Abstract

IKEA is a Swedish furniture retailer with its stores spread in Germany, Australia, and the UK constituting major market share, followed by Asian Pacific region. The company started with an aim to provide a “better lifestyle” and developed itself by incorporating the values into its business and corporate strategy. The company has strong supplier chain, rooting in Finland, followed by India, Pakistan and Nepal. After the retirement of Ignar as the CEO, the new CEO, inaugurated and augmented the post by inculcating the core values and beliefs of IKEA, into its corporate supply chain strategy. In doing so, Barner established strong long-term relations with the suppliers to ensure quality and consistency of service.

In an overview both parties (IKEA and Suppliers) pose dependency on each other for doing business. In 1995, the company got bombard with negative critics in a reaction for the use of child labor in the production of carpets and rugs. The suppliers of these rugs were from India, Pakistan and Nepal, where law and legalization are weak to support the cause. In reaction to the incident, the company developed and established strong relations with WWF, UNICEF and Rugtag to ensure the policy and code of conduct followed by its suppliers. The problem arose in managing the policy and strategy throughout the supply chain.The weak areas identified in the supply chain are the sub-branches of the supply chain, which the suppliers make to procure the material.
Ikea Global Sourcing Challange Harvard Case Solution & Analysis

The company has faced four major setbacks which include formaldehyde used in Denmark, and then Germany damaged the brand image of IKEA greatly. Followed by child labor case in Pakistan in 1995 and then the Rangan Exports scandals which are the supplier of IKEA from India.These all incidents have collectively made Barner to think for a better way to develop the brand image of IKEA, while also maintaining its business and corporate strategy aligned with its mission and vision to offer a better life and a better lifestyle to the consumers.

Executive Action Summary

Ikea has been strongly and competitively moving into the globalmarkets pursuing the uniform strategy of offeringbetter lifestyle to the people.Perhaps in moving in a particular direction, the company has come across with the negative reputation of using the childlabor for the production of therugs that are supplied from Pakistan and India.Though the company has somehow managed to set the certain monitoring and control parameters in Pakistani Industry, the recent coverage of the Ikeaproduction ofIndian rugs by a Germanfilmmakerhas questioned thestance of the company again in social court.

Since the filmmakers invited Ikea for talk show on such activity, it is recommended that the company should attend the talk show. This is due to the fact, that since the company has already been managing the bad reputation and impact on the business brand image, it has not publicized it in the media, making the end customers unaware of the actions taken by the company to rectify the mistake.......................

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