What are alternative solutions mentioned in the case?
IKEA sources with its suppliers to avoid formaldehyde however, the suppliers could not meet the desired outcome. Due to this, the company started working directly with the glue producing company and soon found ways to avoid the use of formaldehyde as much as it could. This event made IKEA more attentive on the environmental issues. In addition, it set standards to be proactive rather than reactive.
When local manufacturers started threatening the local suppliers and stopped them from providing raw material, IKEA looked to outsource the suppliers from Poland. IKEA developed strong relation with the suppliers from Poland by giving loans and machineries to them.
The cost of loans was decided to be deducted from the shipments that they made. These efforts by IKEA helped it in building long relation with suppliers. The suppliers worked for IKEA in more enthused way by providing more updated fashioned raw material in cheapest cost.
The issue of child labor was highlighted by a Swedish channel that IKEA had suppliers in Pakistan and India, which are manufacturing rugs and carpets by child as labors. IKEA took the problem as an ethical issue and seeks for the solution. Therefore, it quickly canceled the contracts with such suppliers who used children as labor.
Another step was taken that they assigned a third party manager who had to look after for the issue and had to confirm that there was no child working for IKEA. This step made IKEA famous that it was paying much attention in ethical issues. Moreover, the manager from IKEA went to India, Pakistan and Nepal to search for the real situation.
During her trip, the manager got to know many things about the rug trade. In addition, with the help of ILO, UNICEF and some local NGOs, she gave the idea to develop a label which assured that it is not produced through child labors.
Hence, they formed partnership with importers, manufacturers and non-governmental organization (NGO) who worked on this serious issue and clarified by putting a label that ensures the rug or carpet is not manufactured by child labor.
Are there other alternatives? If so, which?
The company should have a strong relationship with the suppliers so that trustworthiness could be formed in between. The suppliers have to be educated enough to concern the issue well. A commitment has to be signed between suppliers and the company that if they use children as labor then they would be penalized with a heavy penalty. In newly formed contracts with suppliers, short investments should be made to judge.
IKEA can sign the contracts with the suppliers by mentioning the condition of penalties if they found that child labor is used in industries and work fields. IKEA can arrange awareness seminars for the people of under developing countries to address the causes of the labor child. IKEA can use the platform of World Bank, Asian development and United States who are working for many societal cases.
The company has to solve the problems from its roots. Poverty is the main cause of child labor in India, Pakistan and Nepal. IKEA being an enormous organization could help them in their education. Moreover, it can provide education in its field so that they could be their long term assets. The company has to work side by side with UNICEF and other NGOs as well.( The United Nations Children’s Fund (UNICEF), 2006)
What is the ‘solution’, and why?
A firm that has international business and entertains customers throughout the world should not waste money and time on such issues; rather it should start manufacturing its products itself and meet the requirements easily. IKEA should plant manufacturing factories and looms wherever they found land to be suitable, along with suitable workforce and governmental laws.
In its own manufacturing plant, it can serve better by hiring the suitable personals for the right job. Due to this, reduction incest and lowering the prices could become much easier for IKEA……………
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