Ikea Child Labor

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IKEA is a privately held, Swedish company that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. The furniture retailer was founded in Sweden in 1943 by Ingvar Kamprad. The corporate culture of IKEA was an extension of Kamprad’s personal belief and style where being cost conscious, responsible and humble were a few of the many key values. However during the 1980s, environmental problems emerged with some of IKEAs products and in the mid-1990s, the public soon became aware of IKEA suppliers use of child labor. Major Problems/Themes The two major problems/themes in this case study are the following: • Environmental issue – formaldehyde In the 1980s, Danish authorities passed regulations to define limits for formaldehyde emissions permissible in building products. IKEA products emitted more formaldehyde than was allowed by legislation and due to the publicity of the issue, its sales dropped 20% in Denmark. IKEA passed on stringent requirements regarding formaldehyde emissions to its suppliers and found ways to reduce formaldehyde off-gassing in its products through collaborations with companies. However, 10 years later, the formaldehyde problem returned in the lacquer of their best-selling bookcase series, Billy. Substantial sales and goodwill losses on global level gave IKEA a $6-$7 million loss. • Social issue – child labor A Swedish television documentary showed children in Pakistan working at weaving looms where they were working on IKEA products. IKEA added a clause to all their suppliers stating that if they employed children under legal working age, the contract would be cancelled. The company later appointed a third-party agent to monitor child labor practices at its suppliers in India and Pakistan. IKEA had a hard time finding a legitimate company but later hired a well-known

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