Sweden ,

21/07/1994
IKEA : Introduction
• World’s largest furniture retailer
• Founded as a Swedish mail-order company
• Entered furniture business in 1948
• Catalogues and Self-assembled furniture
• Concept of Knock-down furniture
• Outsourced all its supplies out of Sweden
• Spread operations in and out of Scandinavia
• Entered Germany, its largest market in 1974
IKEA : Values
• Vision “Creating a better life for many people”
• Competitive strategy: Cost Leadership
• Long-term relationship with suppliers
• “We buy unused production capacity”
• The IKEA Spirit
• Open culture: Anti Bureaucratic Week
• Waste of resources is a sin at IKEA
• Testament of a Furniture Dealer
The news flash

BREAKING NEWS: IKEA’s suppliers employ children for

their carpets
Environmental And Social Issues
• Danish authorities issued emission standards
• Publicity resulted in 20% drop in Danish sales
Formaldehyde
• IKEA worked with the glue-producing company to
Issue reduce the formaldehyde emissions
• It cost IKEA $6-7 million

• IKEA already have association with Green Peace and

WWF in the wake of the Formaldehyde issue
• IKEA plans to get in touch with UNO and adhere to the
UNCRC
Child labour
• IKEA plans to send a legal team to ILO to learn about
the intricacies of this problem
 INDIA ,
23/05/1995
Stakeholders: Suppliers
• IKEA employed third-party supervision, and
random audits of suppliers were conducted
• Despite a “NO CHILD LABOUR” policy, fresh
incidents were reported
• IKEA didn’t abandon its suppliers because
they realized the problem is systemic
• IKEA however refused to issue rugmarks in
the absence of stringent monitoring
• IKEA decided to plunge deeper, and
confront the issue head-on
 INDIA ,
12/09/1988
Stakeholders: NGOs
• IKEA contacted Save the Children, UNICEF
and ILO to expand their grasp of the issue
• Govt. belittled the issue as “a socio-economic
phenomenon arising out of poverty and lack
of development”
• NGOs got together to develop the rugmark
• Some well-intentioned activities led to
adverse results (1998 Football World Cup)
• IKEA’s retail countries sent two
representatives on a 10-day educational tour
with NGOs, suppliers etc.
Stakeholders: NGOs
• 20 mn. child labourers in India according to
Govt. sources – unofficially quoted as 50 mn.
• 5% of these children are employed in the
carpet industry
• Poverty and insolvency of parents the primary
causes for child labour – vicious circle
• Child Labour Act applies to certain defined
“hazardous industries”
• Encouragement to children in craft industry
• Poorly enforced laws leads to widespread
child labour – including bonded labour
 INDIA ,
08/03/2004
Stakeholders: UNICEF
• Partnered with UNICEF with the promise to
expand efforts to ensure schooling to children
• UNICEF invited IKEA to participate in their
efforts – it brings a credibility and clout of a
major carpet-buyer in the region
• Initial commitment to fund a 3-year CDP
involving 200 villages and 400000 in UP
• ALCs acting as bridge schools trained in
UNICEF’s “joyful learning technique”
• Impact: 24000 children attending schools or
103 ALCs, 6000 women joined 429 SHGs
 Sweden ,
13/06/2005
IKEA’s initiatives and their impacts
• IKEA refused to adopt the practice of
Rugmark which raised a few eyebrows
• IKEA realized the issue is embedded deep
into the Indian society and the measures
should be commensurate
• Revised contract with the suppliers and
adopted a “NO CHILD LABOUR” policy
• Joined hands with oganizations fighting for
the eradication of child labour
IKEA’s commitments:Job 9 & IWAY
• 10/10 Document enshrining “10 jobs in 10 years”
• Job 9 : “to take responsibility for our suppliers, their co-
workers and for the environment
• It paved the way for IKEA Way (or IWAY) on puchasing
Job 9 products in 2000

• Defines what IKEA expects of suppliers, and vice versa

• Imposes strict regulations against the use of forced or
bonded labour, child labour, wood fro natural forests etc.
• Makes provisions for safe and healthy working
IKEA WAY on environment in the suppliers’ units
purchasing
products
• Creation of a socially and environmentally responsible
brand entity
IKEA: Impact on child labour