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In 1995, Marianne Barner had to face a dilemma of whether or not to continue the IKEA’s partnership with the suppliers of Indian rugs (Bartlett, Dessain, & Sjoman, 2006). This case was controversial due to several reasons. On one hand, terminating a relationship with suppliers will hurt the company’s revenues and financial prosperity. Simultaneously, it would question IKEA’s “cost consciousness”, as the company’s financial stability was of paramount importance to the firm’s success and recognition (Bartlett et al., 2006, p. 4). This aspect was one of the pros of maintaining this partnership with this supplier.
Nonetheless, on the other side, the suppliers were accused of using child labour (Bartlett et al., 2006). Consequently, continuing the partnership with this supplier does not comply with the company’s ER and SHRM philosophy, as it cherishes the integration of managers and employees and does not want to ruin its corporate culture by using child labour. At the same time, applying this concept does not follow IKEA’s long-term organizational goals and a mission statement (Gennard & Judge, 2005; Barry & Wilkinson, 2011).
It remains apparent that reflecting company’s values and philosophies in the relationships with the employees and suppliers will ensure the compliance of the proposed decision with IKEA’s corporate culture and a mission statement (Wilkinson, Bacon, Redman, & Snell, 2009). Thus, terminating this partnership and applying the concepts of strategic human resource management will help evaluate the switching costs to the other producers and contribute to effective decision-making tactics (Storey, Wright, & Ulrich, 2009; Raj, 2007).
In the end, it could be said that a combination of these factors was the primary cause of worry for Marianne Barner. At the same time, it will hurt the company’s financial stability. However, on the contrary, it could be said that continuing this partnership questions IKEA’s ER and HRM strategies since it damages the organizational brand image and reputation.
References
Barry, M., & Wilkinson, A. (2011). Research handbook of comparative employment relations. Cheltenham, UK: Edward Elgar.
Bartlett, S., Dessain, V., & Sjoman, A. (2006). Ikea’s global sourcing challenge: Indian rugs and child labour.
Gennard, J., & Judge, G. (2005). Employee relations. London, UK: Chartered Institute of Personnel and Management.
Raj, R. (2007). Corporate planning and strategic human resource management. New Delhi, India: Nirali Prakashan.
Storey, J., Wright, P., & Ulrich, D. (2009). The Routledge companion to strategic human resource management. London, UK: Routledge.
Wilkinson, A., Bacon, N., Redman, T., & Snell, S. (2009). The SAGE handbook of human resource management. Los Angeles, CA: SAGE Publications.
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