Analizes of a case Study Example | Topics and Well Written Essays - 1250 words

Analizes of a - Case Study Example The company always used outside the box thinking in its business strategies such as buying idle production time from manufacturers in other industries. One of the reasons for the success of the firm in the furniture business was its introduction of self-assembled furniture. This concept help the firm reduce its prices because it eliminated two of the highest cost drivers in the industry which are assembly and delivery. The company’s managerial philosophy is to have an open system in which nobody is superior to others. Input from the employees is always welcomed at IKEA. The management process stressed simplicity and attention to detail. Being cost conscious was also a part of the business culture of the firm. IKEA penetrated the United States marketplace in 1985. In the 1990’s the company was exposed to bad media when a revelation was made to the public that IKEA was dealing with suppliers in Asia that used child labor. Stakeholders Ingvar Kamprad – Founder of th e firm. His values and beliefs are embedded in IKEA’s culture. Using child labor goes against everything he stands for. He does not want to hurt the reputation of the company through a child labor scandal. Marianne Barner – IKEA business area manager for carpets division. She is responsible for finding a solution to the problem. Shareholders – The shareholders of the firm are worried about the problem of child labor because its occurrence will hurt the image and reputation of the company which will negatively impact the price of the common stocks of the company. Asian children – The children population in Asia are at risk due to employment exploitation by IKEA suppliers. The children are the biggest victims in this scandal. Issues By the mid 1990’s the company had grown tremendously. IKEA had 98 stores across 17 countries worldwide. Its supply chain had become extremely complex since the firm had almost 2,300 suppliers. It had become extremely diff icult to monitor the actions of its suppliers. To make things worse those 2,300 suppliers were scattered across 70 countries. The firm was sourcing around 11,200 products. During the 1980’s environmental problems occurred with some of the products IKEA sold. In the 1990’s a new and extremely serious issue occurred as the company was accused of doing business with suppliers that used child labor. Child labor is a growing problem in our society with over 250 million children working in the labor market (Humanium, 2010). IKEA in the 1980’s faced new regulations from the Denmark government that redefine the limits of formaldehyde emissions permissible in product building. At concentration above 0.1 mg/kg in air this material caused watery eyes, headaches, burning sensation in throat, and difficult breathing. The company was fined by the government of Denmark and it was heavily criticized by the media. IKEA sales in the aftermath of this scandal drop by 20% in Denmar k. The company reacted quickly to the problem by establishing stringent requirement regarding formaldehyde levels. At first the problem was not simply to attend since suppliers bought from sub-suppliers that were exposed to formaldehyde. The firm resolved the problem by dealing directly with glue producing chemical companies. A decade later the firm was once again facing issues with formaldehyde in Germany. Its best selling bookcase series had high levels of