Ikea Indian Rugs and Child Labor free essay sample

Thereby, as kindly as possible you extend politeness and it is implied that IKEA is now aware of the child labor IKEA is actively seeking to resolve the issue. 2) What actions should she take regarding the IKEA supply contract with Rangan Exports? The most logical approach towards addressing this issue would be to perform some sort of investigation on ALL of IKEA’s suppliers to make sure that all of them are in compliance. If IKEA singles out Rangan Exports, they could risk some sort of discrimination suit. Additionally, if there are more suppliers in violation of their contract besides just Rangan Exports, these will also eventually come to light in the public eye. If IKEA chooses not to terminate the contract with Rangan Exports and/or other suppliers in violation of their contract, they risk losing respect from the public eye including possible tarnishing of their brand image, etc. These effects can lead to significant losses financially with respect to sales because the public will not want to support a company who condones or allows child labor. We will write a custom essay sample on Ikea: Indian Rugs and Child Labor or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It would be best to address the problem as a whole and make sure all suppliers are in compliance to the terms of their contract agreements. Any other suppliers in addition to Rangan Exports that are in violation of their supply contract and are currently participating in child labor should be fired. Even if Rangan Exports or several other exports are in violation of the contract, with nearly 2,300 other suppliers it should be relatively easy to drop Rangan Exports and utilize another supplier(s) unless Rangan Exports changes their processes immediately. In order for IKEA to maintain the strongest brand image possible and to maintain a good relationship with consumers, IKEA should immediately terminate the contract with Rangan Exports and/or other suppliers in violation of their contracts because they clearly violated the contract agreement. 3) What long-term strategy would you suggest she take regarding IKEA’s continued operation in India? Should the company stay or should it exit? (Be prepared to describe the impact of such a decision and how you would manage it) With respect to a long term strategy IKEA should take regarding its continued operations, IKEA needs to seriously consider the damaging and tarnishing effects a big story about child labor could have on their company and take this very seriously. I believe IKEA can continue to operate its outsourcing in India. However, stricter and more effective checks and balances need to be put into place to make sure that the contracts are not being violated. There should be routine check-ups at all of the suppliers to ensure that they are within the bounds of their contract. It may seem like it would be expensive to have such an operation, but it wouldn’t be nearly as expensive as a major publicity slam against IKEA because they continued to condone child labor. There could not only be a huge loss in trust in IKEA from such a circumstance, but also a huge drop in sales, which as previously mentioned would be costlier than putting in a strategic system of checks and balances. Ultimately, I believe IKEA can achieve its goals of being cost effective in its outsourcing endeavors to India, however new levels of caution need to be taken to make sure the suppliers are behaving in the ethical manner as redetermined and agreed upon by the contract signed between both parties. 4) For those recommending that IKEA continue to source carpets in India, would you suggest that she: 1) Continue IKEA’s own monitoring and control processes or sign-up to Rugmark? 2) Continue to focus only on eliminating the use of child labor in IKEA’s supply chain or e ngage in broader action to address the root causes of child labor as Save the Children is urging? At this point I believe it is critical that IKEA takes a bold stance against child labor to maintain a strong brand name in the market. Because Rugmark was founded on the basis of consumer awareness of the issue I believe some membership to Rugmark would improve the overall public image of IKEA in this arena. I would allow Rugmark to have a certain amount of oversight in the strategy of eliminating child labor throughout the supply chain. However I would ensure that at all times IKEA has complete control of the process so an effective and ethical approach can be taken in the best interests of the company. Again, to maintain a strong public image and to show that IKEA is serious about the issue of child labor in the supply chain I believe it’s important for IKEA to not only focus on eliminating the use of child labor within the bounds of the company, but to also engage in broader action to address the root causes of the child labor issue through means such as Save the Children. In conclusion, I believe effective and ethical use of the supply chain can be reached while still maintaining a strong public image if the issues IKEA is now aware of are taken seriously and correction action is taken swiftly.