...MATTEL: A Case Study | October 22 2012 | Case study discussion taken from Stanford’s Graduate School of Business “Unsafe for Children: Mattel’s Toy Recalls and Supply Chain Management” | Rob Breakiron Wenyao Ma Alek Shnayder Jiajie Wang | Contents Introduction 2 Why do companies outsource? 2 What were the primary causes of Mattel’s recall problems? Where these the result of outsourcing? 4 What actions were taken by the principals in the case to address the recall problems? Were these the right actions? Why, or why not? 5 What should Mattel do now? What should governments do? 7 How can accountability be better managed in long, global supply chains? 12 Introduction Mattel, Inc. (NASDAQ: MAT), the world’s largest toy company with over $12.5 billion in revenue, has grown from the little toy company it once was and has certainly come a long way since it was founded in 1945. The exponential world-wide growth has not always come without a hitch. In the late 2000’s Mattel was at a crossroads due to a significant toy recall problem, reaching far beyond the bottom line. During this case write up we discuss what went wrong, whose fault it was, and what can and should be done to not only fix the problem, but eliminate the chance of similar problems for Mattel and other firms in the future. Our case study will tackle the following five questions through in depth discussion: 1) Why do companies outsource? 2) What were the primary causes of Mattel’s...
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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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...Management report on supply chain management and quality management ---based on a case of Mattel recall scandal 1. Introduction Experiencing a steady growth, global toy industry has attracted many research in studying this field, in which one of the largest toy manufacturers Mattel Inc. suffered from a recall scandal in 2007. This essay directs at exploring reasons that lead to Mattel’s operation failure in this scandal regarding two key frameworks in global operation management, namely, supply chain management and quality management. Providing potential recommendations to prevent or react to supply chain failure as well. 1.1. U.S. toy industry According to Statista (2016), the U.S. toy industry amounted to $43.1 billion in 2015. It was projected to reach $45.02 billion by 2016. By means of global supply chains, U.S. enormous demand for toys is satisfied. For example, most toys sold in the U.S. are designed in the U.S., but approximately eighty percent of those sold in the U.S. are manufactured in China (Boyle, 2015). The main characteristics of toy industry are ‘volatility’ and ‘seasonality’ (Wong & Johansen, 2005). Roughly seventy percent of toy sales occur in the final three months of the year, in which families conduct bulk purchase as gifts to children for Christmas. Therefore, during early months of a year when demand for toys are considerably lower, toy manufacturers face problems with much of the unutilized capacity. They also need to appropriately...
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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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...October 21, 2014 Case Study 5: Mattel & Consumer Protection In 2007, Mattel, a global leader in the design, manufacture, and marketing of toys, issued a voluntary recall of 1.5 million Chinese-made toys. A majority of as a result of such carelessness, children’s health and safety were at great risk due to poor toy design, such as loose magnets, and substituting lead free paint for a fatal amount of lead paint on Mattel’s toys to cut corners and save money. As consumers we are naive to believe that boards of directors and higher management in manufacturing companies are highly concerned with our safety. In reality, Mattel has a serious lack of crisis management as well as failing to meet proper safety procedures violating consumers right to safety. As a result millions of children are in harm’s way and are susceptible to life-altering health risks. Having a lack of regulation on imported toys has resulted in high levels of lead paint and loose magnets. Government regulation or a lack of government regulation has also caused many companies aside from Mattel to cut corners and look more at the bottom line as opposed to the safety of consumers. According to Lawrence and Weber, stakeholder theory “argues that corporations serve a broad public purpose; to create value for society”. It can be assumed Mattel was acting unethically with regards to producing unsafe products for their consumers; as a result, devaluing our society in terms of safety. Within the Mattel case the primary...
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...CASE: GS-63 DATE: 09/15/08 UNSAFE FOR CHILDREN: MATTEL’S TOY RECALLS AND SUPPLY CHAIN MANAGEMENT We apologize to everyone affected by this recall, especially those who bought the toys in question. We realize that parents trust us with what is most precious to them—their children. And we also recognize that trust is earned. —Robert Eckert, CEO of Mattel, Inc.1 On August 2, 2007, Mattel announced a voluntary worldwide recall of 83 products in its Fisher- Price toy lines, including characters such as Dora the Explorer, and the Big Bird and Elmo characters from Sesame Street. The recall, which applied to approximately 1.5 million toys sold worldwide after May 1, 2007, was due to the use of excessive lead paint.2 Over the next month, Mattel announced six more recalls that covered toys with lead paint, as well as small magnets that could become loose and be ingested by children. In October, Mattel made yet another recall for lead paint contamination.3 All of the toys recalled had been manufactured in China. Two weeks after the August 2nd recall, the owner of the Chinese factory that had used the lead paint committed suicide. This series of recalls attracted widespread publicity, as well as political and consumer concerns that sometimes bordered on hysteria. Newspapers and television networks jumped on the story, interviewing concerned shoppers and showing toys being removed from shelves and parents bringing toys to stores for lead testing. Mattel‟s brand image took a serious...
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...INDIVIDUAL CASE STUDY PRESENTATION ON MATTEL This is an ‘open-book’ presentation that is designed to assess your ability to apply the essential theories, principles and techniques of supply chain and operations management to a realistic business situation. The questions will draw on material from the other modules in the MSc Supply Chain Management programme. You will be expected to demonstrate your knowledge and understanding of relevant theoretical principles, concepts and techniques; to apply these appropriately to the particular situation described in the case study and; above all, to make sound decisions. You will not gain marks by presenting a general essay on the topic. Please note that all work should be your own. Copying or plagiarism will not be tolerated and could result in no marks being awarded. If quotes or short extracts are used they should be attributed or the source of the information identified. Play Fair The core values of Mattel, the world’s largest, branded toy manufacturer, appeared on its company website, and on its literature, under the heading ‘Play Fair’: “Act with unwavering integrity on all occasions. Treat each other with respect and dignity. Trust each other to make the right decisions. Be accountable for all that passes in front of us.” In 2007 these values would be put to the test as never before, when it was discovered that substantial numbers of Mattel branded toys had been contaminated with lead paint with global signature...
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...businesses to engage with the media during a crisis? What strategies are successful in external communications for business during such times? Compare & contrast two news stories which centre on a crisis for different businesses giving detailed analysis of each communications strategy. This Essay will begin by reviewing crisis definitions and message strategies. Next it will explore translation strategies used by organisations involved in a crisis to communicate with stakeholders. The essay will then consider Ford–Firestone’s tire failure crisis of 2000 as an example of poor crisis management, and contrast toy maker Mattel’s recall crisis of 2007 as an example of successful crisis management. It will first lie out the rhetorical context of each case before embarking on a detailed analysis equating the effectiveness of both firms’ external communications, and in the case of Ford-Firestone, how these might have been alternatively approached in order to avoid detrimental reputational damage. * Fink (1986, from King, 2000) defines an organisational crisis as ‘a situation that can potentially escalate in intensity, fall under close government or media scrutiny, jeopardize the current public image of the organisation or interfere with normal business operations.’ Pearson and Mitroff support this in their ‘five dimensions of a crisis’, explaining that the situation will be ‘highly visible, require immediate attention, have a surprise element, and a need for action’ (Pearson...
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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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...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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...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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...Jessica Jane A. Gonzales BSBA MMIV-B ASSIGNMENT in TQM CASE STUDY: Unsafe for Children: Mattel’s Toy Recalls and Supply Chain Management Discussion Questions: 1. Why do firms contract overseas for production of products they sell? There are several reasons for the companies to outsource some of their non-core business functions. Outsourced company will become a strategic partner who will be coordinating with the company. It has many advantages and helps the company to concentrate on their main business rather than distracting their efficiencies in different directions. Sometimes companies outsource because the company have expertise in that business area. Another reason behind the outsourcing can be the lack of resources in a company, which lead it to outsource to be performed better by an outsourced company. Outsourcing can help to reduce the excess capital expenses and a company will not need to invest in its non-core business through partnering with other company. 2. What were the primary causes of Mattel’s recall problems? There were many issues which became the primary cause of Mattel recalling its goods. There were initially two problems in the Mattel’s toys which were lead excess paint and defective design. According to the recalling volume of Mattel’s goods, most were recalled due to defective design in which small magnets were attached that could become loose. While on the other side, recalling of goods due to excess lead was comparatively low with...
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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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...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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...Mattel Case Study 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 ...
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