a challenging and complex situation with regards to one of our carpet suppliers using child labor. As the business area manager for carpets it is my responsibility to ensure our department is sourcing the best quality carpets while maintaining an affordable price for our customers. It is also my responsibility to protect IKEAs reputation and ensure that we are sourcing our carpets in a legal and ethical manner. Due to previous incidents involving child labor IKEA has implemented a clause in all supply contracts simply stating, “if a supplier employs children under legal working age, the contract will be cancelled.”[1] Unfortunately due to more recent incidents I feel this clause has done little to dissuade suppliers from using child labor. Below are my recommendations for handling our current supplier Rangan Exports, and additional measures that should be implemented immediately to avoid any future incidents involving child labor.

        I recommend an immediate broadcast and announcement of an investigation of Rangan Exports due to allegations of child labor. This broadcast must be delivered within the next 24 hours due to the timing of a German Documentary displaying children working at Rangan Exports. During the broadcast I will emphasize that child labor is in violation of IKEA’s supplier clause and more importantly it is against the principles and values of IKEA. This is important to emphasize because India did not adopt or sign Convention 138, adopted by the International Labor Organization (ILO), which “committed ratifying countries to working for the abolition of labor by children under 15 or the age of compulsory schooling in that country.”[1] Child labor within India is deeply embedded in the culture and “widespread because laws were poorly enforced and prosecution rarely severe.”[1] IKEA must act immediately, be honest, and reemphasize “zero tolerance” for child labor. Doing so will minimize the potential harm to the company and IKEA will become a major leader in promoting child labor and human rights changes in India.