IKEA

IKEA must stay in India while contributing to resolving the root of the Indian child labor problem. By being socially and ethically responsible, IKEA’s status will remain intact and maintain loyal customers and impressed by the moral code and conduct of the company.

If IKEA decides to start a zero-tolerance policy with rug suppliers and immediately cancels all contracts once child labor is discovered, the consumers might support IKEAs decision. However, since IKEA will have to find a new supplier this will create the short-term shortage of rugs. This is also not a best possible solution of this problem. It is not easy to control the child labor for IKEA in a culture where it is deeply rooted. IKEA must solve this burning issue of child labor used by its suppliers in India. Therefore it will be in IKEA’s interest to find a way that is ethically correct as well as being a benefit to the company and its shareholders. Moreover, IKEA could invest in their employees by providing scholarships to employees’ children, or creating other incentives to educate the children. IKEA could also create classes or a school for children, which finances itself through rug production. In this way, the families are able to earn money and get their children educated. In the short term this may cost IKEA, however in-house labor and investing in their employees, as well as maintaining a good image will pay off long-term. For this IKEA may want to consider employing in-house auditors, or employ experienced auditors who are informed and knowledgeable about child labor and the suppliers’ country. IKEA may also opt to include local NGOs in the audit process. IKEA should continuously work with the help of NGOs to gain their advice and try to find solutions to the problem of child labor. By maintaining a relationship with these organizations IKEA will show its commitment to the cause as well continue to gain valuable information about the situation. They also hired a third party agent to monitor child labor practices in India and to conduct random audits to ensure there were no children working.

In summation;

I believe that the best way for IKEA to take in this situation is to go with suppliers and do what is socially and economically best for both IKEA and those involved.