Business Development

(1) For this assignment, you will need to read the case, IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A), from your HBR Coursepack. Before diving into the case, remember to review the Case Reading Process Steps that you learned in both the Case Analysis Coach as well as Chapter 3 of The Case Study Handbook.

Step 1: For your initial post to this discussion, you must submit your answers to the following questions:

·

·

· What is the core scenario of the case? Why did you classify it as such?

· Based on your classification of the case, what do you believe are the top 3-5 things you need to know about the situation in order to accomplish what you believe the main character has to do or to resolve the major uncertainty that the main character is facing?

· Based on your reading of the case, provide a brief, one sentence summary of what you know about each of the things on your list.

· Where within the case did you discover the information on each?

Case Analysis Summary

IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A)

Marianne Barner needs to make a decision on behalf of IKEA regarding the accusation brought forth against Rangan Exports. She’s faced a similar scenario just one year before when she was brand new to her position as business area manager for carpets. In the months following, she studied the problem personally and recommended implementation of a revised supply agreement and the appointment of an independent auditor to monitor compliance. She thought she had IKEA’s carpet supply chain under control, so the call from the producers of the German TV documentary ousting Rangan Exports not only came as a surprise but a disappointment as well.

Imagine you are a team of consultants, hired by Barner to help her in this situation. Based on this, answer the following questions, being mindful of calling upon evidence provided in the case.

  1. What are the key decisions Barner needs to make in both the short- and the long-term? As a team, what do you believe are the top 2-3 things you need to know in order to help Barner make each of these decisions? Add additional rows as needed.

Decision

Short or Long Term?

Criteria / What We Need to Know

  1. What action(s) would you take regarding the IKEA supply contract with Rangan Exports? In your answer, include why your team recommends this course of action, any unintended consequences your decision might have, and what you might do to counteract this effect.
  2. What do you recommend Barner do about the company’s longer-term approach to its carpet sourcing? Should they continue to implement the revised supply contract, backed by IKEA’s own monitoring process, or should they sign up to an industry-wide Rugmark labeling and monitoring program? Why? What are the pros and cons of each decision?

IKEA’s Own Monitoring Process

Industry-Wide Rugmark Labeling & Monitoring

Pros

Cons

Pros

Cons

  1. How is IKEA currently taking up the fight against child labor? Do you believe they are on the right path with their approach or should they try a new strategy? In your answer, include reasoning for your recommendation and what evidence you could cite to justify your opinion.

(2) This week in class, Ken Graves (Links to an external site.) , OSU College of Business alum, will challenge our thinking by presenting us with a case from his time as a partner at L.E.K. Consulting (https://www.lek.com), a global strategy consultancy. To arm yourself with the knowledge needed to engage in his presentation, there are two main concepts you need to understand:

· Royalty Monetization: the upfront payment of cash by an investor in exchange for full or partial rights to receive future royalty payments from licensees

· Revenue Forecasting: a calculation of the amount of money that a company will receive from sales during a particular period

To understand these concepts, read the following articles:

· New York Time’s article, The Private Equity Firm that Quietly Profits on Top-Selling Drugs (https://www.nytimes.com/2017/07/08/business/dealbook/drug-prices-private-equity.html?searchResultPosition=1)

· The Fundamentals of Revenue Forecasting (https://www.pragmaticmarketing.com/resources/articles/the-fundamentals-of-revenue-forecasting) by Kevin Hinton and Diane Chen

Step 2: Based on the readings,

· In your own words, provide a definition for each of the above terms.

· What are two key takeaways you’ve learned on each of these concepts?

Step 3: Following Ken’s presentation, you will return to the discussion board and answer the following:

· When faced with a similar situation as Ken described in his presentation, what decision would you have made? Why?

· What evidence would you have used to back up the choice you made?

(3) Step 1: Read the case, Starbucks Corporation: Building a Sustainable Supply Chain, found in your HBR Coursepack .

Step 2: Read the article, A Framework for Ethical Decision Making (https://www.scu.edu/ethics/ethics-resources/ethical-decision-making/a-framework-for-ethical-decision-making/), by the Markkula Center for Applied Ethics.

Step 3: Imagine it is 2007, and you are on the team at Starbucks responsible for implementing C.A.F.E. Practices. You’re well on your way to building a sustainable supply chain through the work, but you are facing both internal and external challenges. Your boss asks your team to make a recommendation on how to move forward as a company. Based on your readings in Steps 1 & 2, answer the questions below:

  1. Which ethical approach do you believe best aligns with Starbucks’ C.A.F.E. Practices? Explain your choice, using knowledge gained through the case narrative and/or exhibits.
  2. If you were to continue adhering to this approach:

· What decision(s) would you make regarding Starbucks’ continued participation in or expansion of C.A.F.E. Practices? Why?

· What action(s) would you take to begin addressing the challenges with implementation outlined in the case?

  1. Following the path you set out, where do you envision Starbucks being today, 12 years later?

Do not jump on the internet and start googling what Starbucks actually did or where they are at today. Your answers should be based solely on what you read in Steps 1 & 2 above.

Case Analysis Summary

Starbucks Corporation: Building a Sustainable Supply Chain

In 2004, Starbucks launched Coffee and Farmer Equity (C.A.F.E.) Practices – one of the coffee industry’s first sets of comprehensive sustainability standards, verified by third-party experts. That first year, Starbucks purchased 43 million pounds of green coffee under the program, representing 14.5% of their total green coffee purchases.

In 2008, in the midst of a global recession and slowing sales, Starbucks was fighting for its survival. Tough decisions had to be made – the closing of stores and the laying off of employees. But in the midst of this, Starbucks held true to its commitment of responsibility, setting a goal that by 2015, 100% of their coffee would be ethically sourced through C.A.F.E. Practices, Fairtrade, or another externally audited system.

In 2015, Starbucks nearly reached their goal, their coffee verified as 99% ethically sourced. Despite being the largest coffee retailer in the world to achieve this milestone, Starbucks isn’t finished. They’re still committed to 100% ethically sourced coffee – and not just for them, for everyone. By sharing their best practices with others in the industry, they hope to reach not just 100% in their own supply chain but to make coffee the first sustainable agricultural product. That’s why Starbucks is among the founding members of the Sustainable Coffee Challenge, a diverse industry coalition led by Conservation International. Formed in 2015 at the United Nations Climate Change Conference in Paris, the Sustainable Coffee Challenge boasts a call to action of making coffee the world’s first sustainable agricultural product.

Drawing insight from your readings, individual analysis, in-class discussion, and any additional research, answer the following questions:

Based on what you know of Starbucks’ history with C.A.F.E. practices as well as their successes and challenges up until now, what steps would you recommend Starbucks take in continuing to pursue that 1%?

What challenges might they face along the way, and what could they do to mitigate these?

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