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Ikea Case Essay

760 words - 4 pages

1) How should M. Barner respond to the invitation for IKEA to have a representative?
appear on the upcoming broadcast of the German video program?

Marianne Barner business manager for IKEA’s carpets should respond with a firm no to the invitation. The German video program would only bring detriment to the company, rather than relief or support for the issue at hand. In comparison to the Swedish program, which did not target a specific company, this German-produced program planned to take a confrontational and aggressive approach targeted directly at IKEA and one of its suppliers. Germany currently brings in the most sales for IKEA with $10.4 and 29.7%. Since Marianne Barner’s goal was to ...view middle of the document...

This alternative is legal and consistent with IKEA’s policies. The potential disadvantage of this alternative is that it may deprive IKEA of a lucrative supplier relationship and it may temporarily cut off access to Indian rug sources. As such, it may adversely impact IKEA’s bottom line. Barner’s other option is to give the supplier a “warning” but maintain relations, with the caveat that the supplier stops employing child laborers. This would have the advantage of maintaining a potentially lucrative supplier relationship. It would also present IKEA with the opportunity to “educate” suppliers about the hazards of child labor. On the downside, this action would be contrary to IKEA’s own established policies. It could send a message to other suppliers that IKEA might secretly condone child labor while openly condemning it. Another potential negative consequence would be the amount of negative publicity that would be generated and the damage it would cause to IKEA’s reputation.
IKEA should adopt the first option and terminate relations with the violating supplier. Failing to do so would send the wrong message to other suppliers, increasing their bargaining power, and violates IKEA’s own policies. Furthermore, it leaves IKEA open to charges of unethical behavior. Thus, the company should immediately and publically sever relations with Rangan Exports. They should issue a...

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