...Summary This case is about the recalls of 2007 by Mattel Toys produced in China due to lead found in paint used to produce the toys and due to loose magnets that could cause serious injury to children if ingested. Mattel blamed the lead paint problem on its Chinese suppliers who had subcontracted with other suppliers. The media storm around the recalls caused a loss of consumer confidence in the “Made in China” brand. Chinese officials felt that Mattel unfairly blamed Chinese suppliers for all the recall problems when in fact, the lead issue was relatively small and the remainder of the recalls was due to design problems over which the Chinese suppliers had no control. They were merely producing the products Mattel had designed in the U.S. and had no control over the design process. Evaluate Alternatives Mattel seems to have lost touch with some of the links in its supply chain for the lead paint related toys and there was a lack of enforcement if the suppliers didn’t follow Mattel’s rules. Some Chinese suppliers also subcontracted to other suppliers who also did not comply with Mattel requirements and Mattel wasn’t aware of the subcontracting. For example, Lee Der was a high quality, trusted manufacturing company which had worked exclusively for Mattel since its founding. Lee Der’s paint supplier was Dongxing New Energy, owned by a best friend of Lee Der’s deputy chair, Chueng. Dongxing was not on the approved supplier list for Mattel and Mattel had not noticed...
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...Mattel Recalls 2007 Communication Implications for Quality Control, Outsourcing, and Consumer Relations [ABSTRACT] In August 2007, America's largest toy manufacturer announced the first of what would become five recalls involving 21 million toys—most of which were manufactured in China. This case study and teaching note examine a corporate response to a global crisis and consider the unique communications challenges facing a corporation that operates in an international, crosscultural arena. The teaching note critiques the response’s suitability to the level and impact of the crisis and recommends alternatives. It illustrates that communicators should be cognizant of their international stakeholders and should proactively manage global issues of public concern such as outsourcing and product safety. An example would be that to avert future recalls, Mattel should work closely with its Chinese suppliers and government agencies to implement realistic quality control solutions for which it can be held accountable. The company must reassure stakeholders that outsourcing to China does not mean sacrificing quality. Regaining consumer confidence and controlling the dissemination of product safety information requires strong corporate communicators who can delicately and deliberately balance complex relationships. Table of Contents I. Case Study 1. Overview 2. Company History 2.1 Beginnings 2.2 Reorganization as Mattel, Inc. 2.3 Products 2.4 Accolades for Ethics 2.5 Financial Performance...
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...Mattel Case Study Travis Horbulyk 100119910 February 9th, 2012 Problems: * Decrease in market share * Damage to their brand image Issues: * Unable to keep up with changing technology * Children not playing with toys as much as they use to * Battered reputation due to the safety of their toys SWOT Analysis: * Strengths * Brand Name * Strong customer base * Excellent variety of products for both boys and girls * Mattel has been in the fore front of the toy industry for 6o years * Strong online privacy policy * Controls fate of Barbie’s main competitor, Bratz. * Has excellent Global Manufacturing Principles * Weaknesses * Battered brand image over recent series of recalls * Losing control of their products and company image due to the outsourcing of their manufacturing to third party overseas manufacturers * They have little pricing power due to heavy reliance on Wal-Mart and Target * Keeping children’s interest when they are growing into the tween demographic. * Opportunities * Online and Video Game Market * Barbie retail store * Social Media * Create new alliances with other companies to help market products * Changing focus from traditional toys (Barbies/Hot Wheels) to electronic toys * Moving production from china back to the United States or a more sustainable country * Threats * Decreasing demand...
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...| Case Study | Mattel’s Toy Recall And Supply Chain Management | | | 5/11/2014 | | 1) Why do firms contract overseas for production of products they sell? Answer: The firms contract overseas for production of the products they sell to gain certain advantages from the different countries. * One of the biggest advantages is cheap labor that cut down the cost of the products. * To get the advantage of the cheap fuel prices and raw materials to make the products at effective cost. * The companies can get the tax benefits and other government policy advantages by producing their products at overseas. * The companies can also get the lower cost suppliers from different countries. * The company can get the advantage of currency fluctuation to produce the products at lower currency rate. 2) What were the primary causes of Mattel’s recall problems? Answer: There were several causes for Mattel’s toy recall. But the primary causes are problems in manufacturing, design and usage. * Manufacturing Problems: One primary problem is the use of excessive lead paint in toys. Lead was commonly used in paint. However, it is a neurotoxin and is harmful to developing brains in children. Repeated exposure can cause serious brain damage. * Design problems: A second cause for recall was defect in product design. That was the result of increasing use of small powerful magnets in children’s toys. If the designs of these toys were...
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...Mattel Case Study analysis II Problem Statement As per the case study, Mattel’s main issue is that they are not living up to their core mission. The case clearly states that Mattel’s philosophy is to satisfy the customer’s needs and wants. Delivering what the customer needs and wants can be segregated into two broad categories: First, product development: According to the case, Mattel’s product development ensures that its portfolio never stagnates. Unfortunately, Mattel has failed to adapt to the evolving demands of children, as they are becoming increasingly technologically savvy and are therefore interested in electronic and interactive rather than traditional toys such as Barbie or Hot Wheels at a younger age. This is evident, for example, from the demise of the ‘ELLO’ building toys for young girls1.The product development disparity between customers’ needs and Mattel’s production is further demonstrated by their lack of attention to their global market, which, according to the text, account for 46% of gross sales. This is evident in the Malaysian Consumers Association having attempted to ban the Barbie brand, one of Mattel’s core products, because of her non-Asian appearance and the lack of intellectual stimulation that Barbie provides; and many other countries are following suit. According to the text, Asian sales account for a mere 11% of Mattel’s gross revenues. Second, Corporate and Social Responsibility: A strong product is no longer enough; customers increasingly...
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...CASE: MATTEL AND TOY RECALLS Toy Industry Our presentation started with the industry introduction. Based on the case, toy industry was growing if we compared the results with the previous year. In 2007, the global toy market was around $71 billion business. Though 36% of the market was on the hands of North America, the growth pace was slower than Asia. Especially in China and India it was estimated that market would increase 25% more than previous year. The toy industry in USA had about 880 companies. Dominant players were Mattel, Hasbro, RC2, JAAKS Pacific, Marvel, and Lego. Moreover, big retailers were entering to the market under their own brand names creating threat for existing toy companies. Toy market categorized many segments in USA market, among them infant/preschool toy segment was the largest and stagnant. Noticeable growth occurred in youth electronics and video games. Production of the toys concentrated in China with 60%. Company Information Mattel, Inc. founded by Harold Matson and Elliot Handler at a garage in 1944. The company name was generated by using letters from founders’ last and first names. Mattel’s first products were picture frames and doll house furniture. Barbie doll was introduced in 1959 and Ken product followed it. With these products, Mattel guaranteed its growth. Hot Wheels product established Mattel’s position as an industry leader. Company’s products were organized in 3 different business groups: Mattel Girls & Boys Brands, Fisher Price...
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...MATTEL TOYS RECALL CASE STUDY Product recall: On August 14, 2007, the U.S. Consumer Product Safety Commission (CPSC) in cooperation with Mattel announced five different recalls of Mattel's toys. On September 4, Mattel announced three more recalls. Some were due to the use of lead paint, while others were due to small magnets coming loose. On August 2, 2007, Mattel's Fisher-‐Price subsidiary recalled almost one million Chinese-‐made toys, including the famous cartoon brands amongst kids:Dora the Explorer and Sesame Street toys, because of potential hazards from parts of the toys which were colored using lead-‐based paint that may have exceeded the US Federal limit of 600 parts per million. Q1. What should the country do to polish its image? -‐First, the central government must ensure that manufacturing quality standards and health and safety laws are tightened and enforced nationwide. Western multinationals...
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...Outsourcing may also enable companies to have access to resources and technology, which may be not have been available locally. Furthermore, expertise in risk management, financial management, and other fields can be contracted through outsourcing. As far as Mattel is concerned, the key motivation for outsourcing is to have access to cheap labor, reducing manufacturing cost significantly. Causes of Mattel’s Recall Problem There are three main causes for Mattel’s toy recall: manufacturing problems which refers to the use of lead paint by Chinese manufacturers; design problem as a result of increasing use of small, powerful magnets that have the risk to be swallowed by children if detached, and; product misuse by young creative children which may cause potential danger to them. Among those three reasons, only manufacturing problems are potentially the result of outsourcing. The design and product misuse issues were not the responsibility of contract manufacturers. Outsourcing Pitfalls While outsourcing can reduce costs for companies, it can also give rise to a series of problems if those companies fail to see a clear picture of their outsourcing partners and fail to identify all the possible pitfalls. Specifically for Mattel, the Chinese toy manufacturer gained their competitive advantages by achieving low costs. However, since they were facing pressures both from tremendous negotiating power of large manufacturers such as Wal-Mart and the monetary policy change that...
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...production and outsourcing? In Mattel´s case the tradeoffs between in-house production and outsourcing are: Advantages of Outsourcing (= Disadvantages of In –house production) | Disadvantages of Outsourcing (= Advantages of In –house production) | 1. Low wages and strategic location of the supplier will translate into low prices. Mattel can receive benefits of having as its supplier a company that is located in a country were the wages are low, as this lower production costs will be translated into the final price of the product.In 1988 based on the McKinsey´s study, Mattel created its Vendors Operation Asia (VOA) that consisted of “about 35 suppliers who offered not only low labor costs but also skills and expertise in building relationships with local Chinese government officials and cutting through the Chinese government bureaucracy (…) in 1997, VOA´s manufacturing activities accounted for about 25% of Mattel´s revenues”.Also, if the supplier company is located in an industry cluster like the toy manufacturing industry in Guangdong, where the physical proximity of suppliers and buyers, the possibility to have inventories Just-in-time, easy finding of trained labor force, among others, will help to reduce costs of production of the outside vendors.Mattel had a special strategy to locate its manufacturing plants, as it owned and operated 10 worldwide, 5 located in China, and the other were in Indonesia, Malasya, Thailand and Mexico. In this way Mattel took advantage of low wages...
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...Daniels Fund Ethics Initiative University of New Mexico http://danielsethics.mgt.unm.edu Mattel Responds to Ethical Challenges INTRODUCTION Mattel, Inc. is a global leader in designing and manufacturing toys and family products. Well-known for brands such as Barbie, Fisher-Price, Disney, Hot Wheels, Matchbox, Tyco, Cabbage Patch Kids, and board games, the company boasts nearly $5.9 billion in annual revenue. Headquartered in El Segundo, California, with offices across the world, Mattel markets its products in over 150 nations. It all started in a California garage workshop when Ruth and Elliot Handler and Matt Matson founded Mattel in 1945. The company started out making picture frames, but the founders soon recognized the profitability of the toy industry and switched their emphasis to toys. Mattel became a publicly owned company in 1960, with sales exceeding $100 million by 1965. Over the next forty years, Mattel went on to become the world’s largest toy company in terms of revenue. In spite of its overall success, Mattel has had its share of losses over its history. During the mid to late 1990s, Mattel lost millions to declining sales and bad business acquisitions. In January 1997, Jill Barad took over as Mattel’s CEO. Barad’s management-style was characterized as strict and her tenure at the helm proved challenging for many employees. While Barad had been successful in building the Barbie brand to $2 billion by the end of the 20th century, growth slowed in the early 21st...
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...Executive Summary Mattel, Inc is the world’s largest toy manufacturer product line includes such household names as Fisher-Price, Matchbox and of course Barbie dolls. The company was founded in 1945 and has grown remarkably since with global revenue approaching $6 billion per annum and counting on 31,000 employees to fulfill the toy needs of millions of children. Mattel began their initial Corporate Social Responsibility program when the idea was still in its infancy for many companies back in 1997; they released their first GRI (Global Reporting Initiative) in 2003 and have done so annually since. In the summer of 2007 the company went through a social responsibility media nightmare after the revelations that various toys in their product line exceeded the safety levels for lead which resulted in the recall of over 18,000,000 products. At the time it was a huge story that naturally impacted the company in a negative way but if there is a silver lining it would be that the company has subsequently fully revamped their testing and auditing processes for all manufacturing. The company’s more robust position in 2011 demonstrates that huge business mistakes can be overcome if lessons are learned, which appears to be the case for Mattel. Introduction Mattel, Inc. was founded in 1945 by Ruth and Elliot Handler and Matt Matson. The company had its headquarter in El Segundo, California and was well-known in the world as the leader in the design, manufacture, and marketing of family...
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...Unit 4 Mattel’s China Experience Case Study Analysis MT460 Management Policy and Strategy Professor: Dr. Margery Mayer Date: June 18, 2011 In 1944, based in California, Ruth and Elliot Handler founded Mattel after World War II. In the 1950’s, Mattel start advertising on Mickey Mouse Club with their core product being Barbie. Barbie was named after their daughter Barbara’s nickname. In the 1960, Mattel became publicly owned and in 1965, their sales top $100 million the company now qualified as a Fortune 500 company. Mattel is engaged in designing, manufacturing, and marketing of toys and family products across the world. The company's key global brands include Barbie, Hot Wheels, American Girl, and Fisher-Price. The company operates in the Americas, Asia Pacific, and Europe. It is headquartered in El Segundo, California and employs 27,000 people. (xplosivestocks.com) The start or recovery from damage done to the well-known brand due to recalls. After paying $40 million dollars in recalls for more than 19 million toys in China, Mattel was in a crisis. Their stock was dropping, lawsuits, media attacks, lost sales, and increased expense of litigation cost. Mattel was now suffering from a tarnished brand name and customer loyalty. Mattel’s challenges included convincing parents that child safety and product safety is more important that revenue, form an alliance with Chinese suppliers and the government to create honorable quality control solutions, improve...
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...Environment Case Study Analysis Kaplan University School of Business MT460 Management Policy and Strategy Introduction In 1944, Elliot and Ruth Handler decided to capitalize on the big baby boom that World War II had caused. They went after the toy market and founded the Mattel Brand. They started out simple with a few essential toys such as Barbie and Hot Wheels. The reception was great and their brand of product took off in the toy market. Throughout the years, the Mattel Company saw profits along with facing many hardships. Management changes brought uncertainty and even more hard times to the company as the world’s focus shifted to the quality and safety of products (Teagarden, 2008). Oversight and poor follow-up with Mattel’s overseas Chinese plants and company designs brought this once respectful top of the market toy manufacture to be looked upon in a negative manner amongst their consumers. Mattel’s Recall of Toys from China and Store Shelves July 13, 2007, Jim Walter, Senior Vice President of Mattel’s worldwide quality assurance, brought disturbing news to Bob Echert the CEO of Mattel at the time. After a customary inspection of the Sarge die-cast toy car in Europe, they had found above federal standard levels of lead in the paint of the car (Teagarden, 2008). Bob Echert new trouble was ahead for the company, but had no idea the enormous effect it would have. The Sarge toy car was just the start of the problems that Mattel would face...
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...International outsourcing to China. Quality control in Chinese suppliers. Economic recovery. Cost decrease. Brand estabilishment. improving our quality systems We strive to sustain our consumers’ trust by employing strict standards that extend from product design to manufacturing and distribution. In 2008, we brought together our most experienced quality experts to review existing standards and began development of an enhanced Quality Management System (QMS) that will standardize the product integrity process in our owned/operated, as well as our vendor facilities. We designed the QMS to build upon the International Organization for Standardization (ISO) 9000 system. An external quality systems consultant validated our QMS and Mattel also sought to benchmark our practices and learn from others with leading quality controls systems. Taking an Integrated Approach As we reviewed existing standards, we saw an opportunity to integrate the various requirements contained in our product quality and safety procedures with our Global Manufacturing Principles (GMP), and combined them into one comprehensive system. The new system will streamline our processes, allowing us to audit our owned/operated and vendor factories against our standards for quality and safety at the same time we monitor for social and environmental compliance. Implementation of our QMS is underway at our owned/operated and vendor factories. New vendors will also be evaluated against the QMS...
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...The magnet crisis that occurred in the middle of August 2007 was another disaster where children swallowed small magnet pieces on many of Mattel’s toys which caused one death and 19 injuries. With both crises combined, Mattel recalled over 19 million toys; 1.5 million from the lead paint incident. On June 8, 2007, Mattel was told that there was lead in the toys’ paint that violated the Lead Poisoning Prevention Act of 1971. The CEO ordered an investigation in China which lead to the cancellation of the licenses of two Guandong-based companies to export which were linked to the recalls. After the investigation concluded by August 2nd, Eckert took to the stand to apologize to the consumers and parents and began the $30 million recall. By mid-August, Eckert was recorded saying he blames China’s subcontractors for violating the company’s policies and “utilized paint from non-authorized third-party...
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