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Kimberly Tucker, Chris Salt, Ashley Solomon Case 7: Mattel: Overcoming Marketing and Manufacturing Challenges 11/01/2010 Marketing Management 6800 Section 004
one of the world‟s largest toy companies. et. He then left Mattel “to work at MGA. Analysis of Issues: Legal Issues: It is evident that Mattel has used poor management practices. as well as their inability to adapt their marketing strategy or product to the constantly changing “demographic and socioeconomic trends” (Ferrell. their forced recall of certain toys that were manufactured overseas. all 459). has been able to successfully keep up with the changing lifestyles of today‟s youth by creating dolls that feature “contemporary. Barbie‟s popularity has suffered over the last several years due to new and innovative competition. Mattel and a federal jury agreed that Carter Bryant was in breach of . several toy products were recalled. is their mismanagement of international subcontractors and vendors and the production of certain toys (the manufacturing process). and MGA Entertainment. Mattel then decided to sue Carter Bryant and MGA for engaging in fraudulent activities. Mattel. all 459). international supply chain issues. ethnic designs and skimpy clothes” (Ferrell.1 The Problem: The problem surrounding Mattel Inc. Advances in technology and changes in socioeconomic and demographic trends have created marketing. Mattel‟s mismanagement and oversight lead to violations in terms of ethical and social responsibilities and safety standards. The creation of MGA‟s line of Bratz dolls and the legal battle that ensued are a direct reflection of this practice. Mattel has been involved in prolonged litigation with Carter Bryant and MGA over a breach of an employment contract and copyright infringement. in which their HR and Operations Departments have failed to ensure that employees adhere to confidentiality clauses in their employment contracts. Issues Relevant to the Problem: Mattel‟s problem of mismanagement can be divided into several issues that need to be considered: legal issues. This is supported by Mattel‟s legal battle with Carter Bryant and MGA. Carter Bryant designed the Bratz dolls while he was employed with Mattel. this new competition. which began producing Bratz in 2001” (Ferrell. like MGA‟s Bratz dolls. Due to Mattel‟s poor management of its overseas manufacturers. their former employee Carter Bryant. all 466). privacy. et. Unlike Mattel. and product development issues for Mattel.. et. Although Barbie remains one of Mattel‟s core products. According to Mattel. Essentially. all 459). have been “embroiled in a bitter intellectual property battle…over rights to MGA‟s popular Bratz dolls” (Ferrell. and an increase in technology-based toys. and the increasing rate at which traditional toys are becoming less appealing to today‟s young audience. et. Inc. Since 2004. In regards to legal issues. in which unauthorized subcontractors and third-party suppliers were hired and unsafe materials used.
html). including subcontractors” (Ferrell. Hong Li Da.4.7289869. all 462). Bratz Petz.com/2007/08/28/business/worldbusiness/28ihtmattel. then decided to “source paint from a nonauthorized third-party supplier: a violation of Mattel‟s requirement to use paint supplied directly by Early Light” (Ferrell. In order to save money and cut corners. et.5 million Chinese-made toys” containing lead paint and powerful magnets that posed a choking hazard for children (http://www. “intentional interference with contractual relations.com/id/26410627/). Mattel became “overconfident about its ability to operate in China without major problems” and failed to recognize that the toy recalls were “more of systemic problem” (http://www.…subcontracted the painting of parts of Cars toys to another China-based vendor” (Ferrell. This vendor.msn.7289869. and aiding and abetting breach of the duty of loyalty” (http://www. this unauthorized supplier used paint that contained impermissible levels of lead. Due to the popularity of these highly stylized dolls among Mattel‟s target audience of “tweens. Mattel was forced to recall “1.msnbc. all 462).msn. MGA built the popular Bratz brand “to include more than 40 characters and expanded it with spin-offs such as Bratz Babyz.. as well as Mattel‟s negligence in investigating its international contractors and auditing the “entire supply chain. et.com/id/26410627/). backpacks and bedsheets” (http://www. et. all 463). The violations and problems began when subcontractors used unauthorized third-party suppliers. Early Light Industrial Co.” domestic sales of Barbie went “down 15 percent in 2007 and 12 percent in the first quarter of 2008. Essentially.nytimes. However. while international sales increased 6 percent in 2008 as opposed to 12 percent the previous year” (http://www.msnbc. As outsourcing and subcontracting increased. et. The jury also found MGA guilty of copyright infringement.2 his employment contract when he developed the Bratz concept while working for Mattel. These oversights left room for certain violations to occur. These unsafe products are the result of overseas manufacturers not adhering to Mattel‟s high ethical and safety standards.msnbc. it is clear that Mattel did not properly manage its global manufacturing process. et. Bratz Boyz and items such as helmets. In fact. “a subcontractor for Mattel.com/2007/08/28/business/worldbusiness/28ihtmattel. this lawsuit and the findings of this lawsuit demonstrate Mattel‟s oversight in the management of its employees and its failure to notice the changing psychographic characteristics of its target market. they “must be aware that the international environment often complicates business transactions” (Ferrell. In terms of copyright infringement. all 463). They “deemed MGA and its CEO liable for what it termed „intentional interference‟ regarding Bryant‟s contract with Mattel” (Ferrell.com/id/26410627/).msn.4. International Supply Chain Issues: Because Mattel has a powerful presence on the international scene. aiding and abetting breach of fiduciary duty. all 459). Mattel‟s ability to monitor the manufacturing process and the . In 2007.nytimes.html).
Mattel has also taken a strong stand on social responsibility. Although contractors may remain in compliance with regulations. et.000 hours investigating its vendors and testing its toys” (Ferrell. employees will be tested on legal regulations regarding safety and production standards. some potential solutions might include hosting training seminars on production and safety standards. and complying with state and federal regulations for their toys. Mattel‟s problems have resulted from ineffective management in the legal realm and with the international manufacturing process. product safety. rectify their “mistakes and…prevent future mistakes as well. they should still be reminded of their importance regularly. improve their marketing strategy and product development. If Mattel required their contractors to attend training seminars based on upholding safety standards. and ethical standards by auditing “each of its manufacturing sites as well as the facilities of its primary contractors” and establishing the Mattel Independent Monitoring Council (Ferrell. they could reduce the number of violations during the manufacturing process. they currently conduct an independent monitoring audit in manufacturing facilities every three years. These training sessions would also increase Mattel‟s employee‟s awareness of the importance of upholding safety and human rights standards. In the short run. et. They have “moved to enforce a rule that subcontractors cannot hire suppliers two or three tiers down the supply chain. there are several other courses of actions Mattel can take in order to remedy their management and socioeconomic issues. et.4 socioeconomic trends. as well as from their inability to adapt to the changing technological and socioeconomic trends. Because some of Mattel‟s contractors were found to be in violation of Mattel‟s safety & human rights standards. all 466). Viable Alternatives: In order to correct their management problems.” and have even “spent more than 50. During these sessions and workshops. Analysis of Alternatives: Training: One solution to Mattel‟s problem of ineffective management is for Mattel to require all of their executives and employees to attend training sessions on production and safety standards. this solution could be somewhat expensive for Mattel because they would have to hire educated and licensed .” Mattel has worked to shore up their “ethical defenses to protect both itself and its customers” (Ferrell. and privacy issues will remain pressing concerns for Mattel until they can better adapt their marketing strategy and product development to these market threats. However. all 464). human rights. Thus. and developing technology-based toys. These training seminars should be held regularly and should not be discontinued for any reason. employing internal auditors. adopting a safe production process. all 463).
et. as opposed to blaming subcontractors for things such as the recall of toys. and pop culture references. A My Scene movie would center on the My Scene girls living the average life of high school girls. the Barbie and My Scene dolls should build a unique . these training sessions would be the first to go. concerts. Mattel management will be able to learn new techniques for detecting problems. Also.5 trainers and make arrangements for both the educators and employees. By expanding their My Scene and Barbie brands in order to contend with the ever increasing “role of technology in consumer products. and remain in compliance with toy regulations and standards. which involves fashion. By employing internal auditors. The auditors will be responsible for monitoring management‟s decision making process. With this. and the shifting lifestyle trends of their target audience (Ferrell. Barbie has appealed to younger girls because her movies have focused on imaginary incarnations of Barbie. With My Scene movies. operating choices. In order to keep track of the intricacy of Mattel‟s operations. Internal Auditors: By adopting internal auditing practices. While potential short term affects could be the cost involved in employing auditors and the resentment of Mattel executives and employees. the story would focus on certain aspects of an average girl‟s life. all 466). and the entire supply chain. Technology-based Products: A third solution to the problem surrounding Mattel is for the company to focus on the development of technology based toys. as well as increase their awareness of potential problems. To counter this recent market trend. like Barbie mermaid. the long-term effect of imparting knowledge that will stay with the employees outweighs the short-term effects. if Mattel fell into financial difficulties. This move to the online world has resulted in the decrease of Barbie doll sales because much of Barbie's target market has developed a taste for online interaction instead of playing traditional toys like dolls. the internal auditors can implement monitoring techniques. So much of our world is online these days.” Mattel would be able to keep up with new competition. in the long run. Mattel will be able to measure the accountability of each manager. However. subcontractors. advancements in technology. They will also be accountable for keeping track of the complexity of these operations and processes. the company would be able to avoid its negligence in the inspection of the international manufacturing process. shopping. knowing that their work would be inspected on a regular basis could motivate employees to stay focused on upholding the company‟s high standards and responsibilities. prevent losses due to fines and litigation.
the Barbie doll has become one of Mattel‟s core products. Today. all 457).A. Brand leveraging is high Dominance in the international market External Opportunities Growth potential with technology-based toys. SWOT Analysis: Internal Strengths Mattel‟s core brands are instantly recognizable Barbie is the #1 doll in the U. In this world. There would be places to play games. et. Since 1960.S. and Hotwheels. girls can log on and make their own My Scene girl that they can then use in the My Scene world to interact with other girls. brings to light the company‟s strengths and weaknesses. These brands are instantly recognizable. Their strengths center on their core brands being instantly recognizable. and movies Threats Increasing global competition Increasing domestic competition Volatile oil prices International laws and ethics Lifestyle changes of target audience Rate of children growing up Role of technology in products Purchasing power and consumer needs in global markets Weaknesses Inefficient management Reliance on Wal-Mart and Target Reliance on traditional toys An internal analysis of Mattel Inc. Expanding the My Scene and Barbie brands will increase Mattel's technological offerings to satisfy the ever growing technology-based toy trend.6 and fun online experience for its target audience. and marketing of family products” (Ferrell. development. and testing. For the My Scene brand. especially in international markets Development of an online social network Expand Barbie and My Scene brands to include sports gear. American Girl. Barbie still remains the “flagship brand” and “number one seller” . “is a world leader in the design. and Barbie is even acknowledged as the number one doll in the United States. in the long run. Fisher-Price. et. However. This family toy company‟s core brands are Barbie. fashion lines. Today. Mattel would be able to better compete with new and innovative competition in this technologically advanced and changing socioeconomic world. design the interior of you own apartment. a whole online social world should be created. music. Mattel has become “the world‟s largest toy company in terms of revenue” (Ferrell. Since its inception in 1959. go shopping for clothes for your My Scene character. manufacture. all 457). This solution could be costly in terms of research. and invite other My Scene players to parties at your place. Mattel Inc.
Decision: After considering the benefits. and weaknesses of each viable solution. as well as the manufacturers themselves. and develop safe products. we think the best option for Mattel is to employ internal auditors. Mattel‟s strength also lies in their international presence. Mattel was able to do this in their creation of the My Scene dolls. Employees must be required to comply with the auditors. the role of technology in today‟s products. all 462). all 461). There are many threats that Mattel has to face. Mattel does have a valuable opportunity in terms of developing technology-based products. there are several aspects to consider in implementing this plan. et. maker of the American Girl collection. while potentially expensive to implement. et. In order for the auditing to occur on a monthly or quarterly basis. will be cost-efficient in the long run due to the fact that Mattel will no longer be involved in legal battles because the auditors will monitor the company‟s employees to ensure that they adhere to correct safety standards. This brand has even “built a trust with parents by creating products that are educational. strengths. must be audited on a regular basis. all 458). Mattel has the power to leverage their brands. and the purchasing power and consumer needs in global markets. the manufacturing process. Since its acquisition in 1993. et. all 457). However. safe. This solution will also allow Mattel to “improve its product design and supervision over product quality. financial problems that include volatile oil prices. With the acquisition of “Pleasant Company. et. They are an international power with “offices in 36 countries…[and] products in more than 150 nations” (Ferrell. In terms of weaknesses. an adequate budget will be established. They also rely too heavily on the production of traditional toys and have not yet delved into the development of technology-based toys. all 460). international laws and ethics. First. Auditors taken from the Human Resources Department and Operations Management Department will be put in charge of monitoring the domestic and international supply .” Mattel was able to realize its long-term strategy of reducing “reliance on traditional products and…[taking] away the stigma surrounding the „perfect image‟ of Barbie” (Ferrell. They are confronted with increasing global and domestic competition. and useful” (Ferrell. the lifestyle changes of their target audience. all 461). Besides these brands. Fisher-Price has become the “umbrella brand for all of Mattel‟s infant and preschool lines” (Ferrell. discontinues the unauthorized use of subcontractors. Mattel has to contend with inefficient management. Implementation of Plan: In order for the internal auditors to be a success and produce the desired outcomes for Mattel. et.” which has been identified as part of Mattel‟s problem in the first place (Ferrell. This solution. et. this strategy allows Mattel to use an existing brand to support the company‟s entrance into a new product category. Due to these brands being instantly recognizable.7 of Mattel (Ferrell. Known as brand leveraging. An external analysis of the company reveals Mattel‟s opportunities and threats.
8 chain. and the integrity of their employees and subcontractors. . an audit report must also be produced and presented to Mattel‟s management. the quality of the products. the manufacturing process. the production process. and the compliance of employees with the company‟s high safety and ethical standards. This report should also be published on their website so their customers will have access to Mattel‟s conclusions about the safety of their toys. At the end of the auditing process.
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