Raising Startup Capital Harvard Case Analysis

Home >> Finance >> Raising Startup Capital

Raising Startup Capital Case Study Solution & Analysis


Raising Startup Capital Case Study Solution is an international company in Sweden. It is mainly a house providing business founded by Ingvar Kamprad in 1943. When he started his first mail-order company, he called the company at the age of 17. It was named as IKEA by a combination of terms connecting to his personal 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 sellers by newsletter advertisement. In 1948, by the extra ad in the newsletter about the furnishings has matched the criteria with its rivals. It has actually resulted in renounce the products sale and begin with furniture. For the customer fulfillment and decrease the rate of returns, he purposely opened a shop in an Almhult named town near his home town. Later on, the little newsletter advertisement transformed into a brochure.

Given that 1950 to late 1990s, it has made tremendous development in both the earnings along with in expanding of business. Initially, it had one store while in the late 1990s it has more than 100 shops residing in several nations( see Display 1). The business was growing so well in competition with leading competitors in the market. The competitors due to declined sale threatened the suppliers of IKEA to not take orders at low rates. In 1961, IKEA contracted with a lot of the factories producing furniture and therefore it once again created low expenses. On the other hand, Raising Startup Capital Case Study divided its store in a variety of departments like low-cost price snack bar, children play-area, along with a Sweden Purchase the cuisines making it a popular exporter of food. Nevertheless, over a time period, the item variety was expanded varying from carpets, floor coverings, lights to different product line required in providing house.

The motive of the company was to sale quality products with affordable rates with variation in items globally based on a vision to produce a much better lifestyle for almost everybody. Every year, the company celebrates an anti-bureaucrat week to develop better contact between the providers and customers. Kamprad thought on the fact that it is just possible to make no mistake while you sleep. However, the idea of planning for the future was extremely motivated. In 1986, Kamprad was changed by his Individual assistant who was a skilled individual of the business.
Executive 0Summary
In the mid period of 1990s, IKEA has a broad working networking with about 70 countries finding its products about 11,200. It dealt with practically a bigger number of providers around 2300 worldwide (see Exhibit 2). When there were eco-friendly concerns occurring about IKEA's products at the same time the issuance on the child labor emerged. This has led the business to face the challenging scenario in the maintenance of their relation with providers. Due to this factor, IKEA's appeal reduced dropping the 20% of its sale in Denmark. .

Secret Players.

There are two key players in this case one is IKEA Business and other is its providers. IKEA's strategy is to outsource its product manufacturing to suppliers. These providers are usually 3rd party and based throughout the world.


The method of outsourcing has some concerns like guidelines and regulations of these countries. In some cases suppliers from these underdeveloped countries does not follow required standards as compare to industrialized nations. These weak rules and regulations can result in weak environment policies or kid labour. There is negative impact of these problems on revenue of the business and also credibility of the business. Since most of the company's customers are based in industrialized countries. These customers have high expectations from Raising Startup Capital Case Study Analysis in regards to great quality items with low cost. (Marianne Baxter, 2012) These customers have likewise high expectations from IKEA in aspect of social responsibility. They wanted IKEA to be socially accountable and wanted that it did not have any connection with kid labour or any other environment problem. As IKEA got its supply of carpets mainly for under developed countries like India, Pakistan, Nepal. These under industrialized countries have unchecked kid labour. This is primary problem that IKEA is dealing with just recently. The company is not controlling its suppliers efficiently. Likewise underdeveloped countries allow child labour since of hardship. So business can not depend on city government for resolving this problem. IKEA methods likewise did not work well sufficient to address this concern (see Exhibit 3).

Approaching Issue of Child Labour.

IKEA technique is to keep high level of social obligation because it is one of the significant driver in success of business. IKEA is concerned on child labour problem and other ecological problems to support this strategy.( Naidu & Ramaiah, 2006) Furthermore, Raising Startup Capital Case Study Solution was likewise motivated by Swedish Conserve the Children organization to act "in the finest interest of child".

Response to German producers on Video Program:
Porter's 5 Forces Analysis
In action to the invitation of German producers for IKEA, the invite needs to need to be accepted. The first foremost thing to consider is that the documentary is made by a German business. Nevertheless, it is not necessary to be and accept the invite part of the live conversation however it is of essential significance. As it supplies Barner to have live discussion throughout on-air shows. It generates a likelihood to provide better explanation of their concerns about their relationship with India. Particularly, Barner can perhaps show her idea of mind with a clear reason letting individuals know that for her it is more vital to be more concerned about the IKEA reputation as she is only responsible for this. It is very important to get rid of the criteria of kid labour but this can possibly refrained from doing by stopping company links with their partner companies which involve the pattern of child labour. This understanding of Barner might assist her in keeping IKEA clear reflection and might also lead to stronger relationship of the companies. It also offers IKEA to aware the German producers to fight against the kid labour.

As the German Producers had actually just used IKEA to view some of the shots from their documentary. They must be requested to let them watch the entire film instead of some shots which reveals definitely an unclear image of the fact. This may be the strategy of German producers to show themselves right against the accusation however leaving IKEA behind loaded with doubts about their relationship with the companies of India on the concern of child labour.

On the contrary, the IKEA has actually been positively represented about the problem of Kid labour when the problem was initially installed by the Swedish Tv. There are a set of details on child labour by IKEA which was considerably collected by ILO and UNICEF. This details truly demonstrates the same perspective as same as that of the documentary makers. This will let the manufacturers to perplex about the bothersome issue by clear representation of kid aid throughout their labour at the production markets.

As the television market has great potential to show incorrect news as the fact by their outstanding capability to modify any lie into a fact and makes people believe on it with no doubts. For that reason, it seems rather difficult for Barnerto examine the documentary prior to the session. As the German manufacturers refused to reveal their documentary to Raising Startup Capital Case Study Help prior to it is telecasted just shows there evil intention of blame somebody and their relationships with IKEA perhaps. There might a strong contradiction that the IKEA is fearlessly engaged with a company which uses kid as their labour and continue their relations to make profits with the suppliers while being aware of the truth.

Barner has a strong point of validation which is their philosophical declaration i.e. everyone makes mistakes but one takes its duty. The responsibility of the errors taken by anybody is considered as the very best source of pride.Despite of the reality that Raising Startup Capital Case Study Help was not aware about the growing concern over the kid labour in addition to the involving kid's as labours by the markets, the providers of the IKEA. Throughout the approval of agreement, IKEA started investigation versus its provider markets worldwide. If shown in the documentary by German producers, the management of IKEA is not afraid of accepting its mistakes. It will accept its mistake and take measure to put it right once again.

Barner can likewise develop another validation on the inefficient obligation over social concerns. It is intending to be included with the social concerns however has actually not taken such steps yet. In the field of marketing, IKEA is on top with excellent ideas as well as its distinctive items.
Swot Analysis
The issues of the IKEA is towards leading long term relationships with its network of circulation globally. IKEA is not just recently associated with any of the social activities about the rights and concerns of each individual working in the industries and earning them a handsome profit. In future, IKEA will plan to be part of obligation over the social issues.

Hence, it can be concluded that according to the concern for the company's credibility and share of share need to accept the invite and present it valid thoughts only in case if everything in documentary protests the IKEA. Specifically, IKEA had actually begun a Foundation based upon the principle of securing rights of kid 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 logical and strategic technique in reference to the kid labour issue should provide Rangan Exports with another chance to assist them in conquering this predicament.

IKEA requires to take some procedures in order to identify of the reality. , if the proof versus the Rangan export is true thus leading it in the failure on the ethical level which were outlaid by IKEA.. This clearly indicates that on IKEA, the supplier industry leading to breach 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 business to mean the rights of employees of Rangan Exports. The idea of kid labour does not include a single company as a vast network of business are responsible in putting it ahead. This is one of the most critical problem of social issues and it would be oppression to blame a single one.

Barner can think about 2 alternatives to solve this problem. Initially, either termination of the contract with the Rangan Expors on the basis of involving kid labour to work after the examinations to be sure about the truth. This brings a threat of losing brand name position and track record if the management of IKEA not chooses for the contract termination. This might result in the financial decline state of IKEA by reduced ratio of sale, less appeal of the brand and the issues over social duties. As it is surely not supported by the occupants if any nation to include child labour. This replacement is legal and trustworthy with the policy of IKEA. The primary disadvantage of this replacement is the IKEA deprivation with a rewarding association and might lead to the terminating relations with the sources of carpet by India.

This will assist in maintenance of the healthy association between the provider and the IKEA. This makes obvious for the all suppliers that IKEA is strictly versus the kid labour and genuinely condemn it. This may have a bad effect on the market track record of IKEA by the generation of false publicity.

As it is for the second time that IKEA ended up being a victim of child labour which has actually greatly damaged its credibility. For this purpose, Barner needs to pursue the assistance by ILO and UNICEF as well as NGOs which may help Rangan in getting away the requirement to used child labour for the carpets production. It may choose to spread awareness among the homeowners globally about the social concerns and how one's life is influenced by in regards to social, and ethical worths.

IKEA by the adoption of first alternative, ends its relationship with thesupplier offense. If outcomes in the failure then depict a bad impact on all suppliers by the increased power of bargaining and the infraction of the policy of IKEA. The press ought to 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 child.

In amount, the business can maintain its credibility in the market and somehow can bear the loss developed by one supplier. With the stable track record in the market, Raising Startup Capital Case Study Analysis will certainly cover up its financial crisis within a short time period.
Vrio Analysis
Technique Relating to IKEA's Operations in India

IKEA method is generally concentrate on long term relationship with its suppliers instead of short term. This long term strategy assists IKEA in getting trusted and competitive supplier source. For long term relationship they used to assist their supplier to make complete use of their capacity. They asked providers to offer products and services other than their core products and services. The very same method that was utilized by IKEA in Poland might be borrowed.( Harapiak, 2013) The strategy was to outsource production of furniture and not produce by its own. IKEA likewise needs to ensure that they involve public through its marketing actions which should be handy in understanding IKEA's objectives.

Their intentions must likewise be justifying company's policy. Their actions ought to likewise be according to Kamprad's view i.e. "produce a better daily life for many individuals". They think that they can accomplish this goal by offering highest quality products with low cost. At earlier time IKEA had no focus on ecological and social issues which also consists of child labor they used to focus on only one technique i.e. offering cost effective and quality items to consumers. As time passed they required to consist of other values too to their focus. That enhanced focus might help IKEA in enhancing its track record towards its customers. The new focus included the viewpoint "in the very best interest of the child". So for that function it requires to be ensure that engagements in India would be fulfilling the necessary function too i.e. they did not engage any activity which includes child labor. Majority of population in India is listed below poverty line so there is culture of kid labor and likewise child loan. Moms and dads utilized to allow their children to work in settlement with cash. Stopping operations from India would not make sure solution to child labor however also unfavorable reputation would be developed that IKEA is not taking any trusted action to solve basic concern i.e. child labor.

If Raising Startup Capital Case Study Analysis did not take any possible action to fix problem of kid labor then it would result in loss of sales and IKEA's value too. For a business like IKEA reputation loss is big loss because value of business likewise based on it and also there would be decline in incomes and goodwill if there is any credibility loss.

If IKEA consider just sales figure then getting out from Indian market is preferable. Due to the fact that sales from Indian market just contributes small portion to IKEA's profits.

IKEA required to make sure that kid labor is not utilized for their items. For that purpose IKEA needs a system that can monitor whole treatment. As provider has absence of monetary resources to provide education to children, so IKEA ought to assist provider financially and offer them monetary aids and ask to balance out by future deliveries.

There might be another solution for this issue that Raising Startup Capital Case Study Help might install its own production company combined with school. All financial needs of that school might be fulfilled by proceeds from that producing company. IKEA must run this school by itself and its auditing task must be provided to any other institute like Rugman to make certain it is working correctly for benefit of children. (Usman, 2010).

Raising Startup Capital Case Study Help Ought To Register to Rugmark.

IKEA thinks that every business has its own strengths and weak points. As IKEA has no experience concerning child labor so new personnel would be required for this purpose. It should sign up to Rugmart becausethey are experienced in this field of child labor and ask Rugmort to keep track of and establish procedure suggested by Raising Startup Capital Case Study Analysis. Apart from this there must be also random tracking from IKEA to make certain that required function is achieved.

Handling Source of Kid Labor.

Raising Startup Capital Case Study Solution needs to resolve root cause of child labor in order to support its long term vision. IKEA beginning executing its method in multi methods. If it is discovered that provider did not take any restorative action strategy then IKEA would broke contract with that supplier and there would be no trade with that particular supplier in future.

Assessment of Raising Startup Capital Case Help Strategy.

IKEA has commitment to its customers to offer high quality products with low rates. If IKEA stayed in Indian market then it would result in higher costs for customers. A client would not feel comfortable when he came to understand that he acquire a rug which was woven by child but is now getting educated by supplier of Raising Startup Capital Case Study Help.

Due to the fact that guidelines and regulations of under industrialized countries are different from develop countries, it can be concluded from analysis that Raising Startup Capital Case Study Help had been facing problem in under developed countries. The primary problem that IKEA is facing presently is kid labor due to the fact that a German documentary maker makes documentary of a provider of IKEA that was using kid labor for production of products. Since in this way they would be having opportunity to protect and discuss their case to public, it is concluded that Raising Startup Capital Case Study Analysis must accept invitation to live discussion. It was also concluded that IKEA should sign up Rugmart since IKEA has no any understanding regarding kid labor and Rugmart is professional having knowledge relating to concerns of kid labor. As IKEA has no experience concerning kid labor so new staff would be required for this purpose. The strategy that is suggested for kid labor is that there should be partnership with suppliers and motivate suppliers to perform programs for child welfare and education. As suppliers had absence of resources so they should be provided financial assistance and asked to balance out by future orders. This strategy would make full usage of engaging suppliers and interact to fix concern of kid labor.