Based in California, Mattel, Inc. designed, manufactured, and marketed a broad variety of toy products. The company’s core product lines included Barbie fashion dolls, Hot Wheels die- cast vehicles, Fisher-Price preschool toys along with Disney toys and games like Scrabble (Johnson, 2010). Summer of 2007, Mattel, a global leader in toy manufacturing was faced with a tough challenge of restoring their consumer confidence following several recalls of their toys made in China. Mattel known for possessing the gold standard of testing and safety of its products came under scrutiny for several infractions with their toys.
One of which had unacceptable lead levels in the paint and another contained a magnet that could un-attach and potentially harm a child. Mattel had strict requirement for its contract suppliers, which were subject to inspection by independent auditors (Baron, 2013). These issues clearly feel through the cracks or where random isolated incidents. Nonetheless, in order to achieve their normally high standards, Mattel needs to establish a direct relationship with vendors who manufacture the raw materials for their toys and set safety guidelines.
Mattel has had to assess whether its current policies and procedures were sufficient to ensure safety. In addition to procedures such as factory audits and inspections, technology could be used to mitigate certain risks (Baron, 2013). Clearly Mattel does not have a sufficiently tight quality control procedure to compensate for the risks of outsourcing to Chinese subcontractors. Design flaws are also a major issue. Although the company responded to the crisis quickly Mattel still faces a number of problems, including significant costs associated with the recalls and new monitoring systems, potential lawsuits and a hit to its reputation.
Stakeholders have something at risk, and therefore something to gain or lose as a result of your organization’s activity. By using their influence, stakeholders hold the key to the environment in which your organization operates and therefore its subsequent financial and operating performance (Harrison, 2013). Key stakeholders in this Mattel case study included: competitors, consumers, employees, government regulators, news media, regulatory officials, shareholders, and suppliers.
During a crisis your organization has to look at itself from your stakeholders’ perspective because stakeholders will be most concerned at how the crisis incident will affect them. They are expecting your organization to communicate with them, so it is vital to be proactive if possible. Developing a stakeholder relation management strategy around crisis simulations will be a great help to guide the corporate actions when a crisis does hit (Harrison, 2013). The Crisis Not every crisis can be averted. After initial investigation Mattel discovered the root of the problem, unacceptable lead paint levels and design flaws.
Lee Der a contractor for Mattel had run out of yellow pigment powder, which was necessary to paint the toys. Lee Der had found a non-certified company with the needed supplies to keep production going. This company had knowingly provided false documentation to the company, Lee Der certifying the quality of the powder. A fault could be put on Lee Der for conducting business with a non-certified Mattel approved company. Even with Mattel being ignorant of the transaction of its contractor a more stringent policy should have been in place.
Absolutely, no business with non-certified companies. The issue at hand is what should Mattel do? Does Mattel voluntarily recall products or wait for an investigation to be conducted to prove of the wrongdoing and possibly harmful toys? Mattel had no control over this decision and could claim limited fault or responsibility of this issue. The decision that Mattel must make is an ethical or a financial decision. A voluntary decision would satisfy the ethical need. Mattel needs to remain a respectable company in the eyes of parents.
The safety and well being of ones children is important. If Mattel decided on a voluntary recall, it would be faster and could be coordinated with the consumer product safety commission (CPSC) (Baron, 2013). This voluntary recall would seem like an admission of fault and that Mattel chooses to do the right thing for the safety and the health of its consumers. If Mattel chooses to wait for the CPSC to decide to recall the toys it would be a longer wait. The CPSC was understaffed and was required to satisfy procedural requirements before it could order a recall.
This delay could continue to produce revenue for Mattel, but the new media would surely broadcast the timeline no doughtily portraying Mattel as more concerned over bottom-line than child safety. The right decision that Mattel must make is imperative to the reputation of the company. The Decision and Aftermath Mattel chose an ethical course of action. Mattel decided to voluntarily recall the toys but delayed the recall until it could put up a Web site with information for retailers and consumers about how to return the products.
The majority of the toys in the recall had not yet hit the shelves for sale. This was a good thing for Mattel and consumers. The recall covered more toys than needed to err on the side of caution. Mattel also announced that it was reviewing its procedures for ensuring product safety. Robert Eckert, CEO announced, “We apologize to everyone affected by this recall, especially those who bought the toys in question. We realize that patents trust us with what is most precious to them – their children (Baron, 2013).
Mattel explained the errors that were made and the names of the companies responsible for the issues. While this admission of error may have satisfied most stakeholders, the impact of this devastation caused grief among the Chinese contractors and the Chinese government. The aftermath of the crisis prompted Mattel to reiterate basic safety standards and require contractors to sign a new safety contract. Mattel states, “They needed to reaffirm what they had agreed to in previous years”. The message was very clear. If you cannot do these things, please let us know.
No problem, but you wont be doing business with us (Baron, 2014). It seems that this proactive approach did not work as well as Mattel desired, not long after, multiple lead paint problems were detected as well as a design flaw involving a magnet. Thousands of toys were voluntarily recalled again and further investigation ensued. Who to blame was a large question? The Chinese contractors failed to abide by the implemented safety guidelines and Mattel admitted to fault with the magnet. The recalls by Mattel and other companies put pressure on the Chinese government and its export-driven industries.
The government was sensitive to criticism and thousands of Chinese workers lost their jobs (Baron, 2013). These unfavorable comments hit the Chinese government hard and the issues went deeper than poor toy quality. Mattel issued public apologies to the Chinese government as well as to the Chinese consumers. Mattel pledged to prevent safety problems in the future. It is obvious that Mattel needs much more stringent safety standards in China. Stopping the use of lead in toys may decrease revenue, but the many recalls over the past several years are more costly.
In the long run Mattel can right the wrongs caused by all these safety issues. To prevent any future lead paint issue, Mattel adopted a new test procedure where every production batch of every toy had to be tested before it could be released to go on sale. It also called for more regulation and for more resources to be allocated to the Consumer Product Safety Commission in the US. The company consistently communicated with all stakeholders and communications generally began with “I’m sorry. As the company acknowledged the failure of trust (Hurley, 2012).
This is an excellent step in the right direction for Mattel. Moving forward Mattel should have a plan of action to prevent such issues. Mattel needs to remain a constant presence in all of its factories. Unannounced visits, surprise inspections, and daily quality control is imperative. Unethical actions and non-compliance to the safety issues cannot be tolerated. Any such infractions should cause Mattel to immediately take action and dismiss the contractor at fault. The bottom line is that Mattel needs to express the understanding for the safety of its consumers and to make it the highest priority.