...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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...| 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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...About Mattel Mattel, “the world’s premiere toy company,” began in Southern California in a garage workshop that manufactured picture frames. When the company started selling dollhouse furniture made from picture frame scraps, they realized the market potential and decided switch to toy manufacturing. In 1959, Mattel created their most popular toy, the Barbie doll. Inspired by paper dolls, Barbie was a three dimensional doll with which “little girls could play out their dreams.” Throughout the decades Mattel has continued to create and market popular toys, (Hot Wheels and He-man) merge with successful manufacturers, (Fisher Price and Tyco) partner with children’s program companies, (Disney, Sesame Street, and Nickelodeon) obtain licenses and rights to manufacture popular lines (Cabbage Patch Dolls and Harry Potter merchandise) and acquire other companies (Pleasant Company). Since its conception, the Mattel Company has done a lot to make sure it is considered a trustworthy company for children and the community. The corporation established a children’s charity, called the Mattel Children’s Foundation. In 1997 the company created the Global Manufacturing Principles, making them the first company to create a framework to ensure manufacturing would be conducted through consistent standards on a global level. In 1998 they started a $25 million multi-year donation to the UCLA children’s hospital, which is now called the Mattel Children’s Hospital at UCLA. However, Mattel has not...
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...The 2007 Mattel Toy Recall RESEARCH About Mattel Mattel, “the world’s premiere toy company,” began in Southern California in a garage workshop that manufactured picture frames. When the company started selling dollhouse furniture made from picture frame scraps, they realized the market potential and decided switch to toy manufacturing. In 1959, Mattel created their most popular toy, the Barbie doll. Inspired by paper dolls, Barbie was a three dimensional doll with which “little girls could play out their dreams.” Throughout the decades Mattel has continued to create and market popular toys, (Hot Wheels and He-man) merge with successful manufacturers, (Fisher Price and Tyco) partner with children’s program companies, (Disney, Sesame Street, and Nickelodeon) obtain licenses and rights to manufacture popular lines (Cabbage Patch Dolls and Harry Potter merchandise) and acquire other companies (Pleasant Company). Since its conception, the Mattel Company has done a lot to make sure it is considered a trustworthy company for children and the community. The corporation established a children’s charity, called the Mattel Children’s Foundation. In 1997 the company created the Global Manufacturing Principles, making them the first company to create a framework to ensure manufacturing would be conducted through consistent standards on a global level. In 1998 they started a $25 million multi-year donation to the UCLA children’s hospital, which is now called the Mattel Children’s...
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...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: 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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...Mattel Toy Recall Case 1) What were the primary causes of Mattel’s recall problems? Where these related to outsourcing? Mattel had two direct concerns that led to the August 2007 recalls of millions of toys worldwide. The first was the use of paint with excessive lead content on a variety of toys manufactured by Chinese firms contracted to Mattel. The second concern, which led to a vast majority of the recalls during this period, was due to a design defect that could result in magnets becoming dislodged and ingested by children. A highly placed Mattel official “confirmed that the vast majority of the recalled toys, 17.4 million, had been due to [defective design], while … 2.2 million were related to [lead paint].” Although the public outcry that resulted from these recalls centered on poor quality control in Chinese manufacturing operations, the statistics seem to indicate that the outsourcing to China may have not been the biggest problem in this particular set of recalls. That said, some of the recalls relating to the magnet design issue may have resulted from “excessive” caution, according to statements made by Mattel, therefore the true percentage of the recalls caused by lead content rather than significantly dangerous product design is difficult to determine. The proximate cause of the manufacturing recalls, however, was lax oversight of published policy and poor adherence to established guidelines. Chinese manufacturers have historically been extremely low...
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...The Mattel and the Toy Recalls integrative case poses six questions (four from the case and two from the professor) which will be addressed in this analysis. 1. What went wrong with Mattel’s recall strategy? The strategy used by Mattel in the toy recall was focused on passing the blame to China’s work practices and materials used. Mattel prematurely placed disproportionate blame on Chinese manufacturers and appeared defensive and somewhat fearful. In addition, the toy manufacture delayed reporting to the CPSC by a month and a half after they found out that the toys contained lead paint, even though the CPSC guidelines state that a re-call should be issued in 24 hours. 2. Who are Mattel’s stakeholders, who did Mattel cater to in the recall? Mattel’s stakeholders are the parents buying the toys, the retailers, the employees, the shareholders, management, China, business partners, CPSC, the government and third party contractors. The recall catered to the shareholders thus putting the bottom line ahead of the customer safety. 3. What values did Mattel exhibit during the recall? How did it affect Mattel? By waiting over a month to make a potential toy hazard public, Mattel evaded the truth. Even though a little late, Mattel did work with the CPSC to launch an external media blitz to alert the customers. Also the CEO of the company Robert Eckert apologized to parents in a video posted on website and expressed Mattel's emphasis on family when he spoke to parents from his perspective...
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...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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...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 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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...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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...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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...Eckhart, CEO of Mattel (US), had a problem Mattel had discovered on July 30 that a number of its toys manufactured in China contained lead paint The following month had seen a series of recalls, rising political tensions between the United States and Chinese governments, and a suicide But no company had been in China longer than Mattel; the original Barbie had been created there in 1959 Mattel had a depth of experience and a longevity of relationships which should have prevented it. In the end it was those relationships and that longevity which may have contributed to the product safety failures. Global Supply Chains and Risk Toys were based on a global supply chain which was highly sensitive to petrochemical (plastics) and labor input costs, environmental and human rights sensitivities to socially responsible and sustainable business practices, transportation and logistic disruptions, border crossings, cost and time to market – all of which added to risk. Mattel had established its Global Manufacturing Principles in 1997, in which it established principles and practices for all companies and sites which manufactured Mattel products, either company owned or licensed manufacturing • First Chinese Signal – The crisis had actually begun in June when U.S. toy maker RC2 recalled 1.5 million Thomas the Tank Engine products made in Guangdong, the Chinese province adjacent to Hong Kong and long the center for contract manufacturing by Western firms. • Mattel followed with a...
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