Focus Media Holding Ltd 2014 Case Study Solution & Analysis
Intro:
Focus Media Holding Ltd 2014 Case Study Analysis is a global company in Sweden. It is mainly a home providing business founded by Ingvar Kamprad in 1943. He named the business at the age of 17 when he started his first mail-order business. It was called as IKEA by a mix of terms associating with his individual life from his personalizes to his family farm i.e. Ignvar Kamprad Elmtaryd Agunnaryd. He began his vision to make true by selling his some products obtained by a low-cost 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 competitors. It has actually resulted in renounce the products sale and start with furniture. For the consumer satisfaction and decrease the rate of returns, he intentionally opened a store in an Almhult named town near his hometown. In the future, the small newsletter advertisement transformed into a brochure.
Given that 1950 to late 1990s, it has actually made incredible development in both the incomes along with in expanding of business. It had one store while in the late 1990s it has more than 100 shops residing in numerous 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 many of the factories making furniture and therefore it again developed low costs. On the other hand, Focus Media Holding Ltd 2014 Case Study divided its store in a number of departments like low-cost price snack bar, children play-area, as well as a Sweden Buy the cuisines making it a popular exporter of food. Over a duration of time, the item variety was broadened ranging from carpets, floorings, lamps to different item line needed in furnishing house.
The motive of the business was to sale quality items with reasonable rates with variation in products worldwide based on a vision to develop a better way of life for practically everybody. Every year, the company commemorates an anti-bureaucrat week to establish better contact in between the providers and customers.
In the mid duration of 1990s, IKEA has a broad working networking with about 70 countries finding its items about 11,200. It worked with practically a larger number of providers around 2300 globally (see Display 2). When there were environmental concerns occurring about IKEA's products at the same time the issuance on the kid labor emerged. This has actually led the company to deal with the tough circumstance in the upkeep of their relation with suppliers. Due to this reason, IKEA's popularity decreased dropping the 20% of its sale in Denmark. .
Secret Gamers.
There are two essential players in this case one is IKEA Business and other is its suppliers. IKEA's strategy is to outsource its product manufacturing to providers. These providers are typically third party and based throughout the world.
Problems.
There is negative impact of these issues on income of the company and also reputation of the business. They wanted Focus Media Holding Ltd 2014 Case Study Help to be socially responsible and wanted that it did not have any connection with child labour or any other environment concern. IKEA strategies likewise did not work well adequate to resolve this problem (see Exhibit 3).
Approaching Concern of Kid Labour.
IKEA strategy is to maintain high level of social duty because it is one of the considerable catalyst in success of company. IKEA is concerned on kid labour issue and other environmental problems to support this method.( Naidu & Ramaiah, 2006) Additionally, Focus Media Holding Ltd 2014 Case Study Solution was also encouraged by Swedish Conserve the Children company to act "in the finest interest of kid".
Reaction to German manufacturers on Video Program:
In response to the invite of German manufacturers for IKEA, the invitation ought to need to be accepted. The first primary thing to consider is that the documentary is made by a German business. Nevertheless, it is not obligatory to accept the invitation and be part of the live discussion but it is of crucial significance. As it offers Barner to have live conversation during on-air programming. It creates a likelihood to provide better description of their concerns about their relationship with India. Particularly, Barner can potentially show her thought of mind with a clear justification letting individuals know that for her it is more crucial to be more worried about the IKEA reputation as she is just responsible for this. It is important to remove the criteria of kid labour however this can perhaps refrained from doing by stopping business links with their partner business which include the trend of child labour. This understanding of Barner may help her in keeping IKEA clear reflection and may likewise result in stronger relationship of the companies. It also provides IKEA to mindful the German manufacturers to eliminate versus the child labour.
As the German Manufacturers had only offered IKEA to see some of the shots from their documentary. They should be requested to let them view the whole film rather of some shots which shows certainly an unclear picture of the fact. This might be the technique of German manufacturers to show themselves right versus the allegation however leaving IKEA behind filled with doubts about their relationship with the business of India on the problem of kid labour.
On the contrary, the IKEA has been positively represented about the problem of Kid labour when the issue was at first put up by the Swedish Tv. There are a set of details on child labour by IKEA which was substantially collected by ILO and UNICEF.
As the German producers refused to reveal their documentary to IKEA before it is telecasted simply suggests there evil intention of point the finger at somebody and their relationships with IKEA possibly. 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 make earnings with the suppliers while being aware of the fact.
The responsibility of the errors taken by anybody is thought about as the finest source of pride.Despite of the fact that IKEA was not mindful about the growing concern over the child labour as well as the including kid's as labours by the industries, the providers of the Focus Media Holding Ltd 2014 Case Study Analysis. During the approval of contract, IKEA started examination against its provider industries around the world.
Barner can also come up with another reason on the ineffective responsibility over social concerns. It is intending to be included with the social concerns however has not taken such steps yet. In the field of marketing, IKEA is on top with exceptional ideas along with its distinctive items.
The concerns of the IKEA is towards leading long term relationships with its network of distribution worldwide. IKEA is not just recently associated with any of the social activities about the rights and issues of each private working in the industries and making them a good-looking profit. In future, IKEA will plan to be part of duty 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 invite and present it legitimate ideas only in case if everything in documentary is against the Focus Media Holding Ltd 2014 Case Study Solution. Specifically, IKEA had begun a Foundation based on the concept of safeguarding rights of child labour and to supply them with complimentary environment to inform themselves. (Barlet, 2006).
Actions on Supply contract with Rangan Exports:.
Under the IKEA issues about the most reasonable and tactical method in recommendation to the kid labour issue need to provide Rangan Exports with another possibility to help them in overcoming this issue.
IKEA needs to take some steps in order to identify of the fact. If the proof versus the Rangan export holds true therefore leading it in the failure on the ethical level which were outlaid by Focus Media Holding Ltd 2014 Case Study Analysis. This clearly suggests that on IKEA, the provider market resulting in conflict on the child labour concern.
Consequently, IKEA works with a vision of creating better lifestyle for every individual which is a strong representation for the enterprises to stand for the rights of workers of Rangan Exports. The idea of kid labour does not involve a single business as a huge network of business are responsible in putting it ahead. This is among the most crucial issue of social issues and it would be injustice to blame a single one.
Barner can think about two options to resolve this issue. In the beginning, either termination of the agreement with the Rangan Expors on the basis of involving child labour to work after the examinations to be sure about the reality. If the management of IKEA not chooses for the contract termination, this brings a risk of losing brand position and credibility. This may lead to the monetary decrease state of IKEA by reduced ratio of sale, less popularity of the brand and the concerns over social obligations. If any nation to include kid labour, as it is definitely not supported by the occupants. This substitute is legal and trustworthy with the policy of IKEA. The main drawback of this replacement is the IKEA deprivation with a beneficial association and may lead to the ending relations with the sources of rug by India.
The second option is to warn the provider industry with continuation of the links with a pledge to let not do this mistake again and certainly inhibit the child labour. This will help in maintenance of the healthy association between the supplier and the Focus Media Holding Ltd 2014 Case Study Analysis. This also offers an opportunity to much better teach the providers about the disadvantages of the kid labour. Nevertheless, this decision is made on the basis of IKEA's self-created policy. This makes obvious for the all suppliers that IKEA is strictly versus the kid labour and genuinely condemn it. This may have a bad impact on the market credibility of Focus Media Holding Ltd 2014 Case Study Help by the generation of incorrect publicity.
As it is for the 2nd time that IKEA ended up being a victim of kid labour which has greatly damaged its credibility. For this purpose, Barner ought to pursue the aid by ILO and UNICEF along with NGOs which might help Rangan in leaving the need to utilized child labour for the rugs production. It may choose to spread awareness among the citizens globally about the social issues and how one's life is influenced by in terms of social, and ethical values.
Focus Media Holding Ltd 2014 Case Study Help by the adoption of very first alternative, terminates its relationship with thesupplier violation. Then represent a bad effect on all providers by the increased power of bargaining and the infraction of the policy of IKEA, if outcomes in the failure. Furthermore, it can make a charge for the behaviour which is not ethically best. Hence, Barner must decide of disuniting with Rangan public. The press ought to be hired for the announcement of their decision with its reason with the summarization of the policy of IKEA on the use labour of child. She ought to report all the entire scenario of the issue emerged and be sure that all the suppliers are strictly following the guidelines of the contract. If any of the provider found in compliance to exploitation of the any of the contract rule offering labour of kid need to be fired.
In amount, the company can maintain its reputation in the market and in some way can bear the loss created by one supplier. With the stable credibility in the market, Focus Media Holding Ltd 2014 Case Study Analysis will undoubtedly cover up its monetary crisis within a brief amount of time.
Method Concerning IKEA's Operations in India
IKEA technique is essentially concentrate on long term relationship with its suppliers rather than short term. This long term method assists IKEA in getting trustworthy and competitive supplier source. For long term relationship they used to help their supplier to make complete use of their capability. They asked suppliers to provide items and services other than their core items and services. The very same method that was utilized by IKEA in Poland could be borrowed.( Harapiak, 2013) The method was to outsource production of furniture and not produce by its own. IKEA likewise needs to make sure that they include public through its marketing actions which ought to be valuable in understanding IKEA's objectives.
Their intents must likewise be validating business's policy. Their actions must also be according to Kamprad's view i.e. "create a much better daily life for lots of people". They think that they can attain this goal by providing best quality products with low cost. But at earlier time Focus Media Holding Ltd 2014 Case Study Analysis had no focus on social and ecological issues which likewise consists of kid labor they used to concentrate on only one strategy i.e. providing cost effective and quality products to consumers. So as time passed they required to consist of other values too to their focus. That improved focus could assist IKEA in enhancing its track record towards its clients. The brand-new focus consisted of the perspective "in the best interest of the kid". For that function it requires to be make sure that engagements in India would be satisfying the necessary purpose too i.e. they did not engage any activity which consists of child labor. Bulk of population in India is below hardship line so there is culture of child labor and also child loan. Moms and dads utilized to enable their children to work in settlement with money. Discontinuing operations from India would not guarantee solution to child labor however likewise negative reputation would be built that IKEA is not taking any reputable action to fix basic problem i.e. child labor.
There would be also one other negative result i.e. argument from public. As there is common view point that huge business are constantly selfish and are interested in just creating earnings and consumers would be believing that IKEA is among them. Public has common view that these business must be socially responsible to society as like they are needed 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 step to fix issue of child labor. For a company like IKEA reputation loss is big loss because value of company also based on it and also there would be decline in profits and goodwill if there is any reputation loss.
However if IKEA think about only sales figure then getting out from Indian market is more effective. Due to the fact that sales from Indian market only contributes small portion to IKEA's earnings. In an economical/capitalistic view threat is more than advantages. But to achieve business's long term goal i.e. "to produce a much better everyday life for many individuals" and "in the best interest of the child" it is suggested to not get out from Indian market and continue operations in Indian market with taking necessary precautions.
IKEA needed to make sure that child labor is not utilized for their products. For that purpose IKEA requires a system that can keep track of whole procedure. As supplier has absence of financial resources to provide education to kids, so IKEA needs to assist supplier economically and supply them financial aids and ask to offset by future deliveries.
There could be one other service for this problem that IKEA could install its own manufacturing business integrated with school. IKEA needs to run this school by itself and its auditing job ought to be offered to any other institute like Rugman to make sure it is working properly for finest interest of kids.
Focus Media Holding Ltd 2014 Case Study Analysis Should Register to Rugmark.
As IKEA has no experience relating to kid labor so brand-new personnel would be required for this function. It needs to sign up to Rugmart becausethey are experienced in this field of kid labor and ask Rugmort to develop and monitor procedure recommended by IKEA.
Solving Source of Child Labor.
Focus Media Holding Ltd 2014 Case Study Help requires to resolve root cause of child labor in order to support its long term vision. IKEA beginning executing its strategy in multi ways. If it is found that supplier did not take any restorative action plan then IKEA would broke contract with that provider and there would be no trade with that particular provider in future.
Assessment of Focus Media Holding Ltd 2014 Case Solution Strategy.
Focus Media Holding Ltd 2014 Case Study Help has commitment to its consumers to provide high quality products with low prices. Their method would make full use of engaging providers and collaborate to deal with problem of child labor. According to my individual perception as from shareholders point of view, business is not utilizing its resources effectively through this strategy. They would be having tough choice in future from choosing that whether to increase return on investment for shareholders or continue involvement with social responsibilities of Indian and UNICEF. Since of less return of financial investment if is heavily invests for social welfare, shareholders would be having unfavorable image of IKEA. Then it would result in higher expenses for consumers, if Focus Media Holding Ltd 2014 Case Study Solution remained in Indian market. Conflicts of interest for society and management would be fixed. A consumer would not feel comfortable when he came to know that he acquire a rug which was woven by kid however is now getting educated by provider of IKEA. He would be feeling more comfy when he came to understand that he purchase a rug on slightly greater price which was not woven through child labor.
Conclusion.
The primary issue that IKEA is dealing with currently is kid labor because a German documentary maker makes documentary of a supplier of IKEA that was using child labor for production of products. It was also concluded that Focus Media Holding Ltd 2014 Case Study Help ought to sign up Rugmart because IKEA has no any understanding concerning kid labor and Rugmart is professional having understanding concerning problems of child labor. As IKEA has no experience relating to kid labor so new staff would be required for this purpose.
