Olam International 2 Harvard Case Help

Home >> Finance >> Olam International 2

Olam International 2 Case Study Solution & Analysis


Olam International 2 Case Study Solution is a global company in Sweden. It is generally a house furnishing business founded by Ingvar Kamprad in 1943. He named the company at the age of 17 when he started his first mail-order company. It was called as IKEA by a mix of terms associating with his personal 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 goods procured by an inexpensive source for the local sellers by newsletter ad. In 1948, by the additional ad in the newsletter about the furniture has matched the criteria with its competitors. It has actually caused renounce the goods sale and start with furniture. For the consumer fulfillment and minimize the rate of returns, he deliberately opened a shop in an Almhult called municipality near his home town. In the future, the small newsletter ad changed into a brochure.

Given that 1950 to late 1990s, it has actually made tremendous development in both the revenues along with in broadening of the business. Initially, it had one shop while in the late 1990s it has more than 100 shops residing in multiple nations( see Exhibition 1). The company was growing so well in competition with leading competitors in the market. The rivals due to decreased sale threatened the suppliers of IKEA to not take orders at low rates. In 1961, IKEA contracted with much of the factories producing furniture and hence it once again came up with low expenses. On the other hand, Olam International 2 Case Study divided its store in a variety of departments like low-cost rate snack bar, kids play-area, as well as a Sweden Shop for the foods 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 required in furnishing home.

The intention of the business was to sale quality products with reasonable costs with variation in products worldwide based upon a vision to develop a much better way of life for practically everyone. Every year, the company celebrates an anti-bureaucrat week to develop better contact between the providers and consumers. Kamprad believed on the fact that it is only possible to make no error while you sleep. Nevertheless, the idea of planning for the future was extremely motivated. In 1986, Kamprad was changed by his Personal assistant who was a knowledgeable individual of the company.
Executive 0Summary
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 issues developing about IKEA's items concurrently the issuance on the child labor emerged. Due to this factor, Olam International 2 Case Study Solution popularity decreased dropping the 20% of its sale in Denmark.

Key Players.

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


There is unfavorable effect of these problems on earnings of the company and also reputation of the business. They wanted Olam International 2 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 techniques also did not work well sufficient to address this issue (see Exhibit 3).

Approaching Problem of Kid Labour.

IKEA strategy is to preserve high level of social responsibility since it is one of the substantial driver in success of business. IKEA is worried on child labour problem and other ecological concerns to support this strategy.( Naidu & Ramaiah, 2006) In Addition, Olam International 2 Case Study Analysis was also encouraged by Swedish Conserve the Kid organization to act "in the finest interest of kid".

Reaction to German producers on Video Program:
Porter's 5 Forces Analysis
In reaction to the invitation of German manufacturers for IKEA, the invitation must need to be accepted. The first foremost thing to consider is that the documentary is made by a German business. It is not necessary to be and accept the invitation part of the live conversation however it is of essential significance. As it supplies Barner to have live discussion during on-air shows. It generates a likelihood to provide better description of their issues about their relationship with India. Specifically, Barner can possibly show her idea of mind with a clear reason letting individuals know that for her it is more vital to be more worried about the IKEA reputation as she is just accountable for this. It is essential to remove the criteria of child labour however this can perhaps not done by stopping service relate to their partner companies which involve the trend of kid labour. This perception of Barner may help her in maintaining IKEA clear reflection and may also cause stronger relationship of the companies. It also supplies IKEA to mindful the German producers to combat against the child labour.

As the German Producers had only provided IKEA to see some of the shots from their documentary. They must be requested to let them watch the entire movie instead of some shots which reveals certainly an uncertain picture of the truth. This may be the method of German producers to prove themselves right versus the accusation however leaving IKEA behind loaded with doubts about their relationship with the business of India on the issue of child labour.

On the contrary, the IKEA has actually been favorably represented about the problem of Kid labour when the issue was at first set up by the Swedish Television. There are a set of info on kid labour by IKEA which was substantially collected by ILO and UNICEF. This details genuinely demonstrates the very same viewpoint as like that of the documentary makers. This will let the producers to perplex about the bothersome concern by clear representation of kid help throughout their labour at the manufacturing markets.

As the tv industry has great potential to show incorrect news as the fact by their outstanding capability to modify any lie into a truth and makes individuals think on it with no doubts. It seems quite difficult for Barnerto assess the documentary prior to the session. As the German producers declined to show their documentary to Olam International 2 Case Study Help prior to it is telecasted just suggests there wicked intention of point the finger at someone and their relationships with IKEA possibly. There may a strong contradiction that the IKEA is fearlessly engaged with a company which utilizes kid as their labour and continue their relations to earn incomes with the suppliers while knowing the truth.

The obligation of the mistakes taken by anybody is thought about as the best source of pride.Despite of the truth that IKEA was not conscious about the growing concern over the child labour as well as the involving child's as labours by the markets, the suppliers of the Olam International 2 Case Study Help. Throughout the acceptance of contract, IKEA began investigation versus its supplier markets around the world.

Barner can also create another justification on the ineffective responsibility over social concerns. It is intending to be included with the social issues but has not taken such steps. In the field of marketing, IKEA is on top with outstanding ideas in addition to its attractive items.
Swot Analysis
The issues of the IKEA is towards leading long term relationships with its network of distribution worldwide. IKEA is not recently involved in any of the social activities about the rights and issues of each specific working in the markets and earning them a handsome profit. In future, IKEA will plan to be part of responsibility over the social issues.

It can be concluded that as per the issue for the company's credibility and share of share should accept the invite and present it legitimate thoughts just in case if everything in documentary is versus the Olam International 2 Case Study Solution. Particularly, IKEA had started a Structure based on the concept of securing rights of child labour and to provide them with complimentary environment to educate themselves. (Barlet, 2006).

Actions on Supply agreement with Rangan Exports:.

Under the IKEA issues about the most tactical and reasonable method in reference to the child labour issue need to supply Rangan Exports with another opportunity to help them in conquering this dilemma.

IKEA requires to take some procedures in order to determine of the fact. , if the proof versus the Rangan export is true hence leading it in the failure on the moral level which were outlaid by IKEA.. This clearly suggests that on IKEA, the provider market leading to breach on the child labour issue.

Subsequently, IKEA works with a vision of creating much better lifestyle for every single person which is a strong representation for the business to represent the rights of employees of Rangan Exports. The idea of child labour does not involve a single company as a large network of business are responsible in putting it ahead. This is among the most important concern of social concerns and it would be oppression to blame a single one.

If the management of Olam International 2 Case Study Solution not decides for the agreement termination, this brings a danger of losing brand position and credibility. This might result in the financial decline state of IKEA by reduced ratio of sale, less appeal of the brand name and the issues over social obligations. The main downside of this alternative is the IKEA deprivation with a worthwhile association and might result in the terminating relations with the sources of carpet by India.

This will help in maintenance of the healthy association between the supplier and the IKEA. This makes obvious for the all providers that IKEA is strictly versus the kid labour and really condemn it. This may have a bad impact on the market credibility of IKEA 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 track record. For this function, Barner should pursue the aid by ILO and UNICEF in addition to NGOs which may help Rangan in getting away the need to utilized kid labour for the carpets manufacturing. It might pick to spread out awareness among the locals internationally about the social concerns and how one's life is influenced by in terms of social, and ethical values.

Olam International 2 Case Study Help by the adoption of first option, ends its relationship with thesupplier infraction. Then portray a bad effect on all suppliers by the increased power of bargaining and the offense of the policy of IKEA, if results in the failure. It can make a charge for the behaviour which is not fairly. Thus, Barner needs to decide of disuniting with Rangan public. Journalism ought to be called upon for the statement of their decision with its reason with the summarization of the policy of IKEA on the use labour of child. She must report all the whole circumstance of the problem emerged and be 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 agreement guideline offering labour of kid ought to be fired.

In amount, the business can maintain its track record in the market and somehow can bear the loss developed by one provider. With the steady reputation in the market, Olam International 2 Case Study Solution will surely conceal its financial crisis within a short time period.
Vrio Analysis
Technique Regarding IKEA's Operations in India

IKEA strategy is generally concentrate on long term relationship with its suppliers rather than short term. This long term strategy helps IKEA in getting competitive and trusted supplier source. For long term relationship they utilized to assist their provider to make complete use of their capability. They asked providers to provide services and items other than their core products and services. The very same technique 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 also needs to make sure that they include public through its marketing actions which need to be handy in comprehending IKEA's intents.

Their intentions ought to likewise be justifying company's policy. Their actions must likewise be according to Kamprad's view i.e. "produce a much better daily life for lots of people". They believe that they can accomplish this goal by providing best quality products with low expense. At earlier time IKEA had no focus on environmental and social concerns which likewise includes kid labor they utilized to focus on just one method i.e. offering affordable and quality items to customers. So as time passed they needed to include other worths too to their focus. That improved focus could assist IKEA in improving its credibility towards its clients. The brand-new focus included the perspective "in the very best interest of the kid". So for that function it needs to be ensure that engagements in India would be satisfying the required purpose too i.e. they did not engage any activity that includes child labor. Bulk of population in India is below hardship line so there is culture of kid labor and also child loan. Parents used to allow their kids to operate in compensation with cash. Stopping operations from India would not ensure option to child labor however also unfavorable track record would be built that IKEA is not taking any reputable action to resolve basic issue i.e. kid labor.

If Olam International 2 Case Study Help did not take any possible action to fix issue of kid labor then it would result in loss of sales and IKEA's value too. For a business like IKEA credibility loss is huge loss because worth of business likewise based on it and also there would be decrease in earnings and goodwill if there is any reputation loss.

If IKEA think about only sales figure then getting out from Indian market is preferable. Because sales from Indian market only contributes little portion to IKEA's incomes. In an economical/capitalistic view danger is more than advantages. But to accomplish business's long term goal i.e. "to develop a much better daily life for lots of people" and "in the very best interest of the child" it is recommended to not go out from Indian market and continue operations in Indian market with taking necessary preventative measures.

IKEA needed to make sure that kid labor is not used for their products. For that function IKEA needs a system that can keep an eye on whole treatment. As supplier has absence of financial resources to offer education to children, so IKEA must help supplier financially and supply them financial help and ask to offset by future deliveries.

There might be one other service for this problem that Olam International 2 Case Study Solution might install its own manufacturing business integrated with school. All financial requirements of that school could be satisfied by earnings from that producing business. IKEA must run this school by itself and its auditing task need to be given to any other institute like Rugman to make sure it is working correctly for best interest of children. (Usman, 2010).

Olam International 2 Case Study Analysis Needs To Sign up to Rugmark.

As IKEA has no experience relating to kid labor so brand-new staff would be needed for this function. It must sign up to Rugmart becausethey are experienced in this field of kid labor and ask Rugmort to keep track of and develop process recommended by IKEA.

Resolving Origin of Kid Labor.

Olam International 2 Case Study Analysis requires to fix root cause of kid labor in order to support its long term vision. IKEA starting performing its technique in multi methods. If it is discovered that provider did not take any restorative action plan then IKEA would broke contract with that supplier and there would be no trade with that specific supplier in future.

Examination of Olam International 2 Case Analysis Technique.

Olam International 2 Case Study Help has commitment to its customers to provide high quality products with low rates. Their technique would make complete use of engaging providers and collaborate to resolve issue of kid labor. However according to my individual understanding as from shareholders perspective, company is not using its resources efficiently through this strategy. They would be having hard choice in future from deciding that whether to increase return on investment for shareholders or continue participation with social responsibilities of Indian and UNICEF. Shareholders would be having negative image of IKEA because of less return of financial investment if is greatly invests for social well-being. Then it would result in greater costs for customers, if Olam International 2 Case Study Analysis remained in Indian market. Disputes of interest for society and management would be resolved. A client would not feel comfy when he familiarized that he acquire a rug which was woven by child but is now getting educated by provider of IKEA. However he would be feeling more comfortable when he familiarized that he acquire a rug on a little greater rate which was not woven through kid labor.

It can be concluded from analysis that IKEA had been facing issue in under developed countries since rules and policies of under developed countries are various from establish countries. The main problem that IKEA is facing presently is kid labor because a German documentary maker makes documentary of a supplier of IKEA that was utilizing kid labor for production of products. Since in this way they would be having opportunity to protect and explain their case to public, it is concluded that Olam International 2 Case Study Help must accept invitation to live conversation. Due to the fact that IKEA has no any knowledge regarding kid labor and Rugmart is expert having knowledge relating to concerns of kid labor, it was also concluded that IKEA must sign up Rugmart. As IKEA has no experience regarding kid labor so new personnel would be needed for this function. The method that is recommended for kid labor is that there should be partnership with providers and encourage suppliers to execute programs for kid well-being and education. As providers had lack of resources so they should be provided financial assistance and inquired to offset by future orders. This method would make full usage of engaging suppliers and interact to deal with concern of child labor.