This potential crisis requires immediate and drastic action from Marianne darner. Barber has been asked if KEA wants to send a representative to discuss the issue on TV as the program is being broadcast. In my opinion, they should not send a representative. If were in her position would rather develop a strategy first, and then release a company statement to the public. Going on the program does have its advantages. Their presence on the program could indicate to consumers that KEA is addressing the problem head on, and not trying to hide from the issue.
However, I do not believe there is anything a representative could say that would immediately wipe away the images that the watcher will have just seen. Very often in these types of programs, the station invites the company representative and says they will offer them a chance to defend themselves. However, the interviewer usually ends up attacking the representative even further, and the company does not look any better. I believe they are better off letting the program run, and focusing on how they are going to fix the actual problem before they say anything to the public.
The public is becoming more aware of social issues, and they will be able to tell if KEA is simply trying to save face without any real plan, or if they truly have a strategy to deal with child labor laws. KEA should be aware of factors concerning a porter analysis before they make a decision on how to handle this issue. The furniture market is a large one, and there are several other substitutes that may take KEAS place if this documentary ends up sabotaging the company. It is important that they keep their market share.
Their buyer power may also be affected depending on how they plan to continue or discontinue business with this supplier. Completely cutting ties with a major supplier will undoubtedly cause production and profit to drop drastically. They also need to consider their public image. KEA has done things differently for decades, and they have developed the reputation of a company that cares about its consumers, which is displayed through their significantly lower prices than their competitors. IN the industry today, this reputation is synonymous with ethical practices.
Although child labor has only recently become a hot button issue, it is considered one of the worst offenses in the eyes of the consumer. Finally, KEA must consider that this program is being released in Germany, its largest base of consumers. If they are going to focus on addressing a particular set of consumers it would be the Germans. Regarding the supply contract with Range Exports, I believe that a change of policy is necessary. Cutting them off completely would hurt KEA too much in terms of production, but if they do not take any action it will irreversibly damage their reputation.
I recommend that KEA keeps their contract with Range Exports, but sets up a small team of KEA employed supervisors at the Range plant. This will address the problem of negligence. In past visits to India, excessive have been shielded from child labor factories, and even kicked out of buildings. This shady behavior on the part of the suppliers needs to stop. KEA must give Range an ultimatum: sign a contract that allows KEA supervisors to monitor their plants, or cut off ties completely. Because Range relies so heavily on KEA, I believe that they will certainly sign he contract.
In terms of a long- term strategy, think the same philosophy could be applied. They must intensify their own advising of their factories. The strategy of placing supervisors in every factory can be applied to every factory they deal with, particularly in India. The supervisors will have to report back to KEA headquarters on a weekly basis, reporting any incidences of child labor, or anything that resembles it. This will not increase costs that much, since they would only have to hire an additional handful of employees. Clearly, the ILL mandates can only go so far, and factories are still finding ways to employ children.
KEA must take matters into their own hands. However, this also brings up another area of risk. If this strategy is employed, and child labor is once again discovered in factories associated with KEA, then KEA can no longer claim negligence, since they had some of their own in the factory. The strategy mentioned above includes aspects of (a. ), but I also believe that they should focus on the root of the problem for child labor. Placing supervisors inside of the factories will address the problem head on and immediately, but it is important that the consumer knows KEA is working to solve the bigger issue as well.
I believe that two of the major issues are education and poverty. Spokesman from child labor factories released a sad but true statement that child labor is a phenomenon that arises naturally out of poverty. Until poverty is reversed, the war against child labor will continue. They should team up with Save the Children, and even address this partnership in some of their ad campaigns in order to inform their customers that they are working to better their brand.