Ikea Case Summary

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Case Summary: Group 14 IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labour (A) IKEA Company Background: Founded by Ingvar Kamprad, the company has the vision: “To create a better everyday life for the many people”. Despite stepping down as CEO, Kamprad was very much involved in the company activities. The company was offering products at very low cost; hence IKEA faced stiff opposition from the Sweden’s large furniture retailer’s conglomerate. Eventually IKEA has to look options cross border and it contacted with Poland furniture factories. In due course of time IKEA expanded in many other countries. It followed the strategy of providing affordable, good quality furniture to mass market and ensuring long time healthy relationship with its suppliers. IKEA and Social Issues 1980: Formaldehyde issue in Denmark | 1992: Formaldehyde issue in Germany | 1994: Child labor in Pakistan | 1995: Child labor at Rangan Exports | * 20% drop in sales * Collaborated with glue producing companies, ISI, BASF | * Lost $6 - $7 million * Established a forestry policy with other measures | * No awareness of child labour * Took advice from ILO * Random audits to check child labor | * Invitation to attend the telecast * Decision yet to be made | Other Social Issues: Issue | IKEA’s solution | * Excess Wood Usage: Used 13.56 million cubic metres of solid wood in 2010 * Horse Meat Scandal: Traces of horse meat in frozen meatballs made in Sweden * Deleted women from catalog: Criticized for deleting women images from the Saudi version of their furniture catalogue * Faecal matter found in Chocolate cakes: Faecal coliforms, bacteria normally found in human and animal waste, were found in Ikea cake sold in China * Improper usage of Cotton : Raw material of IKEA | * People and Planet Positive initiative : guidelines to optimize usage of

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