The Balance Sheet Harvard Case Solution

Home >> Finance >> The Balance Sheet

The Balance Sheet Case Study Solution and Analysis


IKEA is a worldwide company in Sweden. He named the business at the age of 17 when he initiated his very first mail-order company. It was named as The Balance Sheet Case Study Solution by a combination of terms relating to his individual life from his personalizes to his family farm i.e. Ignvar Kamprad Elmtaryd Agunnaryd.

The competitors due to decreased sale threatened the providers of IKEA to not take orders at low rates. In 1961, IKEA contracted with numerous of the factories making furnishings and therefore it again came up with low expenses. On the other hand, The Balance Sheet Case Study Solution divided its shop in a number of departments like low-cost price snack bar, children play-area, as well as a Sweden Shop for the cuisines making it a popular exporter of food.

The intention of the company was to sale quality products with sensible costs with variation in items worldwide based on a vision to produce a much better lifestyle for practically everyone. Every year, the company commemorates an anti-bureaucrat week to establish much better contact in between the clients and providers. Kamprad thought on the fact that it is just possible to make no error while you sleep. However, the idea of planning 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. It worked with nearly a larger number of suppliers around 2300 internationally (see Exhibition 2). When there were environmental problems arising about IKEA's items simultaneously the issuance on the child labor emerged. This has led the company to face the tough scenario in the upkeep 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 2 key gamers in this case one is IKEA Company and other is its providers. IKEA's strategy is to outsource its item producing to suppliers. These providers are generally 3rd party and based throughout the world.


The strategy of outsourcing has some problems like rules and guidelines of these countries. Often suppliers from these underdeveloped countries does not follow needed requirements as compare to industrialized nations. These weak guidelines and guidelines can result in weak environment policies or child labour. There is unfavorable effect of these problems on revenue of the business and also track record of the business. Since the majority of the company's clients are based in industrialized nations. These clients have high expectations from The Balance Sheet Case Study Help in terms of good quality products with low expense. (Marianne Baxter, 2012) These consumers have likewise high expectations from IKEA in element of social obligation. They wanted IKEA to be socially accountable and desired that it did not have any connection with kid labour or any other environment problem. As IKEA got its supply of carpets mostly for under industrialized nations like India, Pakistan, Nepal. These under developed countries have uncontrolled child labour. So this is primary issue that IKEA is dealing with just recently. The company is not controlling its suppliers efficiently. Also underdeveloped nations permit child labour due to the fact that of poverty. Company can not depend on regional federal government for solving this problem. IKEA techniques likewise did not work well sufficient to address this problem (see Exhibit 3).

Approaching Problem of Child Labour.

IKEA method is to maintain high level of social duty since it is one of the significant driver in success of company. IKEA is worried on child labour issue and other ecological issues to support this strategy.( Naidu & Ramaiah, 2006) Additionally, The Balance Sheet Case Study Solution was likewise encouraged by Swedish Save the Children company to act "in the finest interest of child".

Action to German manufacturers on Video Program:
Porter's 5 Forces Analysis
In response to the invitation of German manufacturers for IKEA, the invitation needs to require to be accepted. Specifically, Barner can possibly demonstrate her idea of mind with a clear reason letting individuals know that for her it is more important to be more concerned about the IKEA track record as she is just responsible for this. It likewise offers The Balance Sheet Case Study Help to conscious the German producers to combat versus the child labour.

As the German Manufacturers had actually only used IKEA to see some of the shots from their documentary. They must be requested to let them enjoy the whole motion picture rather of some shots which reveals definitely an uncertain picture of the truth. This may be the strategy of German manufacturers to prove themselves right against the claims however leaving IKEA behind full of doubts about their relationship with the business of India on the problem of child labour.

On the contrary, the IKEA has been positively represented about the concern of Child labour when the issue was initially set up by the Swedish Tv. There are a set of info on kid labour by IKEA which was significantly gathered by ILO and UNICEF. This info genuinely shows the very same perspective as same as that of the documentary makers. This will let the manufacturers to astonish about the troublesome problem by clear representation of kid assistance throughout their labour at the production markets.

As the tv market has excellent prospective to show incorrect news as the fact by their excellent ability to customize any lie into a truth and makes people think on it with no doubts. Therefore, it seems quite difficult for Barnerto assess the documentary before the session. As the German manufacturers declined to reveal their documentary to The Balance Sheet Case Study Analysis prior to it is telecasted just suggests there wicked intention of blame someone and their relationships with IKEA perhaps. 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 make earnings with the providers while being aware of the reality.

The responsibility of the errors taken by anybody is considered as the finest source of pride.Despite of the reality that IKEA was not aware about the growing concern over the child labour as well as the involving child's as labours by the industries, the suppliers of the The Balance Sheet Case Study Solution. Throughout the acceptance of contract, IKEA started investigation against its supplier markets around the world.

Barner can also develop another justification on the inefficient obligation over social issues. It is intending to be involved with the social issues however has not taken such procedures. In the field of marketing, IKEA is on top with outstanding ideas as well as its attractive products.
Swot Analysis
The issues of the IKEA is towards leading long term relationships with its network of distribution internationally. 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 making them a good-looking earnings. In future, IKEA will plan to be part of responsibility over the social concerns.

It can be concluded that as per the concern for the company's reputation and share of share ought to accept the invitation and present it valid thoughts only in case if whatever in documentary is versus the The Balance Sheet Case Study Solution. Specifically, IKEA had actually started a Structure based upon the principle of safeguarding rights of kid labour and to provide them with complimentary environment to educate themselves. (Barlet, 2006).

Actions on Supply contract with Rangan Exports:.

Under the IKEA concerns about the most logical and tactical method in referral to the kid labour issue ought to supply Rangan Exports with another opportunity to assist them in conquering this dilemma.

IKEA needs to take some steps in order to identify of the reality. If the evidence against the Rangan export is true therefore leading it in the failure on the moral level which were outlaid by The Balance Sheet Case Study Help. This plainly suggests that on IKEA, the supplier market leading to contravention on the kid labour problem.

Consequently, IKEA works with a vision of developing 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 company as a huge network of business are accountable in putting it ahead. This is among the most important problem of social issues and it would be oppression to blame a single one.

If the management of The Balance Sheet Case Study Solution not decides for the contract termination, this brings a risk 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 duties. The primary disadvantage of this replacement is the IKEA deprivation with a beneficial association and may result in the terminating relations with the sources of rug by India.

The 2nd option is to caution the provider industry with extension of the links with a promise to let refrain from doing this mistake once again and definitely prevent the child labour. This will assist in maintenance of the healthy association in between the supplier and the The Balance Sheet Case Study Analysis. This also offers a possibility to much better teach the providers about the disadvantages of the child labour. Nevertheless, this choice is made on the basis of IKEA's self-created policy. This makes obvious for the all providers that IKEA is strictly versus the kid labour and truly condemn it. This might have a bad effect on the market reputation of The Balance Sheet Case Study Solution by the generation of incorrect promotion.

As it is for the 2nd time that IKEA ended up being a victim of kid labour which has actually considerably damaged its credibility. For this function, Barner should pursue the assistance by ILO and UNICEF in addition to NGOs which may help Rangan in escaping the need to utilized child labour for the rugs production. It may select to spread awareness amongst the homeowners worldwide about the social issues and how one's life is affected by in regards to social, and ethical worths.

The Balance Sheet Case Study Help by the adoption of first option, ends its relationship with thesupplier violation. Then portray a bad effect on all suppliers by the increased power of bargaining and the infraction of the policy of IKEA, if outcomes in the failure. It can make a charge for the behaviour which is not fairly. Hence, Barner must make the decision of disuniting with Rangan public. Journalism needs to be called upon for the announcement of their choice with its reason with the summarization of the policy of IKEA on the use labour of child. She ought to report all the whole scenario of the concern emerged and be sure that all the suppliers are strictly following the rules of the agreement. , if any of the provider discovered in compliance to exploitation of the any of the agreement rule offering labour of child need to be fired.


In amount, the business can maintain its track record in the market and in some way can bear the loss produced by one provider. With the steady track record in the market, The Balance Sheet Case Study Help will surely cover its financial crisis within a short time period.
Vrio Analysis
Method Relating to IKEA's Operations in India

The Balance Sheet Case Study Help method is generally focus on long term relationship with its suppliers rather than brief term. The exact same strategy that was utilized by IKEA in Poland could be borrowed. IKEA likewise requires to make sure that they include public through its marketing actions which should be valuable in comprehending IKEA's objectives.

Their intents should also be validating company's policy. Their actions need to also be according to Kamprad's view i.e. "develop a better everyday life for many individuals". They believe that they can accomplish this objective by providing best quality items with low cost. But at earlier time The Balance Sheet Case Study Help had no focus on social and ecological problems which likewise contains kid labor they used to concentrate on just one strategy i.e. providing economical and quality products to customers. As time passed they required to include other worths too to their focus. That enhanced focus could assist IKEA in improving its track record towards its clients. The new focus consisted of the perspective "in the very best interest of the child". For that purpose it needs to be make sure that engagements in India would be fulfilling the required purpose too i.e. they did not engage any activity which consists of child labor. Majority of population in India is listed below hardship line so there is culture of kid labor and also kid loan. Parents utilized to enable their children to operate in settlement with loan. Discontinuing operations from India would not make sure service to child labor however also unfavorable credibility would be developed that IKEA is not taking any dependable action to resolve basic issue i.e. kid labor.

If The Balance Sheet Case Study Help did not take any possible action to fix problem of child labor then it would result in loss of sales and IKEA's value too. For a company like IKEA track record loss is big loss due to the fact that worth of business likewise based on it and likewise there would be decline in profits and goodwill if there is any credibility loss.

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

The Balance Sheet Case Study Analysis required to make certain that kid labor is not utilized for their products. So for that function IKEA needs a system that can keep an eye on entire procedure. That system must quickly find whenever kid labor is utilized in any activity. Providers need to be encouraged to offer education to children so children can discover something. For that purpose, suppliers would be having monetary concerns. As provider has absence of funds to offer education to kids, so The Balance Sheet Case Study Analysis ought to assist supplier financially and offer them financial assistances and ask to balance out by future deliveries.

There might be another option for this issue that The Balance Sheet Case Study Solution could install its own manufacturing business combined with school. All monetary requirements of that school might be fulfilled by profits from that producing business. IKEA ought to run this school by itself and its auditing job ought to be given to any other institute like Rugman to make certain it is working correctly for benefit of kids. (Usman, 2010).

The Balance Sheet Case Study Solution Ought To Register to Rugmark.

As IKEA has no experience concerning kid labor so brand-new staff would be required for this function. It should sign up to Rugmart becausethey are experienced in this field of child labor and ask Rugmort to develop and monitor process suggested by IKEA.

Resolving Origin of Kid Labor.

The Balance Sheet Case Study Solution requires to deal with root cause of kid labor in order to support its long term vision. IKEA beginning executing its method in multi ways. If it is discovered that supplier did not take any restorative action strategy then IKEA would broke contract with that provider and there would be no trade with that particular supplier in future.

Assessment of The Balance Sheet Case Help Method.

The Balance Sheet Case Study Solution has dedication to its consumers to supply high quality items with low prices. Their technique would make complete use of engaging providers and interact to deal with issue of child labor. According to my personal perception as from shareholders point of view, company is not using its resources effectively through this strategy. They would be having hard choice in future from deciding that whether to increase return on investment for investors or continue involvement with social obligations of Indian and UNICEF. Investors would be having unfavorable image of IKEA due to the fact that of less return of investment if is heavily invests for social welfare. Then it would result in greater costs for consumers, if The Balance Sheet Case Study Solution stayed in Indian market. Disputes of interest for society and management would be solved. When he came to know that he buy a rug which was woven by child however is now getting educated by provider of IKEA, a client would not feel comfy. But he would be feeling more comfy when he familiarized that he purchase a rug on slightly higher rate which was not woven through kid labor.

The main problem that IKEA is facing presently is child labor due to the fact that a German documentary maker makes documentary of a supplier of IKEA that was utilizing kid labor for production of products. It was likewise concluded that The Balance Sheet Case Study Help must sign up Rugmart since IKEA has no any knowledge concerning child labor and Rugmart is expert having knowledge concerning problems of kid labor. As IKEA has no experience concerning kid labor so new staff would be needed for this function.