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IKEA & Child Labour

MGMT2102 Group Presentation

Candice Kim

on 27 September 2012

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Transcript of IKEA & Child Labour

Which textiles personality are
you? Are you wild for tribal? Or rather rural? Take our Facebook textiles personality quiz to find out!
Go to Facebook quiz Picking and
delivery service We'll collect the products on your shopping list from the self-serve and full-serve areas and arrange delivery to your home or business View more info Interest free
finance To realise your dream today we offer 6 months interest free for purchases over $300 to approved applicants. Terms and conditions apply. Apply online CSR represents societal expectations
of corporate behaviour; a behaviour
that is alleged by a stakeholder to
be expected by society or morally required and is therefore justifiably demanded of a business. Supplier Contract Clause – Ikea will terminate relationship with suppliers engaged in child labour practices
Contracted Third Party to monitor suppliers Teleology
Management decisions are acceptable as long as they achieve the desirable consequences Egoism
Self-interest is the primary determinant of a person’s behaviour Utilitarianism
Moral behaviour produces the greatest good for the greatest number of people “Create a better life for the many people” Corporate Social
Responsibility Ikea (Sweden) Indian supplier Utilitarianism
Negative value of Child labour Egoism
Positive value of Child labour Contracts
Child Labour Work undertaken by children aged under 15 or school leaving age that deprives them of their childhood, potential and their dignity. which can be harmful to physical and mental development. Learn how to sew! Visit your local IKEA store between the 17th and 28th of September for sewing workshops, exciting in-store activities and more. Find your nearest store for details Recommendations What did IKEA really do? Shirley Gao
Candice Kim
Catherine Lam
Willem Liebert

Reputational and brand image
- campaigns by NGO’s

Financial risk
- customer boycotts and reduced shareholder value

- losing and then changing supply networks, cost of retrain Individualism vs collectivism
Individualist cultures focus on themselves and immediate family, loose ties between individuals.
Collectivist cultures place loyalty in the group which overrides personal interests or gains. Uncertainty Avoidance Index
Measures a society’s tolerance for uncertainty and ambiguity.
Universalism vs. Particularism
The importance of rules and the breadth of situations and individuals they are applicable to. Universalism(Sweden) Particularism (India) Importance of laws

Laws are enforceable in every situation

Clear distinction between right and wrong

Contracts are binding Enforceability of rules and morals vary depending on situation and relationship of involved parties.

Contracts signify an agreement, but not always kept Dominance hierarchies vs Egalitarianism Dominance hierarchies exist where people at lower levels of the hierarchy are perceived as having less value and are stigmatized. Egalitarians view all people as having similar value, even when that may not be entirely true for the society IKEA (Individualist) India Suppliers(Collectivist) Emphasis on success or personal achievement, employees expected to defend interests

E.g. Profit loss responsibility Children grow up in groups and are protected by them in exchange for loyalty

E.g. Working considered normal phase of child’s development. IKEA
(Egalitarians) India Suppliers
(Dominant Hierarchy) Equality is aspired to and recognized as the ultimate goal for society.

E.g. Ideal that child labour should not exist. Low-self esteem leads to acceptance of situation

E.g. Bonded labour- Children were bonded/placed in servitude, in order to pay off parent’s debts 1,000 to 10,000 rupees. “Globally, 218 million children are child labourers”
– International Labor Organization- “Almost 55% of the children of the world are working
under trying and torturous circumstances”
– UNICEF- “Some children are forced to work up to 18 hours a day,
often never leaving the confines of the factory or loom shed.
- UNICEF - "Every year, 22,000 children die in work-related accidents"
- International Labor Organization-
12% Indian children (5-14yrs)

30% world child labour = Indian

Illegal in India since 1933 Agenda 1. IKEA company background
2. Case Intro
3. Child Labour
4. Corporate Social Responsibility
5. Contracts
6. Recommendations
7. What IKEA really did Ingvar Kamprad Relationship with suppliers:
No manufacturing on own
Long-term & mutual dependency
Supplier development Management Process
Low Power Distance
Low Uncertainty Avoidance
Cost-conscious Case Overview Environmental Issue Early 1980s - Danish regulations limiting formaldehyde emissions in building products. Billy bookcase - poisonous glue Established forestry policy Recalled all bookshelves
= big loss Social Issue 1995 - German documentary maker contacts IKEA
About to broadcast film about Child Labour
Rangan Exports - major Indian carpet supplier for IKEA
Invites IKEA representative to join live discussion during broadcast 1994 - IKEA first contact with Child Labour
Pakistan weaved carpet supplier
Adds clause in contracts, banning all child labour INDIA RISK FOR FIRMS Anna said: In the short term... IKEA consents to participate in the broadcast. IKEA explains complexity of the issue and how our corporate vision aligns with our actions to combat child labour. IKEA’s decision to terminate relations with Rangan Exports. Later discovers that allegations posed by program were false. Revives affiliation with Rangan Exports through judicial and reinstatement process with German broadcast Anna said: In the long term... Upgraded auditing and compliance process Work with organizations (UNICEF & Save the Children) IWAY, Code of Conduct Be proactive, not reactive Indian Government and ILO
Profits vs. Ethics Western perception vs. Caste system Policy and procedure Complete due diligence prior to market entry Training suppliers and company personnel on child rights Social auditing and monitoring
Sector-wide, multi-stakeholder partnerships
Supporting children removed from the workplace Interviewing former child labourers IKEA Foundation
Full transcript