Quality control and product safety are key challenges for companies that manufacture in third-world countries. In the event of a safety or quality control crisis, corporations must respond quickly and efficiently using clear crisis communication and image repair strategies. By studying the Mattel recall case, we see how a multinational corporation restored its reputation amongst multiple stakeholders; it also implemented policies and processes to divert or lessen future crises.
The lessons learned from Mattel demonstrate the importance of transparent communication practices and may guide companies facing similar communication challenges. The teaching notes will firstly introduce the purpose of the Mattel case study, followed by a brief synopsis. Students will next learn relevant theories and principles from which to understand Mattel’s corporate communication response, particularly strategic crisis communication theory (SCCT) and issues management principles. Students will then compare Mattel’s communication response to the industry best practice principles as outlined by Page and suggest a revised, more suitable and effective course of action.
2. PURPOSE OF CASE STUDY:
Upon completion of this case study, students should demonstrate that:
1. Issues develop over time, not overnight. 2. Through environmental scanning, crisis anticipation and strategic communications planning, corporations can minimize the damage done by emerging and sustained crises. 3. Prompt corrective action can remedy the current crisis and avert future crises and criticism–in the event that a crisis recurs. 4. Companies can turn a crisis into a long-term competitive advantage if it is handled properly from the outset. 5. Outside influences may affect a corporation’s image. Communicators must demonstrate preparedness to deal with external effects. 6. In the event of a crisis, a corporation must address (and prioritize) a number of audiences with tailored messages, for example investors, customers, the media, government and the industry. 7. Initial responses to a crisis will remain present throughout a communications campaign, for better or worse, and must be planned carefully. For example, Mattel’s shifted blame to Chinese manufacturers. This backfired and has remained a controversial point since. 8. Successful cross-cultural communication is essential for corporations operating in foreign countries.
Beginning in August 2007, America’s largest toy manufacturer, Mattel, announced the first of what would become a series of five recalls involving 21 million toys. The majority of the recalls were caused by poorly designed magnets fashioned in the United States, while a smaller number were due to toxic lead paint applied by slipshod Chinese suppliers. On the one hand, Mattel’s various publics, such as parents, investors and the government, have harshly criticized the toymaker; on the other hand, analysts and industry experts have praised it for its quick response and stringent safety inspection systems, which are purportedly the industry’s tightest. Regardless, the case draws attention to the quality control challenges facing companies that outsource manufacturing to developing countries. Students, through discussion of the case study and the attached study materials, will analyze the positive and negative approaches of Mattel’s corporate communications response. They will critique the response’s suitability to the level of crisis, and suggest possible alternatives. They will consider the unique communications challenges facing a corporation that operates in an international, cross-cultural arena.
4. TEACHING COMPONENTS:
4.1 Assignments, Activities and Study Materials:
Students will read the case before class. They will browse Mattel’s website, paying particular attention to the recall page (http://service.mattel.com/us/recall.asp) and the Investors and Media pages (http://www.shareholder.com/mattel/default.cfm). They should review Mattel’s history, financial information, corporate governance documents and social responsibility pages. For additional information, students should visit toy industry websites such as Toy Industry Association (www.toy-tia.org) or consumer action group sites like Healthy Toys (www.healthtoys.org). Students should carefully read the news releases in the case appendix.
4.2 Relevant Theories:
Students must understand the key theories informing Mattel’s crisis and response strategies.
Situational Crisis Communication Theory (SCCT):
SCCT posits that each unique crisis requires a unique response tailored to the events and characteristics at hand. It is based on convergent research from Coombs, Benoit, Benson and Hearit that aims to minimize or deflect all possible negative outcomes such as lost sales or low stock prices.[?] In order to determine the best strategy, corporate communicators must assess the reputational threat of the crisis. This is a two-step process. The first step is to determine the nature of the crisis.