Reference no: EM132906271

Answer the following 2 questions

Known for its stylish ready-to-assemble home furnishings, IKEA has long relied on an extensive supplier net- work to manufacture its products and support its rapid global expansion. It has worked hard to develop a successful approach to encourage high ethical standards among its suppliers, including standards concerning the notoriously difficult issue of child labor. IKEA's initial plan to combat the use of child labor by its suppliers involved (1) contracts that threatened immediate cancellation and (2) random audits by a thirdparty partner. Despite these safeguards, the company discovered that some of its Indian suppliers were still employing children. IKEA realized that this issue would crop up again and again if it continued to use low-cost suppliers in developing countries-a critical element in its cost-containment strategy. 2020-2021 Page 7 of 8 Using child labor, for example, can signal bigger problems: production inefficiencies that require the lowest cost labor, lack of alternative options for children like school or supervised community centres, family health or income challenges that mean children need to become breadwinners, and so on. In the approach, IKEA should maintain its core strategic principles even when they seem to be at odds: low costs, great design, adherence to its ethical principles, and a commitment to a better world.

Question:

1. Explain the ethical problem and how it will affect IKEA strategic position.

2. How do you suggest IKEA should proceed to maintain its strategic position and solve the ethical problem?