3. COMPANY & SITUATION
• IKEA = Swedish furniture retailer
• Strategy: Sell affordable, good-quality furniture to mass-
market consumers
• Procurement policy: Establish long-term relationship with
suppliers
• 2,300 suppliers in 70 countries
• Marianne Barner: Business area manager for carpets
• Rangan Exports: Indian carpet supplier; Recently signed
contract forbidding the use of child labor
COMPANY & SITUATION SHORT-TERM ACTIONS RESPONSE PROPOSITION LONG-TERM STRATEGY RECOMMENDATIONS
4. COMPANY & SITUATION
1994:
Child labor scandal in Pakistan
1980: Ikea had no awareness of child labour problem
Formaldehyde scandal in Denmark Apology
Collaboration with chemical Advice from organizations
companies to reduce formaldehyde Change of supplier contracts
concentration Random tests & situation analysis
1992: 1995:
Formaldehyde scandal in Germany Child labor scandal reported by German
CSR: TV channel at Rangan Exports
1. Forestry Invitation for live discussion
2. Adaptation of product range What to do?
3. Working with suppliers
4. Transport and distribution
5. Environmentally concious stores
COMPANY & SITUATION SHORT-TERM ACTIONS RESPONSE PROPOSITION LONG-TERM STRATEGY RECOMMENDATIONS
5. SHORT-TERM ACTIONS
• Investigate first the
situation and generate
potential learnings
• Find a long-term
solution
• Stop business activities
No direct cancellation
only if violation proven
COMPANY & SITUATION SHORT-TERM ACTIONS RESPONSE PROPOSITION LONG-TERM STRATEGY RECOMMENDATIONS
9. LONG-TERM STRATEGY
Own monitoring and control processes or sign up to Rugmark?
COMPANY & SITUATION SHORT-TERM ACTIONS RESPONSE PROPOSITION LONG-TERM STRATEGY RECOMMENDATIONS
11. LONG-TERM STRATEGY
Addressing root causes of child labor?
COMPANY & SITUATION SHORT-TERM ACTIONS RESPONSE PROPOSITION LONG-TERM STRATEGY RECOMMENDATIONS
12. LONG-TERM STRATEGY
• Problem before: Formaldehyde and forestry issues reactive
• Ikea as global company: higher awareness of social
responsibility & anticipate potential upcoming risks introduce
a full CSR concept
Increase awareness of Indian population
hotline, experts, investigation
Provide kids education they have
missed future work prospectives
Higher family income
elimination of child labor,
boycotts together with other firms
COMPANY & SITUATION SHORT-TERM ACTIONS RESPONSE PROPOSITION LONG-TERM STRATEGY RECOMMENDATIONS
