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IKEA was selling rugs produced in India. The company had to confront a social issue of being accused of working with suppliers in the developing world who engaged in exploitative child labor practices and other unethical behavior. To deal with the issue of violation of children’s rights in India, the organization appointed Barner as an Ombudsman (Christopher, Vincent, & Anders, 2006). The woman’s new position provided her with valuable insights into the root causes of malignant practices.
Barner discovered that one of the key reasons for hiring children was the wayward Indian culture that prevented girls from attending educational institutions. Another cause of the problem was a striking rate of poverty in the country. Firms benefiting from the labor of children who wanted to help their ailing parents also contributed to the issue.
IKEA decided to directly confront the issue and address the root causes of exploitative labor practices. To this end, the company changed its contract terms to dissuade suppliers from relying on child labor (Christopher et al., 2006). The program was successful in reducing the use of child labor in India: the contracts with unconscientious suppliers were terminated. The number of suppliers who did not have a child-labor component in the production of their rugs was high enough for the company to continue its cooperation with the country.
A major ethical issue for IKEA is to proceed with its policy of terminating relationships with companies that do not follow the international minimum age standard. Other ethical conventions that have to be maintained by the suppliers include preventing overstaffing, following wage regulation laws, engaging in the safe handling of chemicals, and other safety measures. The company’s suppliers also should explain to their underage workers that they have broken fair labor laws. IKEA should be mindful of the challenges associated with not adhering to ethical policies. The companies that are not responsible for manufacturing their products have to struggle with the consequences of negative publicity and endure enormous financial losses.
Christopher A. B., Vincent D., & Anders S. (2006). IKEA Global Sourcing Challenge: Indian Rugs and Child Labor (B). Brighton, MA: Harvard School of Business.