Aca And The Union Bank Acquisition Harvard Case Solution

Home >> Finance >> Aca And The Union Bank Acquisition

Aca And The Union Bank Acquisition Case Study Solution and Analysis


Aca And The Union Bank Acquisition Case Study Solution is a worldwide company in Sweden. It is primarily a house furnishing business founded by Ingvar Kamprad in 1943. He named the company at the age of 17 when he started his first mail-order business. It was named as IKEA by a combination of terms connecting to his individual life from his personalizes to his family farm i.e. Ignvar Kamprad Elmtaryd Agunnaryd. He started his vision to make true by offering his some goods acquired by a cheap source for the regional retailers by newsletter ad. In 1948, by the extra advertisement in the newsletter about the furnishings has matched the criteria with its rivals. It has resulted in renounce the goods sale and start with furniture. For the client satisfaction and decrease the rate of returns, he deliberately opened a store in an Almhult named municipality near his home town. Later on, the little newsletter advertisement changed into a brochure.

Since 1950 to late 1990s, it has made remarkable development in both the profits as well as in expanding of the business. At first, it had one shop while in the late 1990s it has more than 100 shops residing in several nations( see Display 1). The business was growing so well in competition with leading competitors in the market. The rivals due to declined sale threatened the suppliers of IKEA to not take orders at low rates. In 1961, IKEA contracted with a number of the factories producing furnishings and thus it once again came up with low costs. On the other hand, Aca And The Union Bank Acquisition Case Study divided its shop in a number of departments like low-cost rate lunchroom, children play-area, as well as a Sweden Look for the foods making it a popular exporter of food. Over a duration of time, the item variety was broadened varying from carpets, floor coverings, lamps to numerous item line needed in providing house.

The motive of the business was to sale quality items with reasonable prices with variation in items worldwide based upon a vision to create a much better lifestyle for practically everyone. Every year, the company celebrates an anti-bureaucrat week to develop better contact in between the suppliers and clients. Kamprad believed on the truth that it is only possible to make no error while you sleep. The concept of preparing for the future was extremely encouraged. In 1986, Kamprad was changed by his Individual assistant who was an experienced person of the business.
Executive 0Summary
In the mid duration of 1990s, IKEA has a broad working connecting with about 70 countries tracking down its products about 11,200. It dealt with almost a larger variety of suppliers around 2300 internationally (see Exhibition 2). When there were eco-friendly problems occurring about IKEA's items simultaneously the issuance on the child labor emerged. This has actually led the company to deal with the difficult scenario in the upkeep of their relation with providers. Due to this reason, IKEA's appeal decreased dropping the 20% of its sale in Denmark. .

Key Players.

There are two crucial gamers in this case one is IKEA Business and other is its suppliers. IKEA's strategy is to outsource its item manufacturing to providers. These suppliers are generally 3rd party and based throughout the world.


The method of outsourcing has some issues like rules and regulations of these countries. In some cases suppliers from these underdeveloped nations does not follow required standards as compare to developed nations. These weak guidelines and guidelines can result in weak environment policies or kid labour. There is negative impact of these concerns on earnings of the business and also track record of the business. Due to the fact that the majority of the company's clients are based in industrialized countries. These consumers have high expectations from Aca And The Union Bank Acquisition Case Study Analysis in terms of excellent quality items with low cost. (Marianne Baxter, 2012) These customers have also high expectations from IKEA in aspect of social duty. They wanted IKEA to be socially responsible and desired that it did not have any connection with child labour or any other environment issue. As IKEA got its supply of carpets mostly for under developed countries like India, Pakistan, Nepal. These under industrialized nations have unchecked kid labour. This is primary problem that IKEA is dealing with recently. The business is not controlling its suppliers efficiently. Also underdeveloped nations permit kid labour due to the fact that of hardship. So company can not depend upon city government for resolving this problem. IKEA methods likewise did not work well enough to address this issue (see Exhibit 3).

Approaching Problem of Kid Labour.

IKEA method is to maintain high level of social obligation due to the fact that it is one of the considerable catalyst in success of business. IKEA is concerned on kid labour issue and other environmental problems to support this strategy.( Naidu & Ramaiah, 2006) Additionally, Aca And The Union Bank Acquisition Case Study Solution was also motivated by Swedish Save the Kid company to act "in the best interest of child".

Action to German manufacturers on Video Program:
Porter's 5 Forces Analysis
In reaction to the invitation of German manufacturers for IKEA, the invite needs to require to be accepted. The first primary thing to consider is that the documentary is made by a German company. However, it is not mandatory to accept the invite and be part of the live discussion however it is of essential value. As it offers Barner to have live conversation during on-air programs. It generates a likelihood to offer better explanation of their concerns about their relationship with India. Particularly, Barner can possibly demonstrate her thought of mind with a clear validation letting people understand that for her it is more important to be more concerned about the IKEA reputation as she is only accountable for this. It is necessary to remove the criteria of child labour but this can potentially not done by stopping business links with their partner companies which involve the pattern of child labour. This perception of Barner may assist her in maintaining IKEA clear reflection and may also cause stronger relationship of the business. It likewise supplies IKEA to aware the German manufacturers to eliminate versus the kid labour.

As the German Producers had only used IKEA to see some of the shots from their documentary. They must be asked for to let them see the entire film instead of some shots which reveals definitely an uncertain picture of the truth. This may be the method of German producers to prove themselves right versus the allegation however leaving IKEA behind filled with doubts about their relationship with the companies of India on the issue of kid labour.

On the contrary, the IKEA has actually been positively depicted about the problem of Kid labour when the issue was initially installed by the Swedish Television. There are a set of information on kid labour by IKEA which was significantly collected by ILO and UNICEF. This details really demonstrates the very same perspective as like that of the documentary makers. This will let the manufacturers to astonish about the bothersome problem by clear representation of kid assistance throughout their labour at the production markets.

As the German manufacturers declined to reveal their documentary to IKEA before it is telecasted merely suggests there wicked intention of point the finger at someone and their relationships with IKEA perhaps. There might a strong contradiction that the IKEA is fearlessly engaged with an organization which uses child as their labour and continue their relations to earn revenues with the providers while being conscious of the fact.

Barner has a strong point of validation which is their philosophical declaration i.e. everybody makes mistakes but one takes its duty. The duty of the errors taken by anyone is thought about as the very best source of pride.Despite of the fact that Aca And The Union Bank Acquisition Case Study Solution was not conscious about the growing concern over the child labour in addition to the involving kid's as labours by the industries, the providers of the IKEA. Throughout the approval of agreement, IKEA began investigation against its provider industries all over the world. If shown in the documentary by German producers, the management of IKEA is not scared of accepting its mistakes. It will accept its error and take step to put it right once again.

Barner can likewise come up with another justification on the inefficient responsibility over social concerns. It is intending to be involved with the social issues but has not taken such procedures. In the field of marketing, IKEA is on leading with exceptional concepts along with its distinctive items.
Swot Analysis
The issues of the IKEA is towards leading long term relationships with its network of circulation worldwide. IKEA is not recently associated with any of the social activities about the rights and concerns of each individual working in the markets and making them a handsome earnings. In future, IKEA will prepare to be part of responsibility over the social concerns.

It can be concluded that as per the concern for the company's credibility and share of share ought to accept the invitation and present it legitimate ideas just in case if everything in documentary is versus the Aca And The Union Bank Acquisition Case Study Solution. Particularly, IKEA had actually started a Structure based on the principle of protecting rights of child labour and to supply them with totally free environment to inform themselves. (Barlet, 2006).

Actions on Supply contract with Rangan Exports:.

Under the IKEA concerns about the most tactical and reasonable strategy in referral to the kid labour problem ought to supply Rangan Exports with another chance to assist them in conquering this predicament.

IKEA needs to take some procedures in order to figure out of the truth. , if the evidence versus the Rangan export is true hence leading it in the failure on the ethical level which were outlaid by IKEA.. This plainly suggests that on IKEA, the supplier market resulting in conflict on the child labour issue.

Subsequently, IKEA deals with a vision of producing much better lifestyle for every single person which is a strong representation for the enterprises to represent the rights of employees of Rangan Exports. The concept of child labour does not include a single business as a vast network of companies are accountable in putting it ahead. This is among the most important issue of social issues and it would be injustice to blame a single one.

Barner can consider 2 alternatives to resolve this problem. In the beginning, either termination of the agreement with the Rangan Expors on the basis of involving kid labour to work after the examinations to be sure about the fact. If the management of IKEA not decides for the agreement termination, this brings a danger of losing brand name position and reputation. This might lead to the monetary decrease state of IKEA by reduced ratio of sale, less appeal of the brand and the issues over social obligations. If any nation to consist of child labour, as it is undoubtedly not supported by the inhabitants. This replacement is legal and reputable with the policy of IKEA. The primary disadvantage of this alternative is the IKEA deprivation with a rewarding association and may result in the ending relations with the sources of rug by India.

This will help in maintenance of the healthy association in between the supplier and the IKEA. This makes obvious for the all providers that IKEA is strictly versus the child labour and truly condemn it. This may have a bad impact on the market track record of IKEA by the generation of incorrect promotion.

As it is for the second time that IKEA became a victim of child labour which has actually greatly damaged its track record. For this purpose, Barner ought to pursue the assistance by ILO and UNICEF as well as NGOs which may assist Rangan in escaping the need to utilized child labour for the rugs production. It may select to spread out awareness amongst the residents internationally about the social concerns and how one's life is influenced by in regards to social, and ethical values.

IKEA by the adoption of first alternative, ends its relationship with thesupplier infraction. If results in the failure then portray a bad effect on all suppliers by the increased power of bargaining and the violation of the policy of IKEA. The press ought to be called upon for the announcement of their choice with its factor with the summarization of the policy of IKEA on the use labour of kid.

In amount, the company can preserve its reputation in the market and in some way can bear the loss developed by one supplier. With the stable credibility in the market, Aca And The Union Bank Acquisition Case Study Solution will definitely cover its monetary crisis within a brief period of time.
Vrio Analysis
Method Relating to IKEA's Operations in India

Aca And The Union Bank Acquisition Case Study Help technique is generally focus on long term relationship with its providers rather than brief term. The same strategy that was utilized by IKEA in Poland might be obtained. IKEA also requires to make sure that they include public through its marketing actions which ought to be useful in understanding IKEA's intents.

Their intentions ought to likewise be justifying company's policy. Their actions ought to likewise be according to Kamprad's view i.e. "develop a better everyday life for many individuals". They believe that they can achieve this goal by offering highest items with low cost. However at earlier time Aca And The Union Bank Acquisition Case Study Help had no focus on social and ecological issues which also consists of child labor they utilized to focus on only one technique i.e. supplying affordable and quality items to consumers. As time passed they needed to include other values too to their focus. That improved focus could help IKEA in enhancing its track record towards its consumers. The brand-new focus consisted of the viewpoint "in the best interest of the kid". So for that function it requires to be ensure that engagements in India would be fulfilling the necessary function too i.e. they did not engage any activity that includes kid labor. Majority of population in India is listed below poverty line so there is culture of kid labor and likewise kid loan. Moms and dads utilized to allow their children to operate in settlement with loan. Ceasing operations from India would not guarantee solution to child labor but also unfavorable credibility would be built that IKEA is not taking any trusted action to fix basic issue i.e. child labor.

There would be likewise one other negative impact i.e. argument from public. As there prevails view point that big companies are constantly self-centered and are interested in just generating profit and consumers would be thinking that IKEA is one of them. Public has typical view that these companies should be socially responsible to society as like they are required to be responsible to its shareholders. Then it would result in loss of sales and IKEA's value too, if IKEA did not take any possible action to solve problem of kid labor. For a company like IKEA track record loss is substantial loss since value of company also based upon it and also there would be decrease in revenues and goodwill if there is any track record loss.

If IKEA consider just sales figure then getting out from Indian market is preferable. Due to the fact that sales from Indian market only contributes little part to IKEA's incomes.

Aca And The Union Bank Acquisition Case Study Solution needed to make sure that kid labor is not utilized for their items. For that function IKEA needs a system that can monitor entire procedure. That system must quickly find whenever child labor is used in any activity. Suppliers must be motivated to supply education to kids so kids can discover something. For that function, providers would be having monetary issues. As provider has absence of funds to offer education to kids, so Aca And The Union Bank Acquisition Case Study Help needs to assist supplier economically and offer them financial aids and ask to balance out by future shipments.

There could be one other service for this issue that Aca And The Union Bank Acquisition Case Study Analysis might install its own manufacturing business combined with school. All financial requirements of that school could be fulfilled by profits from that manufacturing company. IKEA needs to run this school by itself and its auditing task need to be provided to any other institute like Rugman to ensure it is working properly for benefit of children. (Usman, 2010).

Aca And The Union Bank Acquisition Case Study Analysis Must Register to Rugmark.

As IKEA has no experience relating to kid labor so new personnel would be needed for this function. It must sign up to Rugmart becausethey are experienced in this field of kid labor and ask Rugmort to establish and keep an eye on procedure suggested by IKEA.

Solving Root Cause of Child Labor.

IKEA requires to resolve origin of child labor in order to support its long term vision. For that function kid welfare and education requires to be promoted. There need to be collaboration with suppliers and motivate suppliers to carry out programs for child well-being and education. As providers had absence of resources so they ought to be supplied financial assistance and asked then to offset by future orders. This is long term strategy not short-term solution. (Martin, 2013) So it could not be performed by IKEA alone. Aca And The Union Bank Acquisition Case Study Solution beginning executing its technique in multi ways. There was partnership in between UNICEF and IKEA. The function of this collaboration was to provide education to all children who are operating in carpet producing cluster. For instance some alternative learning centres were established for those children who were not allowed to get education from public schools. Neighborhood well-being was also promoted through this program. In addition to this collaboration they likewise partnered with their providers in order to create service for problem of kid labor. There was program established with provider. The substantial quality of program was audit of providers on regular basis. If there was any kid labor discovered during audit, corrective action strategy would be needed. In restorative action strategy kid labor is needed to be removed and supplier is needed to make up for well-being and education of that kid. There would be proper follow up from IKEA to make sure that in genuine required corrective action strategy is linked. Nevertheless if it is found that provider did not take any corrective action strategy then IKEA would broke agreement with that provider and there would be no trade with that particular provider in future.

Assessment of Aca And The Union Bank Acquisition Case Help Technique.

Aca And The Union Bank Acquisition Case Study Analysis has commitment to its consumers to offer high quality products with low prices. Their method would make full usage of engaging suppliers and interact to solve issue of child labor. According to my individual perception as from shareholders point of view, company is not utilizing its resources effectively through this strategy. They would be having hard choice in future from choosing that whether to increase roi for investors or continue participation with social responsibilities of Indian and UNICEF. Shareholders would be having negative picture of IKEA because of less return of investment if is greatly invests for social well-being. If IKEA stayed in Indian market then it would lead to greater costs for consumers. Conflicts of interest for society and management would be fixed. A client would not feel comfy when he came to know that he buy a carpet which was woven by child but is now getting informed by provider of IKEA. But he would be feeling more comfortable when he came to know that he buy a carpet on slightly greater cost which was not woven through child labor.

The main problem that IKEA is facing presently is child labor since a German documentary maker makes documentary of a supplier of IKEA that was using child labor for production of goods. It was likewise concluded that Aca And The Union Bank Acquisition Case Study Analysis ought to sign up Rugmart because IKEA has no any understanding relating to child labor and Rugmart is expert having understanding regarding concerns of kid labor. As IKEA has no experience regarding kid labor so brand-new personnel would be required for this function.