Mattel Corporation

Team 4

Ethical Manufacturing. Question 1 The case says that two characteristics make the toy industry unique. The company sells products under three different business groups: Mattel Boys and Girls. Mattel determined the source of the defect and recalled toys. Environmental Sustainability. Mattel makes core bands in company owned facilities. These characteristics mean that toy companies need to make sure they get product to stores at the right time of year to make sales. inspire and encourage members of the toy industry to consider. there is a lot of uncertainty about new product success´ (Bartlett 173). and how to keep recalls from occurring in the future. Power Wheels. As the company was preparing to make a recall for this toy. and that they need to do market research to try to develop toys that children will want and that adults will be willing to purchase. . and went public in 1960. « Second. and Mexico. It also has licensing agreements to make toys like Winnie the Pooh. Batman. The company began in 1944. and other character toys. Mattel made its first Barbie doll in Asia in 1959. the Toy Industry Association. Thailand.S. and closed its last U. ³First. Hot Wheels. tests showed that the paint on toys sold by Mattel had too much lead in the paint. Disney Princesses. Its website says ³TIA seeks to educate. how to best engineer any recalls. After investigation. An industry organization. Malaysia. Fisher-Price. Its main manufacturing locations are China. Mattel was receiving reports of loose magnets in some of its toys as well. In 2007. toy factory in 2002. Indonesia. Matchbox. Superman. and used third parties for non-core brands. The company was faced with difficult decisions about what toys to recall. Elmo. and American Girl Brands.Introduction Mattel is the largest toy manufacturer in the world. It makes toys like Barbie. adopt or strengthen responsible social and environmental initiatives in areas as diverse as: Toy Safety. asks more of members than to be profitable. and Bitty Baby. it found that paint on other toys also had high levels of lead. toy sales are seasonal.

The NPD Group. The main issue as discussed in the August 3rd.87 billion in 2010 compared to $21.Toy Industry Foundation.´In the United States. retail sales of toys generated $21. The case over Mattel and the Toy Recalls covers production issues and supply chain management mishaps in Mattel¶s foreign operations.´ Another noteworthy aspect is the importance of licensed toys to the industry. Although this creates higher profit margins. ³34% of young children in China had blood-lead levels that exceed the safe limit set by the World Health Organization´ (Spencer and Casey. an increase of 2 percent. Thus.34% of apparent consumption in 2003 to 94. This poses serious risks to Mattel and other toy companies. imports showed a steady increase from 85. U. ³Public-health experts say Chinese manufacturers repeatedly revert to lead paint regardless of the rules because it is cheap and readily available. factor costs provide the incentive to find new resources at the best possible prices such as the manufacturers seeking inexpensive ways to paint the toys. .46 billion in 2009. ³Licensed toys represented 25 percent of total industry sales in 2010. Question 2 Managing off shoring for Toy Companies can be a daunting task. the only way to cut-down on paint expense is to use paint with harmful levels of lead.´The toy industry is a growing industry. ³According to leading market research company. Imports from China were 84. proving that the Chinese are not regulating their own production processes and creating hazardous products for consumers.73% in 2007. and also helps factories meet relentless pressure to contain costs´ (Spencer and Casey. nearly all toys are imported.62% of apparent consumption in 2007. 2007). As referred to in the text.S. 2007). In the 2009 Toy Report by the International Trade Administration. The Wall Street Journal quotes a study conducted in 2004 by Beijing University as saying. 2007 edition of TheWall Street Journal states that.Responsible Marketing to Children. and Philanthropy .

This is the greatest challenge for Mattel because they don¶t know who all the primary suppliers are receiving their materials from. This helps Mattel control some of their own production processes while letting some vendors control their own production under the scope of their control. This poses a serious issue to Mattel concerning the audit process. Another challenge is what mix of manufacturing facilities provides the least amount of risk for Mattel. they can work on eliminating some of the intermediary suppliers to reduce the risk involved with the materials used in their toys and be able to audit more of the suppliers. According to the textbook.According to Supply Chain Digest¶s web based article. Overall. . So. Eliminating many of these members can help make business more manageable. and it also appears Mattel did not adhere to its own auditing process of the suppliers QA procedures´ (scdigest. the Chinese manufacturers are breaking policies that Mattel is making. . there are some ³3. How can Mattel audit all the vendors in the supply chain process? Well. 2007). there seems to be a fairly large amount of inherent risk associated with conducting business in foreign countries. a suggestion for Mattel would be to increase the Audit and Quality Assurance staff. Also. Although. ³Mattel minimizes risk of offshoring by employing a mix of company-owned and vendor-owned manufacturing facilities all over Asia´ (Bartlett). which came from another supplier was Mattel needs to decrease the amount of suppliers in the foreign supply chain. Mattel has a very thorough procedure for testing and implementing production process in their off-shoring efforts. a main challenge for Mattel is to successfully and completely audit the production processes in foreign countries. Although. they can¶t and most companies cannot. Completing the above two suggestions can help mitigate regulation and scrutiny from Government agencies. ³it now seems clear that the supplier¶s own testing of the paint.000 companies as part of the supply chain in China and Mattel has connections with only the primary vendors´ (Bartlett). Thus. According to the text.

³Mattel sponsored a 15 minute segment of µThe Mickey Mouse Club¶ for an entire year´ (Bartlett.Although the problem did require a recall.Mattel was a pioneer when it comes to marketing toys.Executives . This leads to another major strength of the company. Mattel executives should be credited with a proactive.Mattel began inspecting every toy imported from the Far East. 28).Having such popular brand recognition has allowed Mattel to diversify overseas. which is where most of their toy production has been outsourced to (Warner 31). rather than a reactive. and Power Wheels just to name a few. 173).This agreement made it possible for Mattel to have many other partnerships with other entertainment companies and allowed them to produce character toys (Bartlett.Judy Warner makes clear that after the initial recall in August 2007. the company who manufactured the defective toys (Bartlett 175). 173).Michael Santoli explains that ³nearly half of company revenue now comes from outside the United States´ (28). Hot Wheels. Mattel made 10 more recalls before the holiday shopping season (31).Question 3 Mattel does a lot of things well.The text explains that in 1955. Barbie.They own brands such as Fisher-Price. they are very well diversified within the toy industry. approach. the problem Mattel faces with the toys is severe enough to issue a recall.These brands afford the company the ability to market their products to many different age groups all across the world. their ability to market their products. Obviously.Mattel has become the preferred creator of Disney and Pixar character toys.Certain toys made in Asia surpassed the United States¶ limit of lead in paint. meaning that the toys had too much lead in the paint (Bartlett 175). giving them exposure to the hit movies and television shows without the risks of having to create the movies or shows themselves (Santoli.Mattel has many different brands that reach a wide variety of children.First of all.Mattel also felt that the problem was severe enough to stop accepting products from Lee Der.

They should also reduce the complex nature of contractor networks. excessive lead in the products surface paint. is done in its headquarters in California. One study show that around 76% of Mattel¶s product recalls is due to its design faults (Mary Jane Credeur and Heather Burke. they seem to have design flaws and issues.proposed that only paint from certified suppliers can be used and that each batch of toys is tested (Warner 34). It needs to have a better research and development where its product is developed. Although Mattel spends around $174 millions in its design facility.Mattel did not have any control of the situation because they went through a third-party manufacturer. Most of the recalls of Mattel products in 2007 are due to the design fault. For long term solutions to these entire problems. So it is of paramount importance to address this issue in order to enhance its product quality. Since 65% of Mattel¶s global production is made in China. they should have a strong quality force to control the quality problems. USA. Mattel has research and development where it designs and develops products.If Mattel had used its own manufacturing plants to manufacture the toys. and loose magnets on some of its products. The fact that Mattel has off-shored most of their production contributed heavily to the fact that there was lead found in the paint on the toys. They should have periodical checkups. September 2007). Mattel should concentrate on the product quality. and a special quality team to arrest the issues. Product quality starts from the product development and design stages of an industry. Question 4 Mattel lately had problems with product quality which has lead to a lot of recalls in the market. To counter these quality issues. the company went through a local vendor to obtain more pigment (Bartlett 175). Mattel needs to concentrate on several problems. rigorous batch inspection. it is unlikely that they would have had such a huge recall of nearly 967. It is not easy for Mattel to control around 3000 .000 toys (Bartlett 176).When Lee Der¶s paint supplier ran out of pigment.

Mattel needs to find the root cause of all its quality problems in order to enhance product quality. They might have to control this aspect of testing. These complex network issues indirectly took Mattel to deal with a fake company which supplied yellow paint with excessive lead to one of its contractors on its products. This would help them to enhance the product quality. Mattel is a fully globalised toy industry which should understand its opportunities and risks in foreign markets. Consumer Product Safety Commission (CPSC).companies which directly and indirectly supplies for Mattel. This would help them to arrest another big issue of loose magnets in some of its products. So they must have a quality team which should inspect at the export point. Question 5 The safety of toys and other children¶s products is managed by the U. Inspection of raw materials would also enhance the product quality. The major hazard of toys is a result of excess lead in the surface paint of the toys. According to Consumer Safety Product Act 1972. The exposure to lead can affect every organ and system in the human body. Mattel should recall the toys on which lead-based paint is used with excessive amounts of lead.500 toy-related injuries occurred in 2006. Also Mattel outsources their product testing to their contractors and also help them to build inspection facilities. so that they can make sure of defects right in the production stages. This will enhance the product quality before being exported all around the world. 22 toy-related deaths and estimated 220. They only have around five factories which they own in China and others are all contracted. Mattel had recalled several millions of toys used . 600 parts per million (ppm) is a permissible maximum amount of lead in products accessible to children (Bartlett & Beamish. 2011). According to CPSC. The majority of recalls in recent years involved toys made in China. Actually.S. This would not be the right decision for their product testing. Mattel should inspect all of the raw materials before it is produced. Therefore.

sit or fall and result in injury. 2007). On the high chair. Also. 2010). Mattel took a more proactive approach and used more communications vehicles to reach parents across the globe. Mattel should recall the toys with design defects such as sharp edge which may injure children. Dora the explorer lines.hazardous levels of lead paint made in China during 2007 such as Sesame street characters. Another major hazard of toys is a danger associated with small magnets in toys. The tricycles include plastic keys with sharp edges on which a child may strike. Voluntary recalls or improvement campaigns have a significant positive impact on the manufacturer¶s image. and Doggie Day Care play sets made in China with magnet problems during 2006 (Bush. Barbie and Tanner play sets. Actually. children can fall on or against the pegs on the rear legs of the High Chair resulting in injuries or lacerations (Kasturi. Also they made its consumer website more interactive with a videotaped message from a CEO of Mattel to further clarify . Baby Gymnastics Tetherball and a High Chair. Recently. Batman and One Piece action figures. The problems are the magnets can come loose easily and children are able to swallow it. Mattel recalled five Fisher Price Trikes toddler tricycles. 2007). The "valve of the inflatable ball" on the aquarium and tetherball "can come off and pose a potential choking hazard to young children. Thus. Mattel should recall the toys with magnets that may loose and be harmful if swallowed. Barbie accessories and so on (Merle. which can be fatal (Bartlett & Beamish. It can cause intestinal perforations and blockage. Mattel should have proactive recall strategies to avoid a loss in consumer loyalty during a recall crisis. 2009). They bought advertising space in major news papers and interviewed on global broadcasting company across the country to address parents. when the major recall crisis occurred in 2007. or toys which can cause choking hazard based on the standard of the Consumer Product Safety Commission. 2011). Sarge toy cars. the Ocean Wonders Kick & Crawl Aquarium. Mattel had recalled several millions of Polly Pocket play set. as well as consumers¶ loyalty and purchase intentions (Souiden& Pons.

companies do not have access to actual item-level information about what is being shipped. They set up toll-free number to answer about consumer inquiry. 2007). suppliers and manufacturing processes involved in assembly. It¶s quite possible Mattel recalled a lot of Barbie dolls that did not have any lead paint on them (Hoffman. In aspect of logistics of recall. . For current recall. as well as through distribution channels and service providers.the situation. Mattel is providing pre-paid mailing labels that should help predict the timing and volume of toys it's receiving from consumers (Kator. Mattel's first priority was to convey the facts and issues to parents that would allow them to determine if they owned the toys in question (Bush. In many cases. Shippers must map their materials to raw components. first. 2007). Mattel should try to create as much visibility as they can. 2007). Tainted products must be traced not only to the consumer but to their particular manufacturer or supplier. Mattel should identify which products are involved and which are not.

Creduer. pg. Retrieved from <http://library. 2009. S.88- . Retrieved from<www. Mary Jane and Heather Burke (September 2007).co. 7 Feb. 2 pgs. 32. Web. October 1).bloomberg. Toy manufacturer Mattel recalls its unsafe toys in India. Department of Commerce. M. 4 Dec. Vol. 62 no9 9-10 S. (2007. New York: McGraw-Hill. 1. Beamish. (U. Cribs recalled on deaths. Christopher A. W. The Washington Post. Iss. C. Mattel Issues Third Toy Recall Of the Summer. New York. Print. 10. < 8542511&Fmt=7&clientId=53813&RQT=309&VName=PQD > Kasturi.php?contentid=4512 &issueid=179> Hoffman.Traffic World. (2007. C. (2007. Retrieved from <http://www. R.. 2008.). PRweek. U. Merle.umi. October 2).search.S.S.Transnational Management. McClatchy .Retrieved from<http://gq8br7rw2g.pdf>.pittstate. ed. (2010. and Paul W. Newark. The logistics of a recall.serialssolutions. Toys in Reverse.europeansupplychainmanagement. 166-78. Trevor.Tribune Business (March 2008). Hidden Dangers.doc."International Trade Administration.Resources "2009 Toy Materials er=home> Davies. August 20).edu:2048/login?url=http://proquest. 2011. Mattel takes crisis efforts global for second round of toy recalls. Sixth 1755871&sid=1&Fmt=3&clientId=53813&RQT=309&VName=PQD > Kator. September 5). (2007). Retrieved from <http://library.. Mattel apologizes to China.

. 2011. 2007).2004&ctx_enc=info%3Aofi%2Fenc%3AUTF-8&rfr_id=info:sid> Santoli.html> ProQuest."Mattel's Blues. Global Supply Chain: Mattel Incident ShowsCompanies Can¶t Go On the Cheap when Sourcing from China. Wall Street Journal. consumer loyalty and purchase intention. Vol. & Pons. M. Toy Industry Retail Sales Generated $ NPD Group.php?cid=1165&ctype=content> Souiden. Retrieved from <http://www. ProQuest. Web. Jane. and Casey. Iss." NPD Group. Nicholas. 106. 2011. (August. F. "Play Time For Mattel. <http://www. 2011. pg. Must Take Proactive Control of Entire Supply Chain. (2009). 27 Jan.87 Billion In 2010. N. .html > "U. Product recall crisis management : the impact on manufacturer¶s image. Web. SCDigest Editorial Staff. 2007: ABI/INFORM Global. Toy Recall Shows Challenge China Poses to Partners. 18.scdigest." Directorship1 Dec. Web. (August 2007). 2010: ABI/INFORM Global. J.7 Feb. Spencer. 7 Feb.wsj. Retrieved from <http://online. 2011. The Journal of Product and Brand Management . 2. " Barron's13 Feb.

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