Mattel case study

The problem surrounding Mattel Inc. is their mismanagement of international subcontractors and vendors and the production of certain toys (the manufacturing process), as well as their inability to adapt their marketing strategy or product to the constantly changing “demographic and socioeconomic trends.” This is supported by Mattel’s legal battle with Carter Bryant and MGA, their forced recall of certain toys that were manufactured overseas, and the increasing rate at which traditional toys are becoming less appealing to today’s young audience. Essentially, Mattel’s mismanagement and oversight lead to violations in terms of ethical and social responsibilities and safety standards.

The U.S. government encourages the U.S. companies to sell their products in other countries because other countries may offer better opportunities for growth.

Opportunities: New streams of revenue due to new product. New streams of customers due to new-product demand. New, lower cost contracts with new suppliers. Possible employment of foreign workers to replace costly domestic workers.

The foreign partner can also become a competitor by selling its production in places where the parental company is already in.

The foreign market must offer a location advantage that makes it profitable to produce the product in the foreign country rather than simply produce it at home and export it to the foreign market. It includes resource endowments, economic and social factors, such as market size and structure, prospects for market growth and the degree of development, labour and input materials costs, the cultural, legal, political and institutional environment, government legislation and policies

With bringing your factories to foreign countries you get cheaper labor land and can avoid many taxes.

Recently, the company commissioned Chinese companies to produce some of its toys. These Chinese-made toys were suspected of containing harmful aspects for children such as magnets which could be swallowed by children, hazardous lead paint, and plastic ignition key that kids can sit on or fall.

1. The decision facing Mattel is whether to continue to produce their products internationally where cost are low, or produce them in the United States where costs are significantly higher but quality is better. Mattel might want to even reconsider going global if there sales are decreasing more internationally than in the United States. Mattel needs to determine how many of the products produced internationally were recalled versus the amount of products produced in the United States that were recalled. Mattel also needs to decide how they are going to advertise their products in a way that will convince consumers in the external environment to buy their products, without having any

In the contents of this case there are several management and safety issues and areas for improvement. One issue is Mattel, Inc.’s

     MGA lawsuit Product Recalls High Dependence on Few Customers Declining Market Share Other litigation and legal

1. no. 1-0013 Mattel, Inc: Vendor Operations in Asia Only 3% of the world’s children are here in the U.S. Our biggest opportunities are in growth outside the U.S. – Jill Barad President & CEO Mattel, Inc. The sun was just breaking over Kowloon Harbor. From his corner office, Ron Montalto gazed across the water and watched the early morning light reflect off Hong Kong’s famous downtown skyline. Only 24 hours ago Ron had been riding around the Carolina Speedway in Kyle Petty’s blue Pontiac, emblazoned with the Hot Wheels logo. The event was part of the kickoff for a new series of Hot Wheels® replicas of NASCAR racers. Now, back in Hong Kong questions still swirled around the sourcing

As the makers of children’s toys, Mattel has the ultimate responsibility to ensure that every toy is made within the tightest of safety standards. With the case of the Mattel toy recall, the company acted within the spectrum of their code of conduct that was titled Global Manufacturing Principles. Once the problem was identified, Mattel quickly addressed the issue, by automatically issuing the product recall and conducted a special investigation. The findings from the investigation led to other issues being found in Mattel toys. Once again, Mattel quickly responded with more product recalls, and a deeper investigation into the reasoning behind the faults. Through these actions Mattel did act in a socially responsible and ethical manner.

Clearly  Mattel  did  not  have  sufficiently  tight  quality  control   procedures  in  its  supply  chain  to  compensate  for  the  extra   risks  of  outsourcing  to  relatively  new  Chinese   subcontractors.  Clearly  there  were  design  flaws  in  the  toys   with  the  magnets  that  could  come  loose.   But  Mattel  deserves  praise  for  now  stepping  up  to  its   responsibilities  as  the  leading  brand  in  the  toy  industry.   -­‐What  has  Mattel  done!  :

Global companies source their raw materials and outsource manufacturing of their products to many countries to take advantage of lower costs or high quality production, and/or lower costs of

However, this process needs to be automated and accessible to their Chinese manufacturer so they are better able to prepare to fulfill the orders in a timely manner. This purchase order process should be combined with a plan that incentivizes their manufacturer to process their orders quicker. They also need to penalize the manufacture for faulty products and late delivery. Although they currently have a Quality Control process they should have their own representative participate in the QC the process in China.