Human Resource Management Harvard Case Help

Home >> Finance >> Human Resource Management

Human Resource Management Case Study Solution and Analysis


Human Resource Management Case Study Solution is an international business in Sweden. It is mainly a house providing business founded by Ingvar Kamprad in 1943. When he initiated his first mail-order company, he called the company at the age of 17. It was named 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 started his vision to make real by offering his some goods acquired by a cheap source for the local retailers by newsletter advertisement. In 1948, by the additional advertisement in the newsletter about the furniture has matched the criteria with its rivals. It has caused renounce the goods sale and start with furniture. For the consumer satisfaction and decrease the rate of returns, he intentionally opened a store in an Almhult named municipality near his hometown. In the future, the little newsletter ad transformed into a catalogue.

Because 1950 to late 1990s, it has actually made remarkable progress in both the incomes along with in broadening of business. At first, it had one shop while in the late 1990s it has more than 100 stores 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 decreased sale threatened the providers of IKEA to not take orders at low rates. In 1961, IKEA contracted with a number of the factories making furnishings and hence it once again developed low expenses. On the other hand, Human Resource Management Case Study divided its store in a number of departments like inexpensive rate lunchroom, kids play-area, as well as a Sweden Look for the foods making it a popular exporter of food. Over a duration of time, the product variety was expanded varying from carpets, floor coverings, lights to different item line needed in providing house.

The motive of the company was to sale quality products with reasonable prices with variation in products worldwide based on a vision to develop a much better lifestyle for almost everyone. Every year, the company celebrates an anti-bureaucrat week to develop better contact in between the clients and suppliers.

In the mid duration of 1990s, IKEA has a broad working networking with about 70 nations tracking down its items about 11,200. When there were environmental concerns arising about IKEA's products concurrently the issuance on the child labor emerged. Due to this reason, Human Resource Management Case Study Analysis appeal reduced dropping the 20% of its sale in Denmark.

Secret Players.

There are two essential players in this case one is IKEA Business and other is its providers. IKEA's strategy is to outsource its product manufacturing to providers. These providers are normally third party and based throughout the world.


The strategy of outsourcing has some issues like guidelines and guidelines of these countries. Often providers from these underdeveloped countries does not follow needed requirements as compare to industrialized nations. These weak rules and regulations can result in weak environment policies or child labour. There is negative effect of these concerns on income of the business and likewise reputation of the company. Because the majority of the company's customers are based in industrialized countries. These customers have high expectations from Human Resource Management Case Study Solution in regards to good quality items with low cost. (Marianne Baxter, 2012) These customers have also high expectations from IKEA in element of social obligation. They wanted IKEA to be socially responsible and wanted that it did not have any connection with kid labour or any other environment issue. As IKEA got its supply of carpets mostly for under developed nations like India, Pakistan, Nepal. These under developed nations have unrestrained kid labour. This is primary issue that IKEA is dealing with recently. The company is not controlling its suppliers efficiently. Also underdeveloped countries enable kid labour since of hardship. Business can not depend on regional government for solving this concern. IKEA strategies also did not work well sufficient to address this problem (see Exhibit 3).

Approaching Issue of Child Labour.

Due to the fact that it is one of the substantial catalyst in success of company, IKEA method is to preserve high level of social obligation. Human Resource Management Case Study Analysis is worried on kid labour problem and other ecological concerns to support this method. There was element of social duty which was engrained in the culture of IKEA's founder Ingvar Kamprad (Display 2). People from India had conflicting views concerning kid labour and social responsibility. According to Indian individuals kid labour is not bad if it is enabled by moms and dads or if children are working under guidance of their parents. There is common practice of kid operate in India and federal government is also unwinded over this matter if it is unbounded kid labour or if their parents are agreed and permitted their kids to work. Kids are also permitted to work in craft markets to make certain that abilities from earlier generation are not lost.( Naidu & Ramaiah, 2006) In Addition, IKEA was likewise encouraged by Swedish Conserve the Kid company to act "in the best interest of child".( Odenbring, 2018) According to this they would be doing just that work which remains in the best interest of kids. They would not be involved in any transaction in which kid labour is used or there is any possibility of environment concern. Because they are reliant of child labour, many of the households would be doing not have important source of earnings. Their basic expenses like food, clothing are pleased through their working of child.( Duflo, 2006) Also laws are not strict adequate to resolve problems of environment or social issues like kid labour so business need to worry whether it is appropriate to carry out organisation in India or not. They needed to make sure that their organisation does not engage in any activity which is against social duty. The decision needs to be taken by also integrating viewpoint of social obligation from the perspective of consumer not from perspective of providers. Customers should not be having doubt their company is participated in any unwanted activity. If requirements concerning social responsibility from customer point of view are not followed, there could be negative outcome. There was case occurred in 1980's. IKEA had stopped working to fulfill required requirements on formaldehyde for a few of its products. Because case IKEA had actually lost its revenues by 20% in Denmark. Since business's credibility in the eyes of consumers had actually declined. In 1992 there was also loss of around $6 to $7 million. This loss was resulted from discontinuation of a popular bookcase series due to the fact that it was not according to needed level of formaldehyde. This likewise damage company's credibility considerably.

Response to German producers on Video Program:

In response to the invitation of German producers for IKEA, the invite needs to require to be accepted. The first foremost thing to think about is that the documentary is made by a German business. However, it is not mandatory to accept the invitation and be part of the live conversation however it is of essential importance. As it offers Barner to have live discussion during on-air shows. It creates a possibility to give better explanation of their concerns about their relationship with India. Particularly, Barner can potentially show her idea of mind with a clear validation letting individuals know that for her it is more vital to be more concerned about the IKEA reputation as she is just responsible for this. It is necessary to get rid of the requirements of kid labour however this can perhaps refrained from doing by stopping organisation relate to their partner business which involve the pattern of child labour. This understanding of Barner might assist her in preserving IKEA clear reflection and might likewise result in more powerful relationship of the business. It also offers IKEA to conscious the German producers to combat versus the kid labour.

As the German Producers had just offered IKEA to view some of the shots from their documentary. They ought to be requested to let them enjoy the entire film instead of some shots which shows certainly an unclear picture of the truth. This might be the strategy of German producers to show themselves right against the claims but leaving IKEA behind filled with doubts about their relationship with the business of India on the issue of child labour.

On the contrary, the IKEA has actually been positively represented about the problem of Kid labour when the issue was initially put up by the Swedish Television. There are a set of details on child labour by IKEA which was substantially gathered by ILO and UNICEF. This details really demonstrates the same viewpoint as same as that of the documentary makers. This will let the manufacturers to astonish about the troublesome concern by clear representation of kid help during their labour at the manufacturing markets.

As the German producers refused to show their documentary to IKEA prior to it is telecasted merely indicates there evil objective of point the finger at someone and their relationships with IKEA potentially. There may a strong contradiction that the IKEA is fearlessly engaged with a company which utilizes child as their labour and continue their relations to make profits with the providers while being aware of the reality.

The obligation of the mistakes taken by anybody is thought about as the finest source of pride.Despite of the reality that IKEA was not conscious about the growing issue over the kid labour as well as the including kid's as labours by the industries, the suppliers of the Human Resource Management Case Study Solution. During the approval of contract, IKEA began investigation versus its supplier markets around the world.

Barner can also develop another validation on the ineffective obligation over social issues. It is planning to be included with the social concerns however has not taken such procedures yet. In the field of marketing, IKEA is on top with outstanding ideas in addition to its captivating products.

The concerns of the IKEA is towards leading long term relationships with its network of circulation internationally. IKEA is not recently involved in any of the social activities about the rights and issues of each private working in the markets and earning them a good-looking revenue. 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 should accept the invitation and present it valid ideas just in case if whatever in documentary is versus the Human Resource Management Case Study Analysis. Specifically, IKEA had actually begun a Foundation based on the concept of securing rights of child labour and to offer them with complimentary environment to inform themselves. (Barlet, 2006).

Actions on Supply contract with Rangan Exports:.

Under the IKEA issues about the most tactical and logical technique in recommendation to the kid labour issue should provide Rangan Exports with another chance to assist them in conquering this predicament.

IKEA requires to take some measures in order to identify of the fact. , if the proof against the Rangan export is true hence leading it in the failure on the ethical level which were outlaid by IKEA.. This plainly indicates that on IKEA, the supplier industry leading to conflict on the kid labour problem.

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

Barner can think about 2 alternatives to resolve this issue. At first, either termination of the contract with the Rangan Expors on the basis of including child labour to work after the investigations to be sure about the fact. If the management of IKEA not chooses for the agreement termination, this brings a danger of losing brand position and track record. This may result in the monetary decline state of IKEA by decreased ratio of sale, less popularity of the brand name and the issues over social obligations. If any country to consist of kid labour, as it is surely not supported by the residents. This alternative is trusted and legal with the policy of IKEA. The primary drawback of this alternative is the IKEA deprivation with a rewarding association and may lead to the ending relations with the sources of carpet by India.

This will help in maintenance of the healthy association in between the supplier and the IKEA. This makes obvious for the all suppliers 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 false publicity.

As it is for the 2nd time that IKEA became a victim of kid labour which has considerably harmed its track record. For this function, Barner must pursue the assistance by ILO and UNICEF in addition to NGOs which might help Rangan in escaping the requirement to utilized child labour for the rugs production. It may choose to spread out awareness among the homeowners worldwide about the social concerns and how one's life is affected by in regards to social, and ethical values.

IKEA by the adoption of very first alternative, ends its relationship with thesupplier offense. If results in the failure then represent a bad effect on all providers by the increased power of bargaining and the infraction of the policy of IKEA. The press should be called upon for the statement of their decision with its reason with the summarization of the policy of IKEA on the usage labour of kid.

In amount, the business can preserve its reputation in the market and in some way can bear the loss created by one supplier. With the steady track record in the market, Human Resource Management Case Study Analysis will certainly cover up its monetary crisis within a brief time period.

Method Relating to IKEA's Operations in India

IKEA technique is essentially focus on long term relationship with its suppliers rather than short term. This long term strategy assists IKEA in getting reputable and competitive supplier source. For long term relationship they utilized to assist their provider to make full usage of their capacity. For instance, they asked suppliers to provide product or services other than their core services and products. The very same technique that was utilized by IKEA in Poland might be borrowed.( Harapiak, 2013) The strategy was to contract out production of furniture and not produce by its own. IKEA likewise needs to make sure that they include public through its marketing actions which must be valuable in comprehending IKEA's intentions.

At earlier time IKEA had no focus on ecological and social problems which also contains child labor they used to focus on just one method i.e. supplying affordable and quality products to customers. That enhanced focus might help Human Resource Management Case Study Analysis in enhancing its credibility towards its clients. Terminating operations from India would not guarantee option to child labor but also negative credibility would be developed that IKEA is not taking any trusted action to solve fundamental concern i.e. kid labor.

There would be also one other negative impact i.e. disagreement from public. As there prevails view point that huge business are always selfish and have an interest in only creating profit and customers would be thinking that IKEA is among them. Public has typical view that these companies should be socially accountable to society as like they are needed to be responsible to its shareholders. If IKEA did not take any possible step to solve issue of child labor then it would lead to loss of sales and IKEA's worth too. For a business like IKEA credibility loss is substantial loss because value of company also based upon it and likewise there would be decline in profits and goodwill if there is any track record loss.

Nevertheless if IKEA think about just sales figure then getting out from Indian market is preferable. Due to the fact that sales from Indian market just contributes little part to IKEA's profits. In an economical/capitalistic view danger is more than advantages. To achieve company's long term objective i.e. "to create a much better everyday life for numerous individuals" and "in the finest interest of the child" it is recommended to not get out from Indian market and continue operations in Indian market with taking required safety measures.

Human Resource Management Case Study Help needed to make sure that kid labor is not used for their items. For that function IKEA requires a system that can keep an eye on entire treatment. That system should quickly find whenever kid labor is used in any activity. Suppliers should be motivated to offer education to children so kids can discover something. For that function, providers would be having monetary concerns. As supplier has absence of funds to provide education to kids, so Human Resource Management Case Study Solution ought to assist provider financially and provide them financial aids and ask to balance out by future shipments.

There could be one other solution for this problem that Human Resource Management Case Study Solution might install its own manufacturing business integrated with school. All monetary needs of that school could be met by profits from that producing business. IKEA must run this school by itself and its auditing job must be given to any other institute like Rugman to ensure it is working correctly for best interest of kids. (Usman, 2010).

Human Resource Management Case Study Solution Ought To 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 child labor and ask Rugmort to keep track of and establish process suggested by IKEA.

Handling Source of Kid Labor.

Human Resource Management Case Study Help requires to fix root cause of kid labor in order to support its long term vision. IKEA beginning executing its method in multi ways. If it is found that provider did not take any restorative action strategy then IKEA would broke agreement with that provider and there would be no trade with that specific provider in future.

Evaluation of Human Resource Management Case Help Method.

Human Resource Management Case Study Analysis has commitment to its customers to offer high quality products with low prices. Their technique would make full use of engaging suppliers and collaborate to solve concern of child labor. According to my individual perception as from shareholders point of view, business is not utilizing its resources effectively through this technique. They would be having tough option in future from choosing that whether to increase roi for shareholders or continue involvement with social responsibilities of Indian and UNICEF. Shareholders would be having unfavorable picture of IKEA due to the fact that of less return of investment if is heavily invests for social well-being. If IKEA stayed in Indian market then it would lead to greater expenses for consumers. Nevertheless disputes of interest for society and management would be solved. When he came to understand that he buy a carpet which was woven by kid but is now getting educated by supplier of IKEA, a customer would not feel comfortable. But he would be feeling more comfortable when he came to know that he purchase a rug on somewhat greater cost which was not woven through child labor.


Since guidelines and guidelines of under industrialized countries are various from establish nations, it can be concluded from analysis that Human Resource Management Case Study Solution had been dealing with problem in under developed nations. The primary issue that IKEA is facing presently is kid labor because a German documentary maker makes documentary of a supplier of IKEA that was using child labor for production of goods. It is concluded that IKEA should accept invite to live discussion due to the fact that in this way they would be having opportunity to defend and describe their case to public. Because IKEA has no any understanding regarding kid labor and Rugmart is expert having understanding concerning problems of child labor, it was likewise concluded that IKEA must sign up Rugmart. As IKEA has no experience relating to kid labor so brand-new staff would be required for this function. The strategy that is recommended for kid labor is that there need to be collaboration with providers and motivate suppliers to execute programs for kid welfare and education. As providers had lack of resources so they need to be supplied financial aid and asked to offset by future orders. This method would make complete use of engaging providers and interact to fix problem of kid labor.