How should Marianne Barner respond to the invitation for IKEA to have a representative appear on the upcoming broadcast of the German video program?
To tackle this knotty problem, it is highly recommended that IKEA should participate in the program. The first thing should be taken into account is that this documentary was produced by a noted German company, which further meant gaining high credibility and extensive influence too dangerous and can be harmful for Marianne Barner to underestimate or ignore. Consequently, a heads-on response is not merely necessary but also imperative.
Further to that point, the company does have gained some positive accomplish ents to the child labor issue since the problem was first raised by Swedish television. IKEA could analyze and discuss the information it had collected so far from UNICEF and the ILO and demonstrate its same attitude as the director of the documentary film as well as pursuing the same goals of eradicating child labor. It could turn the baffling problem around by showing its gratitude to the director for helping spot the child labor at the company’s manufacturing and could never to be too emphasize that the company is going to study the case thoroughly.
Furthermore, what Marianne Barner should point out is that as the IKEA’ s philosophy goes: Anyone can make mistake but one should take the responsibility of making a mistake. Taking responsibility has been served as a privilege. Since the IKEA was unaware of making the mistake by accepting the contract without further investigating the production facility of the supplier. By having a representative showing up on the video program, IKEA will proclaim that not only the company has guts to accept mistakes it committed but also cares to rectify it. Last but not the least, Marianne Barner should further mention IKEA‟s inadequate engagement in social responsibility, pointing out it remained at the reactive step but not yet at the proactive step or interactive step. This inadequate engagement accounts for reasons why the company keeps undergoing social and environmental issues pushed by the public. IKEA is prominent at new ideas for marketing but the company is still passive in social responsibility action. To fix this drawbacks, Marianne Barner needs to assure the public that IKEA will be more aware of social responsibility and potential upcoming social issues in the future and grasp this opportunity to deliver its elaborate plan to the masses. With a carefully considered plan, participating in the television program would not only help save the brand and image but also be a perfect occasion for publicity.
What actions should she take regarding the IKEA supply contract with Rangan Exports?
As far as IKEA is concerned, the most tactical and logical method towards addressing this issue would be to give Rangan Exports a second chance and help them out from the plight rather than simply terminating the contractual relationship with them and discarding the hot potato to them. Since IKEA‟ s vision statement goes “To create a better everyday life for the many people.” That is to say, IKEA endeavors to fight for the benefits of the majority of people, including those who are working for Rangan Exports.
Actually, child labor issues have long existence and deep social roots, thus it would be unreasonable and unjustifiable to merely blame a single supplier or company, therefore, Rangan Exports should not solely take the blame and deserves a second trust and chance. What‟s more, IKEA should make investigations into 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. In addition, if there were more suppliers violate their contract besides just Rangan Exports, these will also eventually head above the water. If IKEA chooses not to terminate the contract with Rangan Exports and/or other suppliers in violation of their contract once again, they risk losing respect from the public including potential tarnishing of their brand image, etc. These effects can result in significant financial losses regarding sales because the public will not be willing to support a company who allows or indulge child labors. In this sense, Marianne Barner should firstly seek the assistance of UNICEF, ILO and NGOs and should help Rangan Exports to avoid using child labor in production of rugs by raising awareness about such social issues and how it impacts the life of child in physical, moral, and social terms. Then she should address the problem as a whole and make sure all suppliers are in compliance to the terms of their contract agreements. Any suppliers that are in violation of their supply contract and are currently participating in child labor should be fired. Moreover, IKEA could extract some proportion of its sales revenues to help those 4 children and its family with better schooling and healthcare, etc. Only they become well educated, skillful in some fields or other, and the whole country or geographic areas get rich, can the child labor issue be really eradicated.
What long-term strategy would you suggest she take regarding IKEA’ s continued operation in India? Should the company stay or should it exit? Describe the impact of such a decision and how would you manage it?
At this point, IKEA is recommended to continue and even improve engagement in India. A multinational reputable company as IKEA was, it would be irresponsible to get out of somewhere just because it is difficult to be there. Or rather, to redeem its reputation IKEA should do exactly the opposite. It is obvious that child labor is deeply imbedded in Indian culture as many people are poor and cannot wipe out their debts, thus child labor is inevitable to ensure the life of the whole family. This demonstrates that pulling out would not abolish child labor but push Indian people even harder as a resource of earning money would disappear. In return a negative image could be set up towards IKEA for not taking further actions in the Indian market. Terminating business relations with its supplier could cause tremendous public disagreement as lots of people may regard companies such as IKEA, the world‟s largest furniture retailer, is interested nothing else but for earning 4 children and its family with better schooling and healthcare, etc. Only they become well educated, skillful in some fields or other, and the whole country or geographic areas get rich, can the child labor issue be really eradicated. A prevailing view goes that these types of company owe responsibility not only to the shareholders but also to the society. By refusing help, a passive image could be established which would cause not only the loss of sales but also of IKEA' s good will. Consequently, how can IKEA effectively aid the Indian markets, regain its reputation 5 without severely affecting its profitability? Here are some recommendations. First, IKEA should introduce a code of conduct. This code should set down clear requirements with regard to working conditions and the environment. All suppliers are required to sign the code of conduct. Those who do not meet the requirements are given a few months to introduce structural changes. If adequate changes were not implemented, IKEA would end its relationship with the supplier. Second, IKEA could establish a cross-comparison monitoring mechanism to supervise suppliers’productions. Employing a third party supervisor as well as selecting supervisors internally to oversee the production process of suppliers and intriguing competition between them to gain effective supervision and therefore decreasing or even eliminating child labor phenomenon. Third, IKEA should go further than just saying „no‟ to a supplier who exploits children. Rather, IKEA should show a genuine interest in bringing about improvement for children by assuming a responsibility for child labor issues.” For instances, IKEA could consult with NGOs like Save the Children and WWF to effectively combat environmental degradation and promote social welfare. Or wage a campaign with NGOs that two cents from a particular products‟ sales revenue go towards programs that supports Indian children.
The last but not the least, IKEA could publish a corporate brochure on social and environmental responsibility and also gives an annual coverage of their progress on global issues in the IKEA annual report in order to keep the masses aware of IKEA‟ s good faith and efforts in actively solving this issue.