Morgan Stanley Positioning To Be The Sustainability Finance Leader Harvard Case Solution

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Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Solution and Analysis


Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Analysis is an international business in Sweden. It is primarily a home furnishing company founded by Ingvar Kamprad in 1943. When he initiated his very first mail-order business, he called the company at the age of 17. It was named as IKEA by a combination 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 real by offering his some goods obtained by a cheap source for the local merchants by newsletter ad. In 1948, by the extra advertisement in the newsletter about the furnishings has actually matched the requirements with its rivals. It has actually led to renounce the items sale and start with furniture. For the consumer complete satisfaction and lower the rate of returns, he deliberately opened a shop in an Almhult called area near his hometown. Later on, the small newsletter ad transformed into a brochure.

Given that 1950 to late 1990s, it has actually made incredible development in both the incomes in addition to in broadening of business. At first, it had one store while in the late 1990s it has more than 100 stores residing in numerous countries( see Exhibit 1). The company was growing so well in competition with leading rivals in the market. The competitors due to decreased sale threatened the providers of IKEA to not take orders at low rates. In 1961, IKEA contracted with much of the factories manufacturing furniture and hence it once again came up with low expenses. On the other hand, Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study divided its store in a number of departments like inexpensive rate snack bar, kids play-area, in addition to a Sweden Look for the cuisines making it a popular exporter of food. Over a period of time, the item variety was expanded varying from carpets, floor coverings, lamps to various item line needed in furnishing home.

The intention of the company was to sale quality products with reasonable rates with variation in products globally based on a vision to develop a better way of life for almost everyone. Every year, the company celebrates an anti-bureaucrat week to develop much better contact in between the clients and suppliers.
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. It worked with practically a bigger number of suppliers around 2300 worldwide (see Exhibition 2). When there were ecological concerns developing about IKEA's items simultaneously the issuance on the child labor emerged. This has led the company to deal with the difficult situation in the maintenance of their relation with suppliers. Due to this reason, IKEA's popularity decreased dropping the 20% of its sale in Denmark. .

Key Gamers.

There are 2 key gamers in this case one is IKEA Company and other is its suppliers. IKEA's method is to outsource its product manufacturing to suppliers. These suppliers are normally third party and based throughout the world.


The strategy of outsourcing has some problems like rules and policies of these nations. Often suppliers from these underdeveloped countries does not follow needed standards as compare to developed countries. So these weak guidelines and guidelines can result in weak environment policies or kid labour. There is negative impact of these concerns on profits of the business and likewise track record of the company. Since most of the company's customers are based in industrialized nations. These consumers have high expectations from Morgan Stanley Positioning To Be The Sustainability Finance Leader 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 desired IKEA to be socially accountable and wanted that it did not have any connection with kid labour or any other environment concern. As IKEA got its supply of carpets mostly for under industrialized nations like India, Pakistan, Nepal. These under industrialized nations have unrestrained child labour. So this is primary problem that IKEA is dealing with just recently. The company is not controlling its suppliers efficiently. Underdeveloped nations enable child labour because of poverty. Business can not depend on regional federal government for fixing this problem. IKEA strategies likewise did not work well enough to resolve this issue (see Display 3).

Approaching Problem of Kid Labour.

Since it is one of the considerable catalyst in success of company, IKEA technique is to preserve high level of social obligation. Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Analysis is worried on kid labour issue and other ecological problems to support this strategy. There was element of social responsibility which was engrained in the culture of IKEA's founder Ingvar Kamprad (Exhibit 2). Individuals from India had conflicting views regarding kid labour and social responsibility. According to Indian individuals child labour is okay if it is enabled by parents or if children are working under supervision of their parents. There is common practice of child work in India and government is likewise unwinded over this matter if it is unbounded kid labour or if their moms and dads are concurred and enabled their children 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 also encouraged by Swedish Save 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 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 issue. The majority of the families would be doing not have crucial income source since they rely of kid labour. Their basic expenses like food, clothes are pleased through their working of child.( Duflo, 2006) Also laws are not stringent sufficient to deal with concerns of environment or social concerns like kid labour so business require to stress whether it is proper to carry out organisation in India or not. They needed to ensure that their organisation does not take part in any activity which is against social duty. The decision requires to be taken by also incorporating viewpoint of social responsibility from the perspective of consumer not from point of view of suppliers. Consumers need to not be having doubt their company is taken part in any unwanted activity. If requirements regarding social obligation from customer point of view are not followed, there might be unfavorable result. There was case occurred in 1980's. IKEA had actually failed to fulfill necessary standards on formaldehyde for a few of its items. Because case IKEA had lost its profits by 20% in Denmark. Because business's credibility in the eyes of clients had declined. In 1992 there was likewise loss of around $6 to $7 million. This loss was arised from discontinuation of a popular bookcase series since it was not according to required level of formaldehyde. This likewise harm business's reputation considerably.

Action to German producers on Video Program:
Porter's 5 Forces Analysis
In reaction to the invite of German producers for IKEA, the invitation needs to require to be accepted. The very first foremost thing to consider is that the documentary is made by a German company. It is not compulsory to be and accept the invite part of the live discussion however it is of important significance. As it provides Barner to have live conversation during on-air shows. It produces a probability to give much better explanation of their concerns about their relationship with India. Specifically, Barner can potentially show her thought of mind with a clear validation letting people understand that for her it is more crucial to be more worried about the IKEA track record as she is only accountable for this. It is important to get rid of the requirements of child labour however this can perhaps not done by stopping company links with their partner business which involve the trend of child labour. This perception of Barner might help her in maintaining IKEA clear reflection and might also lead to more powerful relationship of the companies. It likewise supplies IKEA to conscious the German producers to eliminate versus the kid labour.

As the German Manufacturers had just used 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 reveals certainly an unclear image of the fact. This might be the strategy of German manufacturers to prove themselves right versus the allegation however leaving IKEA behind full of doubts about their relationship with the companies of India on the concern of kid labour.

On the contrary, the IKEA has been favorably depicted about the issue of Child labour when the problem 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 very same viewpoint as same as that of the documentary makers. This will let the manufacturers to perplex about the problematic issue by clear representation of kid help throughout their labour at the manufacturing industries.

As the German manufacturers declined to show their documentary to IKEA prior to it is telecasted just indicates there wicked intent 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 child as their labour and continue their relations to make incomes with the providers while being conscious of the reality.

Furthermore, Barner has a strong point of reason which is their philosophical statement i.e. everyone makes errors however one takes its duty. The duty of the errors taken by anybody is thought about as the best source of pride.Despite of the truth that Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Help was not conscious about the growing concern over the kid labour along with the involving child's as labours by the industries, the providers of the IKEA. Throughout the approval of contract, IKEA began investigation against its supplier markets all over the world. If shown in the documentary by German producers, the management of IKEA is not afraid of accepting its errors. It will accept its error and take measure to put it right again.

Barner can likewise create another reason on the ineffective obligation over social issues. It is planning to be involved with the social concerns but has actually not taken such measures. In the field of marketing, IKEA is on top with excellent ideas as well as its distinctive products.
Swot Analysis
The issues of the IKEA is towards leading long term relationships with its network of distribution globally. IKEA is not recently associated with any of the social activities about the rights and concerns 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 issues.

Hence, it can be concluded that according to the issue for the business's credibility and share of share need to accept the invitation and present it legitimate thoughts just in case if whatever in documentary protests the IKEA. Specifically, IKEA had started a Structure based upon the principle of securing rights of kid labour and to offer them with complimentary environment to educate themselves. (Barlet, 2006).

Actions on Supply contract with Rangan Exports:.

Under the IKEA issues about the most tactical and rational strategy in recommendation to the child labour problem ought to offer Rangan Exports with another opportunity to assist them in conquering this problem.

IKEA requires to take some procedures in order to identify of the truth. If the proof versus the Rangan export is true hence leading it in the failure on the moral level which were outlaid by Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Solution. This clearly suggests that on IKEA, the provider market resulting in conflict on the kid labour problem.

Subsequently, IKEA deals with a vision of creating much better way of life for each person which is a strong representation for the business to mean the rights of workers of Rangan Exports. The idea of kid labour does not include a single business as a vast network of companies are responsible in putting it ahead. This is among the most crucial issue of social concerns and it would be injustice to blame a single one.

If the management of Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Analysis not decides for the agreement termination, this brings a risk of losing brand position and credibility. This might result in the financial decrease state of IKEA by reduced ratio of sale, less popularity of the brand name and the concerns over social responsibilities. The primary drawback of this substitute is the IKEA deprivation with a rewarding association and may result in the terminating relations with the sources of rug by India.

The 2nd option is to alert the supplier market with continuation of the relate to a pledge to let refrain from doing this mistake again and undoubtedly inhibit the kid labour. This will assist in upkeep of the healthy association in between the provider and the Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Help. This likewise offers an opportunity to better teach the providers about the disadvantages of the child labour. However, this decision is made on the basis of IKEA's self-created policy. This makes apparent for the all providers that IKEA is strictly against the kid labour and really condemn it. This might have a bad effect on the marketplace credibility of Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Analysis by the generation of incorrect publicity.

As it is for the 2nd time that IKEA became a victim of child labour which has actually considerably damaged its credibility. For this function, Barner ought to pursue the help by ILO and UNICEF in addition to NGOs which may help Rangan in escaping the need to used child labour for the carpets production. It might select to spread out awareness among the residents worldwide about the social concerns and how one's life is affected by in terms of social, and ethical worths.

Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Solution by the adoption of very first alternative, terminates its relationship with thesupplier violation. If results in the failure then portray a bad impact on all providers 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 morally. Therefore, Barner should make the decision of disuniting with Rangan public. The press needs to be called upon for the statement of their decision with its factor with the summarization of the policy of IKEA on the use labour of child. She must report all the whole scenario of the problem emerged and be sure that all the providers are strictly following the rules of the agreement. If any of the supplier found in compliance to exploitation of the any of the contract rule offering labour of kid must be fired.

In sum, the company can keep its reputation in the market and somehow can bear the loss produced by one supplier. With the stable credibility in the market, Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Solution will definitely cover its financial crisis within a short amount of time.
Vrio Analysis
Technique Regarding IKEA's Operations in India

IKEA strategy is basically concentrate on long term relationship with its suppliers rather than short term. This long term technique assists IKEA in getting competitive and reputable supplier source. For long term relationship they utilized to help their provider to make complete usage of their capability. They asked providers to provide services and items other than their core items and services. The very same technique that was utilized by IKEA in Poland could be borrowed.( Harapiak, 2013) The technique was to contract out production of furnishings and not produce by its own. IKEA also needs to make certain that they involve public through its marketing actions which need to be valuable in comprehending IKEA's intents.

At earlier time IKEA had no focus on social and environmental concerns which likewise consists of child labor they utilized to focus on just one strategy i.e. offering economical and quality products to customers. That enhanced focus could assist Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Help in improving its credibility towards its clients. Terminating operations from India would not guarantee option to child labor however likewise unfavorable reputation would be built that IKEA is not taking any trusted action to resolve basic problem i.e. kid labor.

There would be also one other unfavorable result i.e. disagreement from public. As there prevails view point that huge business are constantly selfish and are interested in just generating revenue and customers would be believing that IKEA is among them. Public has common view that these business ought to 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 worth too, if IKEA did not take any possible action to fix problem of child labor. For a business like IKEA credibility loss is big loss since worth of company likewise based upon it and also there would be decline in incomes and goodwill if there is any track record loss.

Nevertheless if IKEA think about only sales figure then going out from Indian market is preferable. Since sales from Indian market just contributes little part to IKEA's earnings. In an economical/capitalistic view risk is more than benefits. However to accomplish company's long term objective i.e. "to produce a much better daily life for lots of people" and "in the best interest of the child" it is recommended to not get out from Indian market and continue operations in Indian market with taking essential preventative measures.

Morgan Stanley Positioning To Be The Sustainability Finance Leader 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 monitor whole treatment. That system needs to quickly detect whenever child labor is used in any activity. Suppliers must be motivated to offer education to children so kids can discover something. For that function, suppliers would be having financial problems. As provider has lack of financial resources to provide education to children, so Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Help should help provider economically and supply them financial aids and ask to balance out by future shipments.

There could be another service for this problem that Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Solution could install its own production business integrated with school. All financial needs of that school could be met by earnings from that making company. IKEA needs to run this school by itself and its auditing task ought to be given to any other institute like Rugman to make sure it is working correctly for benefit of kids. (Usman, 2010).

Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Help Needs To Register to Rugmark.

IKEA believes that every business has its own strengths and weaknesses. As IKEA has no experience concerning kid labor so new staff would be required for this function. It must sign up to Rugmart becausethey are experienced in this field of kid labor and ask Rugmort to monitor and develop process suggested by Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Solution. Apart from this there need to be also random tracking from IKEA to make sure that required purpose is accomplished.

Resolving Root Cause of Kid Labor.

Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Solution requires to fix root cause of child labor in order to support its long term vision. IKEA starting executing its technique in multi ways. If it is found that provider did not take any corrective action strategy then IKEA would broke contract with that supplier and there would be no trade with that specific supplier in future.

Examination of Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Analysis Method.

Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Help has commitment to its customers to provide high quality products with low costs. Their technique would make complete use of engaging suppliers and interact to fix problem of kid labor. According to my personal perception as from shareholders point of view, company is not utilizing its resources efficiently through this strategy. They would be having difficult option in future from deciding that whether to increase return on investment for shareholders or continue participation with social obligations of Indian and UNICEF. Due to the fact that of less return of investment if is greatly invests for social welfare, shareholders would be having unfavorable image of IKEA. Then it would result in greater expenses for consumers, if Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Help remained in Indian market. Nevertheless conflicts of interest for society and management would be dealt with. When he came to understand that he acquire a rug which was woven by kid but is now getting informed by provider of IKEA, a customer would not feel comfy. He would be feeling more comfy when he came to know that he purchase a carpet on slightly higher rate which was not woven through child labor.

The primary issue that IKEA is facing presently is kid labor due to the fact that a German documentary maker makes documentary of a supplier of IKEA that was utilizing child labor for production of goods. It was also concluded that Morgan Stanley Positioning To Be The Sustainability Finance Leader Case Study Analysis should sign up Rugmart since IKEA has no any knowledge regarding kid labor and Rugmart is professional having knowledge relating to problems of child labor. As IKEA has no experience regarding child labor so new personnel would be required for this function.