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IKEA's Global Sourcing Challenge: Indian Rugs and Child Labor
Student’s Name
Institution
Course
Instructor
Date
, 2
Executive Summary
In 1994, IKEA experienced a major ethical crisis after the German television
documentary exposed children who were being employed at looms in Pakistan to manufacture
carpets to be used in the company. This disclosure went against what IKEA was selling itself by
being a socially responsible company. The business area manager of carpets, Marianne Barner,
was confronted with three options: adopting the Rugmark certification, going with the best
interest of the child, or pulling out of the Indian rug market. Both alternatives had their own
benefits and risks to the company in terms of supply chain and reputation. This paper looks at the
history of IKEA, the international law against child labor and assess the merits of each of the
proposed solutions. The analysis suggests a hybrid model that would involve the incorporation of
Rugmark certification together with the national level child welfare programs. It is a long-term
approach to the issues. Yet, it considers immediate stakeholder interests and appeals to the root
causes of child labor, which is in line with business interests and Biblical principles of fairness
and stewardship.
IKEA's Global Sourcing Challenge: Indian Rugs and Child Labor
Student’s Name
Institution
Course
Instructor
Date
, 2
Executive Summary
In 1994, IKEA experienced a major ethical crisis after the German television
documentary exposed children who were being employed at looms in Pakistan to manufacture
carpets to be used in the company. This disclosure went against what IKEA was selling itself by
being a socially responsible company. The business area manager of carpets, Marianne Barner,
was confronted with three options: adopting the Rugmark certification, going with the best
interest of the child, or pulling out of the Indian rug market. Both alternatives had their own
benefits and risks to the company in terms of supply chain and reputation. This paper looks at the
history of IKEA, the international law against child labor and assess the merits of each of the
proposed solutions. The analysis suggests a hybrid model that would involve the incorporation of
Rugmark certification together with the national level child welfare programs. It is a long-term
approach to the issues. Yet, it considers immediate stakeholder interests and appeals to the root
causes of child labor, which is in line with business interests and Biblical principles of fairness
and stewardship.
