1) What was the major concern of IKEA company?

How did this company try to resolve the

issue of India rugs? How will you solve this issue as an Independent thinker? Propose best
possible way to sort out this issue.
The primary concern of IKEA now was the new German documentary that showcased the use of child
labour in manufacturing IKEA’s rugs. The company was trying to address the problem of child labour and
it had already updated its contracts with its suppliers with the clause of cancellation in case of failure of
meeting the terms of the agreement. IKEA was also working with the International Labour Organisation to
deal with the problem. The company had also hired third-party auditors to conduct surprise audits to
ensure that the suppliers were not employing children. The best way to solve the problem is to work with
the countries’ governments, for the problem is deep-rooted in the economy and has multifaceted causes.
They should work to organise the rug manufacturing sector and ensure payment of fair wages to the
adults and incase a skill needs to be passed on to the future generations there need to be strict age
restrictions on who can be employed and after what age. The debt problem needs to be addressed by
formalising and promoting structured banking systems. Finally, children should be incentivised to attend
school, and the parents should be motivated to ensure their kids are educated to end the vicious cycle.

2) What was the “Knockdown” concept?? Do you think this concept is still relevant in this
changing business world? Explain briefly.
Knockdown Concept is where the furniture is packed in flat boxes and can be easily transferred and
transported by the customers to their destinations. The furniture can be assembled at the consumers
home without much technical assistance. The knockdown concept has been one of the USP of IKEA and
has worked well for the company (lowering transport and assembly costs) and the customers (lower
product prices). I think the product is still relevant in this changing business world. People are now more
mobile than ever before. With changes in job locations and rapid urbanisation, there is a growing demand
for cost-effective mobile furniture. The concept of renting homes is gaining momentum even in India, and
people who have to swap locations prefer investing in low-cost and convenient furniture in comparison.
One major competitor to IKEA’s Knowdown concept is the concept of renting furniture like Furlenco.

3) Do you think the child labour issue was a big issue for the IKEA company? What was ethical
dilemma regarding this issue? How will you take the necessary steps to overcome this issue?
Yes, the Child labour issue is a big issue for IKEA as a corporate citizen by buying from subsuppliers who
were recruiting child labour was indirectly promoting child labour. The ethical dilemma was whether IKEA
should proactively take steps to stop Child labour or continue to operate through its relations with its
suppliers to take the necessary action. I believe IKEA should proactively take steps to stop Child Labour in
the rug manufacturing industries it should do so by first suspending the contract with Rangan Exports to
set an example and send out a message to the other suppliers of the seriouness of the matter. Next, it
should ensure that it sources products with the ‘Rugmark’ lable and also also conduct suprise internal and
external audits at the manufacturing units to ensure strict compliance. Currently, the Indian rugs
accounted for a tiny part of IKEA’s turnover. Still, if it failed to take action against a growing global
concern, the company would garner a negative image in the minds of its customers. IKEA should address
the problem at the source like it had done in the case of the