IKEA’s Global Challenges: Indian Rugs and child labor  Case Solution

IWAY policies

The company also offers some WAY policies in order to build its reputation and increase the

Sales of the company.

  • In the working condition, the company should not force any labor to work
  • No child will work in the factories.
  • No mental and physical action will be held in business environment.
  • The supplier should also provide safety its employer in order to handle chemical in safe way.
  • Suppliers have to reduce the wastage.
  • The company appointed an international auditor, which monitored the operations of suppliers in India and Pakistan.

Pros and cons of the IWAY policies

Pro’s

  • While applying the IWAY policies with the suppliers, it enhance the work condition and labor became more satisfied because any pressure and mental and physical action was held,this enhanced the productivity and created market value
  • IKEA takes the responsibility for its supplier’s actions. If any company will commit-illegal action,IKEA will cancel the contract with that particular supplier. Thus because of this fear, most of the suppliers donor involve in illegal actions. This will improve the brand image
  • The company has partnered with acknowledged and capable NGO’s
  • While using these policies,80% of the children started attending schools, the literacy ratio of the country will increase.
  • In the short run, eliminating the child labor increases the cost of production because the company has to pay cheap price for child labor but in the long run, it increases the sales and image.

Con’s

  • The company was not able to achieve the measurable goals, the reason for this is the company is not able to maintain cheap cost of the production
  • Effective auditing is difficult due to the large number of suppliers, this also increased the cost of the company.
  • Policies were unclear.

Recommendation and conclusion

When child labor was found to have worked in the supply chain of IKEA, the company requested its supplier that was using the child labor to stop this act immediately and implemented a corrective and preventive action plan within the time frame. If any violation occurs again, the company will terminate future business with that particular supplier. Along with that, when company makes a relationship with new suppliers, the company investigate sits past operation with regards of child labor. The company expanded its business in Chinese market and made alternative supplies in China. Since China has cheaper labor,the cost of production will be lower and the company will be able to sell its-products at a lower price, which will attract customers and enhance the sales of the company.

Along with that, the company wants to make contract with the government in order to save children from child labor, it will be very effective way to decrease the labor force and without any cost consuming strategy. The company also can built it sown factories so that the company can effectively manage its operations and maintain its reputation…………………..

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