Mattel Toys Recall Case

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Mattel’s Motivations for Outsourcing
Companies outsource for a variety of reasons. Most companies primarily outsource manufacturing, labor-intensive jobs to companies located in developing countries at a lower cost. If quality level is maintained, outsourcing can be a great value-added strategy. Through outsourcing, companies can achieve flexibility and are able to focus on their main business. 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,
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safety standards. Actions taken by Chinese government did solve some problems such as regulation inconsistency and lacking corporate responsibility, but they also created bottlenecks that led to shipment delays at an additional cost to the manufacturers. United States politicians criticized both Mattel and China and U.S. government along with the European Union threatened to ban toy imports from China unless government inspectors ensure safety.
Suggestions for Mattel and China
To completely eliminate the trust issue, Mattel should consider moving from outsourcing to offshoring. While it may be costly at first, long-term benefits can be realized as both quality and imitation issue can be successfully addressed. Rather than changing their strategy, Mattel can send their own highly trained employees to work cooperatively with outsourcing manufacturers, supervising their daily activity to ensure quality and compliance instead of testing every toy after the production process is complete. These supervisors should directly report to top officials of the company to ensure an effective information flow. Mattel can also set up compensation incentives to reward contracted manufacturers that offer consistent best quality products.
While enforcing manufacturers to sign documents and enhance production

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