...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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...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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...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 beating. The toy recalls reinforced public...
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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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...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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...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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...Mattel Cynthia D. Marshall BUS 250 Armando Nunez April 16, 2012 Mattel Mattel started its business in 1945 and company was incorporated in 1947. Company became publicly held in 1960. In 2007, with turnover of $5.6 billion and net profit of $592 million, Mattel was global leader in design, manufacturing and marketing of toys. At that time, Mattel employed more than 30,000 employees and company was selling products in more than 150 countries. Mattel’s portfolio of toys include some of the best selling and most popular toys such as Barbie, Hot Wheels, Matchbox, Radica, American Girl etc. Mattel was always considered as a responsible company. Mattel earned high reputation in the minds of consumers. Mattel was recognized by Forbes magazine as one of the 100 most trustworthy U.S. companies. Mattel was recognized as one of the 100 Best Corporate Citizens by CRO magazine. Mattel outsourced major portion of manufacturing to low cost production countries. In 2007, near 65% of Mattel’s toys were manufactured in China. Company also had factories in Hong Kong, Indonesia, Malaysia, Philippines and Singapore. Near 50% of the revenue of Mattel came from the toys manufactured outside USA. In addition to producing toys in its own factories, Mattel contracted production to 30-50 Chinese companies. Many of these companies in turn subcontracted the production/part of production to other subcontractors. In 1997, Mattel developed a detailed code of conduct - “Global Manufacturing Principles”. These...
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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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...Mattel, Inc: The Lead Paint Recall Ron Montalto tossed the newspaper onto a growing pile. The Sept 22, 2007 Wall Street Journal headline read “Mattel Seeks to Placate China With Apology.” The headlines in the stack of papers told the story: Mattel Announces Third Toy Recall – CNN Money (Sept 5, 2007) Mattel Does Damage Control After New Recall - Wall Street Journal (Aug 15, 2007) Owner of Chinese Toy Factory Commits Suicide – New York Times (Aug 14, 2007) Lead Paint Prompts Mattel to Recall 967,000 Toys– New York Times (Aug 2, 2007) The worldwide news coverage had been intense. Robert Eckert, Mattel’s CEO, had led the news on both morning and evening TV broadcasts, staring directly into the camera and apologizing for Mattel’s failure, while promising to take immediate steps to improve quality. Mattel had also launched a recall website that received millions of visitors and was later referred to as a model of excellence (see Exhibit 1). Corporate communication experts had given Mattel and Eckert high marks for the handling of the crisis. Yet Montalto, a long-term Mattel China veteran, still couldn’t grasp how it had all come to this. Ironically, the bottom paper in the stack headlined “Toymaking in China, Mattel’s Way” heralded Mattel’s decades of success operating in China and was published just days before the initial recall (New York Times July 26, 2007 – see Exhibit 2 for full press list and links). Montalto reflected on key sourcing decisions made nearly...
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...Case 1 Marketing Strategy Jasmine Hall Mattel 1. Yes, Manufacturers of children’s products have a special obligation to not mislead consumers and society. One responsibility to the society that Mattel is performing is their commitment to protecting the privacy of their online customers when visiting their website or purchasing a product online. By assuring parents that their children’s privacy will be respected, Mattel demonstrates that that is takes its responsibility of marketing to children very seriously. They are also responsible for product safety, quality, protecting the environment, customs, evaluation and monitoring and compliance. Mattel’s business partners must have high standards for product safety and quality, adhering to practices that met Mattel’s safety and quality standards, which have been seriously violated in the past. Also, because of the global nature of Mattel’s business and its history of leadership in this area, the company insists that business partners strictly adhere to local and international customs laws. Partners must comply with all import and export regulations. The company also seeks to maintain an independent monitoring system that provides checks and balances to help ensure that standards are met. If certain aspects of Mattel’s manufacturing principles are not met, Mattel will try to work with contractors to help them fix their problems. New partners will not be hired unless they meet Mattel’s standards. If corrective action is advised...
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...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. Declining sales at outlets such as Toys ‘R’ Us marked the start of...
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...Capabilities Group 1 – Phase 2 Report Overall Situation: As the world’s largest toy company, Mattel is a seasoned veteran within the industry. It is well known for brands like Barbie, Fisher Price, American Girl, and Hot Wheels and, moreover, new product lines like Max Steel and Monster High have quickly found success. Despite its command of the toy industry, Mattel faces competition from companies like Hasbro, JAKKS Pacific, and LEGO. Nonetheless, Mattel is poised for continued growth through expansion and investment into developing markets like Latin America, Russia, China, and India and, further, through its acquisition of smaller, more specialized companies. Mattel must better monitor its product quality and brand image in these developing markets and, moreover, strive to better deliver on its vision and promise of creating the future of play. Issues: • Vision: Mattel has a strong vision, “creating the future of play” and despite successful toys, does not necessarily deliver on the “future” element of that vision. • Technology: Mattel has its “toys and dolls” tradition but needs to successfully integrate technology moving forward; this is an extension of the above issue. Fig., 2. • Competition: As with most consumer goods, shoppers are looking for the next “it” thing. Thus, Mattel will continue to face tough competition from rivals and new entrants. Fig., 10. • Economy: As with any economic downturn, sales have struggled. Figs., 5, 9. • Image: In 2007, Mattel recalled more...
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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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...Questions: 1. What relevant Social Issues were depicted in the Embassy case? 2. What impact will the new city ordinance have on Embassy’s business operations? 3. If you were the Marketing manager of Embassy, what measures are you going to institute so as to make Embassy remain as a popular “Hang-out” among teens? Answers: 1. The relevant social issues that were depicted in the Embassy case is about their limitation in serving liquors or alcoholic drinks which is patron by those customers were a certain condition are order for them to be allowed in resuming their operations. 2. The impact that the new city of ordinance will have on embassy business operations will be an effective and efficient flow the business as they follow the conditions given to them. 3. If I am the marketing manager of embassy, the measures that I will be going to institute so as to make embassy remain as a popular “having-out among teens is that I must lessen or limit the serving of alcoholic drinks which will give a bad effect on teenagers” health. Instead, I will suggest serving new drinks that will be loved by teens such as juices or beverages that has only a small time I’ll suggest to serve foods which will be a good compliment to new drinks that I suggested. CASELET 2 MATTEL ISSUES NEW MASSIVE CHINA TOY RECALL ABOUT 9 MILLION ITEMS RECALLED; DANGER FROM MAGNETS AND LEAD PAINT Questions: 1. What do the recalls of various toys say about current product quality strategies...
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...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 standards. In addition to our internal efforts, the Toy Safety Certification Program (TSCP) is being developed in the U.S. by the Toy Industry Association (TIA) and the American National Standards Institute (ANSI). The goal of the TSCP is to create a...
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