Aztek Chocolate Studio Accounting System Software Harvard Case Analysis

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Aztek Chocolate Studio Accounting System Software Case Study Solution & Analysis


Aztek Chocolate Studio Accounting System Software Case Study Solution is a worldwide business in Sweden. It is primarily a house furnishing company established by Ingvar Kamprad in 1943. When he initiated his first mail-order business, he called the business at the age of 17. It was named as IKEA by a mix of terms associating with his personal life from his personalizes to his household farm i.e. Ignvar Kamprad Elmtaryd Agunnaryd. He began his vision to make real by offering his some products procured by a cheap source for the regional retailers by newsletter ad. In 1948, by the additional advertisement in the newsletter about the furniture has actually matched the criteria with its competitors. It has caused renounce the items sale and start with furnishings. For the client complete satisfaction and reduce the rate of returns, he intentionally opened a store in an Almhult called township near his home town. In the future, the little newsletter ad transformed into a catalogue.

Given that 1950 to late 1990s, it has made incredible development in both the profits along with in expanding of the business. It had one store while in the late 1990s it has more than 100 stores residing in numerous countries( see Exhibition 1). The business was growing so well in competitors with leading rivals in the market. The competitors due to decreased sale threatened the suppliers of IKEA to not take orders at low rates. In 1961, IKEA contracted with a number of the factories manufacturing furniture and hence it again came up with low expenses. On the other hand, Aztek Chocolate Studio Accounting System Software Case Study divided its store in a variety of departments like cheap cost cafeteria, kids play-area, along with a Sweden Look for the cuisines making it a popular exporter of food. Nevertheless, over a time period, the item variety was expanded ranging from carpets, floorings, lamps to various line of product required in furnishing home.

The intention of the business was to sale quality items with affordable prices with variation in items worldwide based upon a vision to develop a much better way of life for practically everybody. Every year, the company celebrates an anti-bureaucrat week to develop much better contact between the suppliers and customers. Kamprad thought on the reality that it is just possible to make no error while you sleep. The concept of planning for the future was extremely encouraged. In 1986, Kamprad was replaced by his Individual assistant who was a knowledgeable person of the business.
Executive 0Summary
In the mid duration of 1990s, IKEA has a broad working networking with about 70 nations locating its items about 11,200. It worked with practically a larger number of suppliers around 2300 globally (see Exhibit 2). When there were eco-friendly problems developing about IKEA's items at the same time the issuance on the kid labor emerged. This has actually led the company to deal with the difficult circumstance in the upkeep of their relation with suppliers. Due to this reason, IKEA's appeal decreased dropping the 20% of its sale in Denmark. .

Key Gamers.

There are two essential players in this case one is IKEA Business and other is its providers. IKEA's method is to outsource its product producing to providers. These providers are usually 3rd party and based throughout the world.


The strategy of outsourcing has some concerns like guidelines and policies of these countries. Sometimes providers from these underdeveloped countries does not follow needed requirements as compare to developed countries. These weak guidelines and policies can result in weak environment policies or child labour. There is unfavorable effect of these issues on profits of the business and likewise track record of the business. Since most of the company's consumers are based in developed nations. These customers have high expectations from Aztek Chocolate Studio Accounting System Software Case Study Analysis in terms of good quality products with low cost. (Marianne Baxter, 2012) These customers have likewise high expectations from IKEA in element of social responsibility. They desired IKEA to be socially accountable and desired that it did not have any connection with kid labour or any other environment issue. As IKEA got its supply of carpets mainly for under industrialized countries like India, Pakistan, Nepal. These under developed countries have uncontrolled kid labour. So this is main issue that IKEA is facing recently. The company is not controlling its suppliers effectively. Underdeveloped nations permit kid labour since of hardship. So business can not depend on city government for fixing this problem. IKEA methods likewise did not work well adequate to resolve this concern (see Exhibit 3).

Approaching Concern of Child Labour.

Because it is one of the considerable catalyst in success of business, IKEA method is to preserve high level of social duty. Aztek Chocolate Studio Accounting System Software Case Study Analysis is worried on kid labour problem and other environmental problems to support this technique. There was aspect of social duty which was engrained in the culture of IKEA's creator Ingvar Kamprad (Exhibition 2). Individuals from India had conflicting views regarding kid labour and social obligation. According to Indian individuals kid labour is not bad if it is permitted by moms and dads or if children are working under guidance of their parents. There prevails practice of kid operate in India and government is also relaxed over this matter if it is unbounded kid labour or if their parents are agreed and enabled their kids to work. Kids are likewise permitted to work in craft industries to ensure that abilities from earlier generation are not lost.( Naidu & Ramaiah, 2006) Furthermore, IKEA was likewise motivated by Swedish Save the Children company to act "in the very best interest of child".( Odenbring, 2018) According to this they would be doing just that work which is in the very best interest of kids. They would not be involved in any deal in which child labour is used or there is any possibility of environment concern. Since they are dependent of child labour, many of the households would be doing not have crucial source of earnings. Their basic expenses like food, clothing are satisfied through their working of child.( Duflo, 2006) Likewise laws are not strict adequate to attend to concerns of environment or social concerns like kid labour so business need to fret whether it is appropriate to perform company in India or not. They required to ensure that their organisation does not engage in any activity which is against social responsibility. The decision needs to be taken by likewise incorporating approach of social obligation from the point of view of customer not from viewpoint of providers. Customers ought to not be having doubt their company is participated in any undesirable activity. If standards regarding social duty from customer point of view are not followed, there could be negative outcome. There was case occurred in 1980's. IKEA had failed to fulfill required requirements on formaldehyde for a few of its items. In that case IKEA had actually lost its incomes by 20% in Denmark. Since business's track record in the eyes of customers had declined. In 1992 there was also loss of around $6 to $7 million. Due to the fact that it was not according to needed level of formaldehyde, this loss was resulted from discontinuation of a popular bookcase series. This also harm company's track record significantly.

Action to German manufacturers on Video Program:
Porter's 5 Forces Analysis
In response to the invite of German producers for IKEA, the invite needs to need to be accepted. The very first primary thing to consider is that the documentary is made by a German business. Nevertheless, it is not mandatory to accept the invite and be part of the live conversation but it is of important significance. As it provides Barner to have live discussion during on-air programs. It generates a probability to provide better description of their issues about their relationship with India. Specifically, Barner can potentially demonstrate her idea of mind with a clear validation letting people understand that for her it is more important to be more worried about the IKEA credibility as she is only responsible for this. It is important to eradicate the requirements of child labour however this can possibly refrained from doing by stopping organisation relate to their partner companies which include the trend of kid labour. This understanding of Barner may help her in preserving IKEA clear reflection and might likewise cause stronger relationship of the companies. It also supplies IKEA to aware the German producers to fight versus the kid labour.

As the German Manufacturers had actually only provided IKEA to view a few of the shots from their documentary. They ought to be requested to let them view the entire film instead of some shots which reveals certainly an unclear picture of the truth. This might be the strategy of German manufacturers to prove themselves right versus the accusation but leaving IKEA behind full of doubts about their relationship with the companies of India on the problem of child labour.

On the contrary, the IKEA has actually been favorably portrayed about the concern of Child labour when the issue was at first put up by the Swedish Television. There are a set of information on kid labour by IKEA which was significantly collected by ILO and UNICEF.

As the German manufacturers refused to show their documentary to IKEA prior to it is telecasted merely suggests there evil intention of point the finger at someone and their relationships with IKEA possibly. There might a strong contradiction that the IKEA is fearlessly engaged with an organization which utilizes kid as their labour and continue their relations to earn revenues with the suppliers while being conscious of the reality.

Furthermore, Barner has a strength 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 best source of pride.Despite of the reality that Aztek Chocolate Studio Accounting System Software Case Study Solution was not conscious about the growing concern over the kid labour as well as the including child's as labours by the industries, the providers of the IKEA. Throughout the acceptance of agreement, IKEA began investigation versus its provider markets around the globe. If revealed in the documentary by German manufacturers, the management of IKEA is not afraid of accepting its errors. It will accept its mistake and take procedure to put it right once again.

Barner can also create another justification on the ineffective responsibility over social concerns. It is planning to be included with the social issues but has actually not taken such steps yet. In the field of marketing, IKEA is on top with outstanding ideas along with its attractive products.
Swot Analysis
The issues of the IKEA is towards leading long term relationships with its network of circulation globally. IKEA is not just recently associated with any of the social activities about the rights and issues of each specific working in the industries and making them a good-looking earnings. In future, IKEA will plan to be part of responsibility over the social concerns.

For this reason, it can be concluded that according to the issue for the company's reputation and share of share ought to accept the invitation and present it valid thoughts only in case if everything in documentary protests the IKEA. Specifically, IKEA had actually started a Foundation based upon the concept of securing rights of child labour and to provide them with totally free environment to inform themselves. (Barlet, 2006).

Actions on Supply contract with Rangan Exports:.

Under the IKEA concerns about the most strategic and logical strategy in referral to the kid labour problem need to provide Rangan Exports with another possibility to assist them in conquering this problem.

IKEA requires to take some steps in order to determine of the fact. If the proof versus the Rangan export is true therefore leading it in the failure on the moral level which were outlaid by Aztek Chocolate Studio Accounting System Software Case Study Help. This clearly shows that on IKEA, the supplier market leading to contravention on the child labour concern.

Subsequently, IKEA deals with a vision of producing better lifestyle for every person which is a strong representation for the business to mean the rights of workers of Rangan Exports. The concept of kid labour does not involve a single company as a large network of companies are accountable in putting it ahead. This is among the most crucial issue of social issues and it would be oppression to blame a single one.

If the management of Aztek Chocolate Studio Accounting System Software Case Study Solution not chooses for the contract termination, this brings a hazard of losing brand name position and track record. This might result in the monetary decline state of IKEA by decreased ratio of sale, less appeal of the brand name and the concerns over social duties. The main disadvantage of this substitute is the IKEA deprivation with a rewarding association and might result in the terminating relations with the sources of carpet by India.

This will help in upkeep of the healthy association between the supplier and the IKEA. This makes apparent for the all suppliers that IKEA is strictly against the kid labour and genuinely condemn it. This may have a bad impact on the market credibility of IKEA by the generation of false publicity.

As it is for the second time that IKEA became a victim of kid labour which has actually significantly damaged its reputation. For this purpose, Barner needs to pursue the aid by ILO and UNICEF along with NGOs which may help Rangan in escaping the need to used child labour for the carpets production. It may choose to spread out awareness among the homeowners internationally about the social concerns and how one's life is affected 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 providers by the increased power of bargaining and the violation of the policy of IKEA. The press must be called upon for the announcement of their choice with its reason with the summarization of the policy of IKEA on the use labour of kid.

In sum, the business can keep its reputation in the market and in some way can bear the loss developed by one provider. With the stable reputation in the market, Aztek Chocolate Studio Accounting System Software Case Study Help will certainly conceal its monetary crisis within a short time period.
Vrio Analysis
Technique Regarding IKEA's Operations in India

IKEA method is generally concentrate on long term relationship with its providers rather than short term. This long term method assists IKEA in getting competitive and trustworthy provider source. For long term relationship they utilized to help their supplier to make complete use of their capacity. They asked suppliers to offer services and products other than their core products and services. The very same method that was utilized by IKEA in Poland might be obtained.( Harapiak, 2013) The technique was to outsource production of furniture and not produce by its own. IKEA likewise needs to ensure that they involve public through its marketing actions which need to be valuable in understanding IKEA's intentions.

Their intentions should likewise be validating business's policy. Their actions should likewise be according to Kamprad's view i.e. "produce a better daily life for many people". They think that they can achieve this objective by offering highest quality products with low cost. At earlier time IKEA had no focus on ecological and social problems which also includes child labor they utilized to focus on only one method i.e. offering budget friendly and quality items to consumers. As time passed they needed to consist of other worths too to their focus. That enhanced focus might assist IKEA in improving its reputation towards its clients. The new focus included the viewpoint "in the very best interest of the kid". For that function it needs to be make sure that engagements in India would be satisfying the required function too i.e. they did not engage any activity which consists of kid labor. Majority of population in India is listed below hardship line so there is culture of child labor and likewise child loan. Parents utilized to allow their kids to work in compensation with cash. Terminating operations from India would not ensure service to child labor however also unfavorable credibility would be developed that IKEA is not taking any reputable action to resolve standard concern i.e. child labor.

If Aztek Chocolate Studio Accounting System Software Case Study Solution did not take any possible action to resolve problem of child labor then it would result in loss of sales and IKEA's worth too. For a business like IKEA track record loss is substantial loss since worth of business also based on it and also there would be decline in revenues and goodwill if there is any credibility loss.

Nevertheless if IKEA consider only sales figure then getting out from Indian market is more suitable. Due to the fact that sales from Indian market only contributes little portion to IKEA's profits. In an economical/capitalistic view threat is more than benefits. To attain company's long term objective i.e. "to produce a much better daily life for lots of individuals" and "in the best interest of the child" it is advised to not get out from Indian market and continue operations in Indian market with taking necessary precautions.

IKEA required to make sure that kid labor is not utilized for their items. For that function IKEA needs a system that can keep track of entire procedure. As supplier has lack of monetary resources to provide education to kids, so IKEA ought to assist supplier financially and offer them financial aids and ask to offset by future shipments.

There could be one other service for this problem that Aztek Chocolate Studio Accounting System Software Case Study Help could install its own production business combined with school. All financial needs of that school might be met by earnings from that making business. IKEA ought to run this school by itself and its auditing task should be offered to any other institute like Rugman to make sure it is working effectively for best interest of kids. (Usman, 2010).

Aztek Chocolate Studio Accounting System Software Case Study Help Needs To Register to Rugmark.

IKEA thinks that every company has its own strengths and weaknesses. As IKEA has no experience regarding child labor so new personnel would be needed for this purpose. It needs to register to Rugmart becausethey are experienced in this field of kid labor and ask Rugmort to keep an eye on and establish process recommended by Aztek Chocolate Studio Accounting System Software Case Study Help. Apart from this there must be likewise random tracking from IKEA to make sure that required function is accomplished.

Resolving Root Cause of Child Labor.

IKEA requires to solve origin of child labor in order to support its long term vision. For that purpose kid welfare and education requires to be promoted. There should be collaboration with suppliers and encourage providers to carry out programs for kid welfare and education. As suppliers had absence of resources so they should be offered financial assistance and asked then to balance out by future orders. This is long term technique not short-term solution. (Martin, 2013) So it might not be performed by IKEA alone. Aztek Chocolate Studio Accounting System Software Case Study Help beginning executing its strategy in multi methods. There was collaboration in between UNICEF and IKEA. The purpose of this collaboration was to provide education to all kids who are operating in carpet producing cluster. For instance some alternative knowing centres were established for those children who were not permitted to get education from public schools. Neighborhood welfare was also promoted through this program. In addition to this collaboration they likewise partnered with their suppliers in order to create option for problem of child labor. There was program established with supplier. The substantial quality of program was audit of suppliers on routine basis. Restorative action strategy would be required if there was any kid labor found during audit. In corrective action plan kid labor is required to be removed and supplier is needed to compensate for well-being and education of that child. Then there would be proper follow up from IKEA to make sure that in real needed restorative action plan is linked. If it is found that supplier did not take any corrective action plan then IKEA would broke agreement with that supplier and there would be no trade with that specific supplier in future.

Assessment of Aztek Chocolate Studio Accounting System Software Case Solution Technique.

IKEA has dedication to its consumers to offer high quality items with low prices. If IKEA remained in Indian market then it would result in greater costs for consumers. A customer would not feel comfy when he came to know that he buy a carpet which was woven by child however is now getting educated by provider of Aztek Chocolate Studio Accounting System Software Case Study Solution.

It can be concluded from analysis that IKEA had actually been facing issue in under industrialized countries due to the fact that guidelines and guidelines of under industrialized nations are different from establish countries. The main issue that IKEA is dealing with presently is kid labor since a German documentary maker makes documentary of a provider of IKEA that was utilizing kid labor for production of goods. It is concluded that IKEA must accept invite to live discussion due to the fact that in this way they would be having opportunity to safeguard and explain their case to public. It was also concluded that IKEA must sign up Rugmart since IKEA has no any knowledge concerning child labor and Rugmart is expert having understanding relating to concerns of child labor. As IKEA has no experience relating to child labor so new staff would be needed for this function. The technique that is suggested for kid labor is that there should be partnership with providers and encourage suppliers to perform programs for child welfare and education. As providers had absence of resources so they must be supplied financial assistance and asked them to balance out by future orders. This method would make full usage of engaging suppliers and collaborate to solve concern of child labor.