Question

In the fall of 1994, after managing the initial response to the crisis, Barner and her direct manager traveled to India, Nepal, and Pakistan to learn more. Barner recalled the trip: “We felt the need to educate ourselves, so we met with our suppliers. But we also met with unions, politicians, activists, NGOs, U.N. organizations, and carpet export organizations. We even went out on unannounced carpet factory raids with local NGOs; we saw child labor, and we were thrown out of some places.”

On the trip, Barner also learned of the formation of the Rugmark Foundation, a recently initiated industry response to the child labor problem in the Indian carpet industry. Triggered by a consumer awareness program started by human rights organizations, consumer activists, and trade unions in Germany in the early 1990s, the Indo-German Export Promotion Council had joined up with key Indian carpet manufacturers and exporters and some Indian NGOs to develop a label certifying that the hand-knotted carpets to which it was attached were made without the use of child labor. To implement this idea, the Rugmark Foundation was organized to supervise the use of the label. It expected to begin exporting rugs carrying a unique identifying number in early 1995. As a major purchaser of Indian rugs, IKEA was invited to sign up with Rugmark as a way of dealing with the ongoing potential for child labor problems on products sourced from India.

On her return to Sweden, Barner again met frequently with the Swedish Save the Children’s expert on child labor. “The people there had a very forward-looking view on the issue and taught us a lot,” said Barner. “Above all, they emphasized the need to ensure you always do what is in the best interests of the child.” This was the principle set at the heart of the U.N. Convention on the Rights of the Child (1989), a document with which Barner was now quite familiar. (See Box 19.1 for Article 32 from the U.N. Convention on the Rights of the Child.)

Box 19.1 The U.N. Convention on the Rights of the Child: Article 32

1.        States Parties recognize the right of the child to be protected from economic exploitation and from performing any work that is likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral, or social development.
2.        States Parties shall take legislative, administrative, social, and educational measures to ensure the implementation of the present article. To this end, and having regard to the relevant provisions of other international instruments, States Parties shall in particular:

1.        Provide for a minimum age for admission to employment
2.        Provide for appropriate regulation of hours and conditions of employment
3.        Provide for appropriate or other sanctions to ensure the effective enforcement of the present article.

Source: Excerpt from “Convention on the Rights of the Child,” from the website of the Office of the United Nations High Commissioner for Human Rights, available at http://www.unhchr.ch/html/menu3/b/k2crc.htm, accessed October 2005.

The more Barner learned, the more complex the situation became. As a business area manager with full profit-and-loss responsibility for carpets, she knew she had to protect not only her business but also the IKEA brand and image. Yet she viewed her responsibility as broader than this: She felt the company should do something that would make a difference in the lives of the children she had seen. It was a view that was not universally held within IKEA, where many were concerned that a very proactive stand could put the business at a significant cost disadvantage to its competitors.

A new crisis

Then, in the spring of 1995, a year after IKEA began to address this issue, a well-known German documentary maker notified the company that a film he had made was about to be broadcast on German television showing children working at looms at Rangan Exports, one of IKEA’s major suppliers. While refusing to let the company preview the video, the filmmaker produced still shots taken directly from the video. The producer then invited IKEA to send someone to take part in a live discussion during the airing of the program. Said Barner, “Compared to the Swedish program, which documented the use of child labor in Pakistan as a serious report about an important issue without targeting any single company, it was immediately clear that this German-produced program planned to take a confrontational and aggressive approach aimed directly at IKEA and one of its suppliers.”

Bartlett, C.A., Dessain, V. and Sjöman, (2006) ‘IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor’ Harvard Business School Case 906-414.

TMA Question: 1500 Words

The first issue for Marianne Barner was whether to recommend that IKEA participate in the German TV program or decline the invitation. Beyond the immediate public relations issue, she also had to decide how to deal with Rangan Exports’ apparent violation of the contractual commitment it had made not to use child labor.

This crisis raised the issue of whether the overall approach IKEA had been taking to the issue of child labor was appropriate. Should the company continue to try to deal with the issue through its own relationships with its suppliers? Should it step back and allow Rugmark to monitor the use of child labor on its behalf? Or should it recognize that the problem was too deeply embedded in the culture of these countries for it to have any real impact and simply withdraw?

As an HR consultant for IKEA, critically analyze the above series of question as to advice Barner on how to face this issue/mess/crisis? Support your answer with examples.

In the fall of 1994, after managing the initial response to the crisis, Barner and her direct manager traveled to India, Nepal, and Pakistan to learn more. Barner recalled the trip: “We felt the need to educate ourselves, so we met with our suppliers. But we also met with unions, politicians, activists, NGOs, U.N. organizations, and carpet export organizations. We even went out on unannounced carpet factory raids with local NGOs; we saw child labor, and we were thrown out of some places.”

On the trip, Barner also learned of the formation of the Rugmark Foundation, a recently initiated industry response to the child labor problem in the Indian carpet industry. Triggered by a consumer awareness program started by human rights organizations, consumer activists, and trade unions in Germany in the early 1990s, the Indo-German Export Promotion Council had joined up with key Indian carpet manufacturers and exporters and some Indian NGOs to develop a label certifying that the hand-knotted carpets to which it was attached were made without the use of child labor. To implement this idea, the Rugmark Foundation was organized to supervise the use of the label. It expected to begin exporting rugs carrying a unique identifying number in early 1995. As a major purchaser of Indian rugs, IKEA was invited to sign up with Rugmark as a way of dealing with the ongoing potential for child labor problems on products sourced from India.

On her return to Sweden, Barner again met frequently with the Swedish Save the Children’s expert on child labor. “The people there had a very forward-looking view on the issue and taught us a lot,” said Barner. “Above all, they emphasized the need to ensure you always do what is in the best interests of the child.” This was the principle set at the heart of the U.N. Convention on the Rights of the Child (1989), a document with which Barner was now quite familiar. (See Box 19.1 for Article 32 from the U.N. Convention on the Rights of the Child.)

Box 19.1 The U.N. Convention on the Rights of the Child: Article 32

1.        States Parties recognize the right of the child to be protected from economic exploitation and from performing any work that is likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral, or social development.
2.        States Parties shall take legislative, administrative, social, and educational measures to ensure the implementation of the present article. To this end, and having regard to the relevant provisions of other international instruments, States Parties shall in particular:

1.        Provide for a minimum age for admission to employment
2.        Provide for appropriate regulation of hours and conditions of employment
3.        Provide for appropriate or other sanctions to ensure the effective enforcement of the present article.

Source: Excerpt from “Convention on the Rights of the Child,” from the website of the Office of the United Nations High Commissioner for Human Rights, available at http://www.unhchr.ch/html/menu3/b/k2crc.htm, accessed October 2005.

The more Barner learned, the more complex the situation became. As a business area manager with full profit-and-loss responsibility for carpets, she knew she had to protect not only her business but also the IKEA brand and image. Yet she viewed her responsibility as broader than this: She felt the company should do something that would make a difference in the lives of the children she had seen. It was a view that was not universally held within IKEA, where many were concerned that a very proactive stand could put the business at a significant cost disadvantage to its competitors.

A new crisis

Then, in the spring of 1995, a year after IKEA began to address this issue, a well-known German documentary maker notified the company that a film he had made was about to be broadcast on German television showing children working at looms at Rangan Exports, one of IKEA’s major suppliers. While refusing to let the company preview the video, the filmmaker produced still shots taken directly from the video. The producer then invited IKEA to send someone to take part in a live discussion during the airing of the program. Said Barner, “Compared to the Swedish program, which documented the use of child labor in Pakistan as a serious report about an important issue without targeting any single company, it was immediately clear that this German-produced program planned to take a confrontational and aggressive approach aimed directly at IKEA and one of its suppliers.”

Bartlett, C.A., Dessain, V. and Sjöman, (2006) ‘IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor’ Harvard Business School Case 906-414.

Question: 1500 Words

The first issue for Marianne Barner was whether to recommend that IKEA participate in the German TV program or decline the invitation. Beyond the immediate public relations issue, she also had to decide how to deal with Rangan Exports’ apparent violation of the contractual commitment it had made not to use child labor.

This crisis raised the issue of whether the overall approach IKEA had been taking to the issue of child labor was appropriate. Should the company continue to try to deal with the issue through its own relationships with its suppliers? Should it step back and allow Rugmark to monitor the use of child labor on its behalf? Or should it recognize that the problem was too deeply embedded in the culture of these countries for it to have any real impact and simply withdraw?

As an HR consultant for IKEA, critically analyze the above series of question as to advice Barner on how to face this issue/mess/crisis? Support your answer with examples.

Answer 1

Yes, Barner should recommend IKEA to participate in the German TV program because

1) This will give a chance to IKEA to clarify that the company is against the use of child labor in anyways.

2) This will also give a chance to tell the world about the contract with the suppliers in order to prohibit child labor.

3) Participating in the program will also strengthen the Goodwill of IKEA.

Rangan exports violated the contract so Barner may go for following decisions:

1) IKEA may sue Rangan exports for the breach of the contract.

2) IKEA may warn Rangan exports not to use child labor in future.

3) IKEA may finish the dealing with Rangan exports to create Goodwill.

4) IKEA may ask Rangan exports to clarify in front of the world that there was no role of IKEA in using child labor.

5) Other suppliers may also be warned about the use of child labor.

IKEA approach to child labor is appropriate and correct because children have the right to study in this age.

Yes, company should try to deal with the issue with the other suppliers. Company may warn the other suppliers about the contract.

No, instead of taking a step back, company should support Rugmark in this good work, the fight against child labor. This will also increase company's Goodwill.

No, company should not withdraw by saying only that the child labor is in one country's culture or roots. Instead of saying this IKEA should create awareness about the child labor in those countries with Rugmark foundation. Company may also contribute some amount for the education of children in those countries. This will also strengthen the Goodwill of the company.

So, as an HR consultant for IKEA, I would suggest Barner to go for above discussed points to face the crisis because Goodwill is as important as business for the company.

If you like this answer kindly give good ratings and this will motivate me to answer well.