Case | HBS Case Collection | May 2006 (Revised November 2006)

IKEA's Global Sourcing Challenge: Indian Rugs and Child Labor (A)

by Christopher A. Bartlett, Vincent Marie Dessain and Anders Sjoman

Abstract

Traces the history of IKEA's response to a TV report that its Indian carpet suppliers were using child labor. Describes IKEA's growth, including the importance of a sourcing strategy based on its close relationships with suppliers in developing countries. Details the development of IKEA's strong culture and values that include a commitment "to create a better everyday life for many people." Describes how, in response to regulatory and public pressure, IKEA developed a set of environmental policies that grew to encompass a relationship with Greenpeace and WWF on forest management and conservation. Then, in 1994, Marianne Barner, a newly appointed IKEA product manager, is surprised by a Swedish television documentary on the use of child labor by Indian carpet suppliers, including some that supply IKEA's rugs. She immediately implements a strict policy that provides for contract cancellation if any IKEA supplier uses child labor. Then Barner is confronted by a German TV producer who advises her that he is about to broadcast an investigative program documenting the use of child labor in one of the company's major suppliers. How should she react to the crisis? How should the company deal with the ongoing issue of child labor in the supply chain?

Keywords: Developing Countries and Economies; Moral Sensibility; Policy; Employment; Contracts; Supply Chain Management; Organizational Culture; Natural Environment; Non-Governmental Organizations; Social Issues;

Citation:

Bartlett, Christopher A., Vincent Marie Dessain, and Anders Sjoman. "IKEA's Global Sourcing Challenge: Indian Rugs and Child Labor (A)." Harvard Business School Case 906-414, May 2006. (Revised November 2006.)