Hung Fook Tong From Hong Kong To China Harvard Case Solution

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Hung Fook Tong From Hong Kong To China Case Study Solution & Analysis


Hung Fook Tong From Hong Kong To China Case Study Solution is a global company in Sweden. It is primarily a house furnishing business established by Ingvar Kamprad in 1943. He called the company at the age of 17 when he initiated his first mail-order business. 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 selling his some goods obtained by a low-cost source for the regional retailers by newsletter advertisement. In 1948, by the additional ad in the newsletter about the furniture has matched the criteria with its competitors. It has resulted in renounce the products sale and start with furniture. For the client complete satisfaction and decrease the rate of returns, he deliberately opened a shop in an Almhult named township near his home town. In the future, the little newsletter advertisement changed into a catalogue.

The rivals due to decreased sale threatened the providers of IKEA to not take orders at low rates. In 1961, IKEA contracted with many of the factories producing furnishings and thus it again came up with low expenses. On the other hand, Hung Fook Tong From Hong Kong To China Case Study Analysis divided its store in a number of departments like cheap cost cafeteria, children play-area, as well as a Sweden Store for the cuisines making it a popular exporter of food.

The motive of the company was to sale quality products with reasonable costs with variation in products internationally based upon a vision to create a much better lifestyle for almost everyone. Every year, the business celebrates an anti-bureaucrat week to establish much better contact between the providers and customers. Kamprad thought on the fact that it is only possible to make no mistake while you sleep. However, the idea of preparing for the future was highly motivated. In 1986, Kamprad was changed by his Individual assistant who was a knowledgeable individual of the company.
Executive 0Summary
In the mid period of 1990s, IKEA has a broad working networking with about 70 countries tracking down its items about 11,200. When there were eco-friendly concerns emerging about IKEA's items at the same time the issuance on the child labor emerged. Due to this factor, Hung Fook Tong From Hong Kong To China Case Study Solution appeal reduced dropping the 20% of its sale in Denmark.

Secret Gamers.

There are 2 crucial players in this case one is IKEA Business and other is its providers. IKEA's technique is to outsource its product producing to providers. These providers are generally 3rd party and based throughout the world.


There is negative impact of these issues on profits of the company and likewise track record of the business. They desired Hung Fook Tong From Hong Kong To China Case Study Help to be socially accountable and wanted that it did not have any connection with kid labour or any other environment issue. IKEA strategies likewise did not work well enough to resolve this problem (see Display 3).

Approaching Concern of Kid Labour.

Due to the fact that it is one of the substantial catalyst in success of company, IKEA method is to keep high level of social obligation. Hung Fook Tong From Hong Kong To China Case Study Analysis is worried on kid labour issue and other environmental issues to support this strategy. There was element of social obligation which was engrained in the culture of IKEA's creator Ingvar Kamprad (Exhibition 2). People from India had conflicting views regarding child labour and social duty. According to Indian people child labour is not bad if it is permitted by parents or if children are working under guidance of their parents. There is common practice of child work in India and federal government is likewise unwinded over this matter if it is unbounded child labour or if their moms and dads are agreed and allowed their kids to work. Children are also permitted to work in craft markets to ensure that abilities from earlier generation are not lost.( Naidu & Ramaiah, 2006) Furthermore, IKEA was likewise motivated by Swedish Conserve the Children organization to act "in the very best interest of child".( Odenbring, 2018) According to this they would be doing just that work which remains in the very best interest of children. They would not be involved in any transaction in which kid labour is used or there is any possibility of environment problem. Since they are dependent of kid labour, many of the households would be lacking essential source of earnings. Their fundamental costs like food, clothes are pleased through their working of kid.( Duflo, 2006) Also laws are not stringent sufficient to address concerns of environment or social concerns like kid labour so companies need to stress whether it is suitable to carry out organisation in India or not. They required to make sure that their business does not take part in any activity which protests social obligation. The decision needs to be taken by likewise integrating viewpoint of social obligation from the point of view of customer not from point of view of suppliers. Consumers should not be having doubt their company is participated in any undesirable activity. There could be negative outcome if requirements concerning social duty from consumer perspective are not followed. There was case happened in 1980's. IKEA had stopped working to fulfill required standards on formaldehyde for a few of its items. Because case IKEA had actually lost its profits by 20% in Denmark. Because company's credibility in the eyes of customers had actually decreased. 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 business's credibility substantially.

Response to German manufacturers on Video Program:
Porter's 5 Forces Analysis
In action to the invite of German manufacturers for IKEA, the invite must need to be accepted. The first primary thing to think about is that the documentary is made by a German business. It is not compulsory to accept the invite and be part of the live discussion however it is of vital value. As it offers Barner to have live discussion throughout on-air programming. It creates a likelihood to give better explanation of their concerns about their relationship with India. Specifically, Barner can possibly 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 reputation as she is only responsible for this. It is important to remove the requirements of child labour however this can perhaps refrained from doing by stopping company relate to their partner companies which include the pattern of child labour. This understanding of Barner may assist her in keeping IKEA clear reflection and might also cause more powerful relationship of the companies. It also offers IKEA to conscious the German producers to eliminate versus the child labour.

As the German Manufacturers had just offered IKEA to see some of the shots from their documentary. They need to be requested to let them view the entire movie instead of some shots which shows definitely an unclear image of the fact. This may be the method of German manufacturers to prove themselves right versus the allegation but leaving IKEA behind full of 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 issue of Child labour when the problem was at first set up by the Swedish Tv. There are a set of details on kid labour by IKEA which was substantially collected by ILO and UNICEF. This info genuinely demonstrates the same perspective as same as that of the documentary makers. This will let the manufacturers to astonish about the problematic problem by clear representation of child aid throughout their labour at the manufacturing industries.

As the television industry has terrific prospective to show false news as the fact by their excellent ability to customize any lie into a reality and makes people think on it with no doubts. For that reason, it appears quite impossible for Barnerto assess the documentary prior to the session. As the German producers refused to show their documentary to Hung Fook Tong From Hong Kong To China Case Study Solution prior to it is telecasted just suggests there evil intention of point the finger at somebody and their relationships with IKEA possibly. There may a strong contradiction that the IKEA is fearlessly engaged with an organization which utilizes kid as their labour and continue their relations to earn incomes with the providers while knowing the fact.

Barner has a strong point of justification which is their philosophical statement i.e. everyone makes errors but one takes its responsibility. The obligation of the mistakes taken by anybody is considered as the very best source of pride.Despite of the fact that Hung Fook Tong From Hong Kong To China Case Study Help was not conscious about the growing concern over the kid labour as well as the involving kid's as labours by the industries, the providers of the IKEA. Throughout the approval of agreement, IKEA began examination against its provider markets around the globe. The management of IKEA is not scared of accepting its errors if displayed in the documentary by German producers. It will accept its error and take procedure to put it right once again.

Barner can likewise develop another validation on the inefficient responsibility over social issues. It is meaning to be involved with the social issues however has actually not taken such procedures yet. In the field of marketing, IKEA is on top with excellent ideas along with its distinctive products.
Swot Analysis
The concerns of the IKEA is towards leading long term relationships with its network of distribution worldwide. IKEA is not just recently involved in any of the social activities about the rights and concerns of each specific working in the markets and earning them a handsome earnings. In future, IKEA will plan to be part of responsibility over the social concerns.

It can be concluded that as per the issue for the company's credibility and share of share need to accept the invitation and present it legitimate ideas only in case if whatever in documentary is versus the Hung Fook Tong From Hong Kong To China Case Study Solution. Particularly, IKEA had begun a Structure based on the principle of protecting 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 strategic and logical technique in referral to the child labour problem ought to offer Rangan Exports with another chance to help them in overcoming this dilemma.

IKEA requires to take some steps in order to identify of the reality. , if the proof against the Rangan export is true therefore leading it in the failure on the ethical level which were outlaid by IKEA.. This clearly shows that on IKEA, the provider market leading to contravention on the child labour issue.

Subsequently, IKEA deals with a vision of producing better way of life for every single individual which is a strong representation for the enterprises to represent the rights of workers of Rangan Exports. The concept of child labour does not include a single business as a large network of business are accountable in putting it ahead. This is among the most vital problem of social issues and it would be injustice to blame a single one.

If the management of Hung Fook Tong From Hong Kong To China Case Study Solution not decides for the contract termination, this brings a threat of losing brand position and credibility. This might result in the monetary decline state of IKEA by reduced ratio of sale, less popularity of the brand and the issues over social duties. The primary drawback of this substitute is the IKEA deprivation with a beneficial association and might result in the ending relations with the sources of carpet by India.

The second alternative is to warn the provider industry with continuation of the links with a guarantee to let not do this error again and undoubtedly inhibit the kid labour. This will help in upkeep of the healthy association between the supplier and the Hung Fook Tong From Hong Kong To China Case Study Solution. This likewise supplies a chance to much better teach the providers about the downsides of the kid labour. This decision is made on the basis of IKEA's self-created policy. This makes obvious for the all providers that IKEA is strictly against the kid labour and truly condemn it. This might have a bad effect on the market track record of Hung Fook Tong From Hong Kong To China Case Study Analysis by the generation of incorrect promotion.

As it is for the 2nd time that IKEA became a victim of child labour which has actually greatly harmed its reputation. For this function, Barner needs to pursue the assistance by ILO and UNICEF in addition to NGOs which may assist Rangan in getting away the need to utilized child labour for the rugs manufacturing. It might choose to spread awareness among the locals worldwide about the social issues and how one's life is affected by in terms of social, and ethical worths.

Hung Fook Tong From Hong Kong To China Case Study Analysis by the adoption of very first alternative, terminates its relationship with thesupplier offense. If results in the failure then depict a bad influence on all suppliers by the increased power of bargaining and the violation of the policy of IKEA. It can make a charge for the behaviour which is not fairly. Therefore, Barner must make the decision of disuniting with Rangan public. Journalism must 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 whole situation of the problem emerged and make sure that all the suppliers are strictly following the guidelines of the agreement. , if any of the provider found in compliance to exploitation of the any of the contract guideline offering labour of child should be fired.


In amount, the company can maintain its credibility in the market and in some way can bear the loss created by one provider. With the stable track record in the market, Hung Fook Tong From Hong Kong To China Case Study Analysis will definitely cover up its financial crisis within a brief period of time.
Vrio Analysis
Technique Concerning IKEA's Operations in India

IKEA strategy is generally concentrate on long term relationship with its providers instead of short term. This long term strategy assists IKEA in getting competitive and dependable provider source. For long term relationship they utilized to assist their provider to make complete usage of their capacity. For instance, they asked providers to provide services and products aside from their core products and services. The exact same strategy that was used by IKEA in Poland could be obtained.( Harapiak, 2013) The method was to outsource production of furnishings and not produce by its own. IKEA likewise needs to ensure that they include public through its marketing actions which ought to be valuable in comprehending IKEA's intentions.

Their intents need to likewise be validating company's policy. Their actions must likewise be according to Kamprad's view i.e. "produce a much better daily life for many people". They believe that they can accomplish this goal by providing highest items with low cost. However at earlier time Hung Fook Tong From Hong Kong To China Case Study Analysis had no focus on social and ecological issues which also consists of child labor they used to focus on only one technique i.e. providing budget-friendly and quality items to clients. So as time passed they required to include other values too to their focus. That improved focus might assist IKEA in improving its track record towards its consumers. The brand-new focus included the viewpoint "in the very best interest of the child". So for that purpose it needs to be make certain that engagements in India would be satisfying the required purpose too i.e. they did not engage any activity that includes child labor. Majority of population in India is below hardship line so there is culture of child labor and likewise child loan. Moms and dads utilized to allow their children to operate in payment with loan. Terminating operations from India would not guarantee service to kid labor but likewise unfavorable reputation would be developed that IKEA is not taking any trustworthy action to solve fundamental problem i.e. child labor.

There would be also another negative result i.e. dispute from public. As there prevails view point that huge companies are constantly selfish and are interested in just generating profit and consumers would be believing that IKEA is among them. Public has common view that these business need to be socially accountable to society as like they are required to be responsible to its shareholders. If IKEA did not take any possible action to solve issue of child labor then it would result in loss of sales and IKEA's value too. For a company like IKEA reputation loss is huge loss due to the fact that worth of company likewise based on it and also there would be decrease in incomes and goodwill if there is any reputation loss.

If IKEA think about just sales figure then getting out from Indian market is more effective. Because sales from Indian market only contributes little part to IKEA's profits.

IKEA required to make sure that child labor is not used for their products. For that function IKEA requires a system that can keep track of whole treatment. As provider has lack of financial resources to supply education to kids, so IKEA must help supplier economically and supply them monetary aids and ask to balance out by future shipments.

There could be one other solution for this problem that IKEA might install its own manufacturing company integrated with school. IKEA should run this school by itself and its auditing job should be offered to any other institute like Rugman to make sure it is working appropriately for finest interest of children.

Hung Fook Tong From Hong Kong To China Case Study Help Should Register to Rugmark.

As IKEA has no experience regarding kid labor so brand-new staff would be required for this purpose. It must sign up to Rugmart becausethey are experienced in this field of child labor and ask Rugmort to keep an eye on and establish procedure recommended by IKEA.

Handling Source of Kid Labor.

Hung Fook Tong From Hong Kong To China Case Study Analysis requires to resolve root cause of kid labor in order to support its long term vision. IKEA beginning executing its technique in multi methods. If it is discovered that supplier did not take any corrective action strategy then IKEA would broke contract with that provider and there would be no trade with that specific provider in future.

Examination of Hung Fook Tong From Hong Kong To China Case Solution Strategy.

IKEA has commitment to its consumers to supply high quality products with low rates. If IKEA stayed in Indian market then it would result in higher expenses for customers. A client would not feel comfy when he came to understand that he acquire a rug which was woven by child however is now getting educated by supplier of Hung Fook Tong From Hong Kong To China Case Study Help.

Because guidelines and guidelines of under developed nations are various from establish countries, it can be concluded from analysis that Hung Fook Tong From Hong Kong To China Case Study Analysis had actually been facing problem in under industrialized nations. The main issue that IKEA is facing currently is child labor since a German documentary maker makes documentary of a provider of IKEA that was utilizing kid labor for production of items. It is concluded that IKEA ought to accept invite to live discussion due to the fact that in this method they would be having chance to defend and describe their case to public. Because IKEA has no any knowledge relating to child labor and Rugmart is professional having understanding regarding problems of kid labor, it was also concluded that IKEA needs to sign up Rugmart. As IKEA has no experience concerning child labor so new staff would be needed for this function. The technique that is suggested for child labor is that there should be partnership with suppliers and motivate providers to perform programs for kid welfare and education. As suppliers had lack of resources so they should be supplied financial aid and inquired to balance out by future orders. This method would make complete usage of engaging providers and work together to deal with problem of kid labor.