Ikea Case

Swedish furniture retailer which sells affordable, good-quality furniture to mass-market consumers

Procurement policy: Establish long-term relationship with suppliers

2,300 suplliers in 70 countries

Marianne Barner: Business area manager for carpets

Rangan exports: Indian carpet suppliers; Recently signed contract forbidding the use of child labor

The Vision: To create a better life for the majority of people which is the basis of its strategic orientation

The Mission: To offer a wide range of home furnishing items of good design and function at precis so low that the majority of people can afford to buy them.

Values: Daring to be different, togetherness and enthusiasm, cons consciousness, constand desire for renewal, accept and delegate responsibility

1980: Formaldehyde scandal in Denmark

1992: Formaldehyde scandal in Germany

1994: Child labor scandal in Pakistan. Rugmark contract

1995: Child labor scandal reported by German TV channel at Rangan exports

* Invitation for live discussion

* Contract termination

Number of stores increased 6 times in 10 years

1954 – 0, 1964 – 2, 1974 – 9, 1984 – 52, 1994 -114

Need more supply: In the mid-1990s: 2300 suppliers in 70 countries, sourcing a range of around 11200 products.

Commercial issues: 24 trading service offices in 19 countries, monitored production, tested new product ideas, negotiated prices and checked quality

1st Environmental issue

* Danish regulation in the early 1980s

* Formaldehyde emissions from the chemical compound

* IKEA sales dropped 20% in Denmark.

1st action: Ikea to Suppliers of plywood and particleboard to subsuppliers of glue companys

Alternative action: IKEA to subsuppliers directly

2nd environmental issue

* German media investigated the formaldehyde problem

* The lacquer of the bookshelves

1st action: Immediately stopped the production and sales of Billy bookcases worldwide, estimated lost: 6-7 million dollar

Alternative action:...