Mattel Recalls - Joshua Mark Henry Kern · Mattel has suffered from 36 product recalls since 1998. In 2007, Mattel suffered a difficult year. Between a four month span, Mattel had
Post on 07-Jun-2020
1 Views
Preview:
Transcript
Mattel Recalls
Presented by: Josh Kern
Presented to: Mr. Rico Horca
Abstract
Mattel Inc. is currently the market leader in the toy industry (UK Essays). They have
had many innovative toy creations in their history including Barbie and Hot Wheels. Mattel
currently has manufacturing facilities located in China, Indonesia, Malaysia, Thailand and
Mexico. Recently, Mattel has had a few issues with toys which were released from some of
these manufacturers. This report will give three possible solutions and a recommendation
in order to solve their issue. Four criteria will be used to explore each option:
Cost Ease of Implementation Time to complete Effectiveness
Table of Content
Contents Abstract ......................................................................................................................................................... 2
Table of Content ........................................................................................................................................... 3
Executive Summary ....................................................................................................................................... 4
Introduction .................................................................................................................................................. 5
Key Players .................................................................................................................................................... 6
Current Issue ................................................................................................................................................. 7
Evaluating Criteria ......................................................................................................................................... 8
Option 1 ........................................................................................................................................................ 8
Option 2 ........................................................................................................................................................ 9
Option 3 ...................................................................................................................................................... 10
Option Matrix .............................................................................................................................................. 12
Recommendation ........................................................................................................................................ 12
Conclusion ................................................................................................................................................... 13
References .................................................................................................................................................. 14
Annotated Bibliography .............................................................................................................................. 14
Executive Summary
In 2007, Mattel Inc. experience five critical recalls, which amounted in over twenty
million products being recalled. Mattel needs to make a change in order to prevent these
issues from continuing to occur. The option with the highest evaluation of each criteria will
be the option that is recommended. Mattel is looking to grow their customers in addition to
improving their profits each year. The option which prevents the greatest number of recalls
and limits the number of bad publicity will be the most important option.
The three options are:
Hire Superintendent (employee) Hire new supply chain manufacturing company Improve existing supply chain
They will be evaluated by these criteria:
Cost- Cost refers to the amount of money needed to implement each option. The
options will all cost money to accomplish and each option will cost Mattel a different amount.
The cost criteria analyze the long-term and short-term expenses of each option. Cost will
include costs such as: salary of additional employees, travel fees and any additional costs. The
most desirable option will be the one which is the cheapest.
Ease of Implementation- Ease of Implementation refers to how difficult each option
is to begin operations. Ease will also refers to how difficult each option will be to continue the
implementation for many years. Ease of Implementation will also include the number of
employees needed in order to complete each option. The option which is easiest to complete
and require the least participants will be the more desirable option.
Time to complete- Time to Complete refers to the amount of time each option will
require to accomplish. It refers to all time from the start to the finish of each option. Time to
complete will include; total time, strategy time, employee time, implementation time and the
time needed to keep the option going for many years. The option which takes the shortest
amount of time will be the more desirable option.
Effectiveness- Effectiveness refers to the long-term and short-term benefits of each
option. The criteria refers to the new safety prevention and prevention of hazardous toys from
being released into the general public. The more productive options will create greater long-
term safety. Effectiveness will prevent law-suits and recalls of our product. Effectiveness also
suggests the more productive option will positively affect the greatest number of individuals.
The most effective option will provide Mattel with a better organization image and greater
customer satisfaction.
Introduction
Mattel was created in 1945 out of a garage. The company was founded by Ruth and
Elliot Handler and Harold “Matt” Matson. The company began selling picture frames when it
was first established. The picture frames scraps lead Elliot Handler to begin manufacturing doll
houses as a side business. In 1959, Mattel had their greatest breakthrough; Ruth Handler was
inspired by her daughter’s fascination with cutout paper dolls. She suggested manufacturing a
three dimensional doll named, Barbie, for little girls to play with. In 1961, Mattel introduced
Barbie’s boyfriend, Ken, named after Ruth Handler’s son. They later introduced a friend named
Midge and a sister named Skipper. In 1968, Mattel introduced the first African-American doll,
her name is Christie, and she is a friend of Barbie. Much later, Mattel introduced a Latina friend
named Theresa and an Asian friend named Kira. In 1975, Ruth and Elliot Handler, the founders
of the company, decided to leave the company. After the founders of Mattel left, they began
concentrated on manufacturing products for preschool kids and young boys; they also began
acquiring established toy manufacturing companies and licensing agreement to manufacture
these products.
Mattel’s product history
1965- “See N’ Say” preschool toy
1968- Hot Wheels are modeled “Candy-Colored pain jobs”.
1977- Electronic games; Intellivision home video entertainment system.
1982- An action figure named He-Man.
1995- Cabbage Patch Kids
1996- Tickle me Elmo.
2003- Barbie Couture fashion line introduced Acquisitions/ Licensing agreements
1986- Purchased Arco o (Hong Kong industry)
1986- Entered joint venture with Bandai o Japan’s largest toy company
1988- Revives association with Walt Disney Company
1988- Purchased Corolle S.A. o Collector dolls in France
1989- Acquire Corgi Toys o British scale car model producers
1991- Acquires Aviva Sports o Sports toy maker
1992- Acquire International Games Inc.
1993- Merge with Fisher-Price
1994- Acquire Kransco and J.W. Spear & sons
1996- Obtains licensing agreement with Nickelodeon
1997- Merges with Tyco Toys
1998- Purchased Polly Pocket brand
1998- Fisher-Price begins dominating preschool demographic
1998- Acquires Pleasant Company
1999- Licensing and marketing deal with Ferrari toy company
2000- Licensing agreement with Harry Potter
2001- Licensing agreements with Vivendi Universal Publishing and THQ o Gaming, educational and productivity software
2001- Licensing agreement with Barney
Mattel had many great innovations at the beginning of the company history. In the mid-
80’s, Mattel began acquiring many different subsidiaries and licensing agreements to expand
their products. In 1990, Mattel moved their headquarters to El Segunda, California. Sadly in
2002, Co-founder Ruth Handler died at the age of 85 and in 2011, Elliot Handler passed away as
well.
Key Players
The current CEO of Mattel Inc. is Bryan Stockton. Mr. Stockton took over, as CEO, for
Robert Eckert, who served as the CEO from 2000-2011. Stockton began working with Mattel in
November of 2000, where he began as the executive vice president of business planning and
development. He worked his way through the company and recently became the CEO of
Mattel.
David Allmark is the currently the Executive Vice President of global brands team,
including the Fisher-Price brand. He has been working in that position since February, 2011. He
has been employed by Mattel since 1998, when he was working as director of sales and
marketing for Bluebird Toys P.L.C. and Mattel purchased Bluebird Toys P.L.C.
Peter Gibbons has recently been given the title of Executive Vice President of Mattel in
April, 2013. He was previously employed as Executive Vice President of global supply chain
operations at Starbucks Corporation.
Kevin Farr is the Chief Financial Officer and has been since February 2000. Farr began
working with Mattel in August, 1992, where he served as the Senior Tax Director. In 1996, Farr
was promoted to Senior Vice President, in addition to Corporate Controller.
Current Issue
Mattel has suffered from 36 product recalls since 1998. In 2007, Mattel suffered a
difficult year. Between a four month span, Mattel had an additional 5 recalls, which affected
over 20 million Mattel products. Product recalls can severely cripple a company; lost sales,
damaged reputation, diversion of resources, customer services expenses, and possible litigation
expenses. Every year, three billion toys are sold in the United States; of which, less than one
percent of the toys are recalled (Story & Barboza, 2007). Eighty percent of toys purchased in
the United States are produced in Chinese factories. Batch testing is a cause of harmful toys
being released to the public.
Date Quantity
Recalled
Description Reason
08/02/07 1,500,000 Fisher-Price toy trains High levels of lead-paint
08/14/07 17,400,000 Mattel play set
Barbie doll & Tanner
Loose magnets
09/04/07 850,000 Barbie Accessory Set
GeoTrax
High Levels of lead-
paint
10/25/07 55,000 Go Diego Go! Rescue Boats High levels of lead-paint
11/06/07 155,000 Laugh & Learn
Learning Kitchen
Choking hazard
The Hansheng Wooden Products Factory and Lida Toy Company were the two
companies involved in the controversial issues. They were directed to temporarily stop their
operations because the products did not comply with safety standards. They had their
exporting licenses revoked, by Chinese authorities. Reports claim, four days later, the boss of
the Lida Toy Company hung himself inside the factory (UK Essay’s). Mattel is in need of changes,
in order to improve Mattel’s supply chain.
Evaluating Criteria
Option 1
Option one will require Mattel to hire an additional employee, who specializes in safety
prevention. The inspector will require additional training in safety prevention. The employee
will need to accurately predict harmful hazards which may result in recalls, and damaging
publicity. The employee will need to know the safety laws of every country in which they are
doing business.
A foreign supplier is concerned in optimizing profits. Doing so requires buying the most
inexpensive materials and selling for a price above break-even. A foreign supplier may purchase
the cheapest paint, possibly unknowingly containing higher than legal levels of lead-paint. It is
Mattel’s new employee’s job to investigate the quality of our products.
The employee would travel between manufacturing plants, in order to inspect the
products before they are released to the general public. He would travel between
manufacturing plants before the conclusion of the finished product. Mattel currently does the
majority of their manufacturing in China. They have additional manufacturing facilities in
Indonesia, Thailand, Malaysia and Mexico, which the employee will need to travel between.
The job will require additional testing of products by breaking them and testing the content
materials in each product. Toys containing small breakable pieces or other hazard for children
will not be allowed into the marketplace. Broken toys can be into weapons and will also not be
allowed into the marketplace.
Advantages:
An advantage of hiring a superintendent to inspect products before products are
released would be the time to complete criteria. The only time needed to complete this option
would be the time needed to hire and train a capable superintendent.
Another advantage of hiring a superintendent would be the Ease of Implementation
criteria. Hiring an additional employee for the company would be simple, but it will be a little
more difficult to find an employee with intuition skills.
Disadvantages:
Cost may be considered a disadvantage of this option. The cost needed to hire a
superintendent will not be cheap. This option may be the most expensive option, but it
guarantees an extra set of eyes inspecting the products before they are shipped.
The effectiveness criteria would also be considered a disadvantage of this option. The
option will create an additional staff member, but the superintendent may not be entirely
necessary. The products need to be inspected, but the company should train the manufacturers
to inspect the products themselves, during assembly.
Option 2
A decision Mattel will need to consider is to hire a new manufacturing company to
produce their product. The multiple manufacturing companies located in China, which
Mattel has hired to produce their products, cannot do it effectively. The purpose of a
manufacturing supply chain is to optimize profits of the company. Mattel outsources the
manufacturing of their products, in order to maximize their revenue.
Mattel’s main manufacturers are located in China. Mattel’s Chinese manufacturers
produce over 65% of Mattel’s products (Story & Barboza, 2007). Mattel will need to find
another reputable manufacturer, possibly still located in China. Chinese manufacturing
companies produce nearly 80% all of toy purchased in the United States (Story & Barboza,
2007).
Advantages:
An advantage of the hiring a new supply chain manufacturer is the cost criteria. This
option will have a reasonable price, similar to the previous supply chain. The price of each
supply chain will be very similar with companies looking for the cheapest alternatives.
Disadvantages:
A disadvantage of hiring a new manufacturing company to produce the product would
be a lack in effectiveness. All manufacturing companies are just as capable of producing quality
goods. Changing companies will delay future product releases. New staff would require
training.
The time to complete this option is unnecessary. The time needed to switch between
manufacturing facilities is not productive. Mattel needs to be more focused on improve current
problems in the organization.
The ease of Implementation is fairly simple. It requires replacing the existing
manufacturing company with a new one. This option is more difficult than another option. The
option would be relatively simple if the company needed a replacement in the current
manufacturing supply chain.
Option 3
The third option Mattel has to consider is to keep the existing supply chain
manufacturer and improve it in a variety of different ways. Communication is a key variable in
order to improve Mattel’s supply chain. The company will need to re-train and re-communicate
the laws of each country. Mattel will need to test every product they are intending to sell; batch
testing could allow harmful toys to be release to children. Mattel could improve customer
relations of these incidents by posting a blog page for unhappy customers and parents to bring
their objectives about the company.
Mattel needs a better supply chain to create reliable merchandise. In order to
accomplish this, Mattel will need to communicate better with their foreign manufacturers,
located in five different countries. Communication is important in the business industry. Each
employee needs to communicate with others. Mattel needs to communicate the product
requirements, in the toy industry with their manufacturers. The company needs to confirm the
requirements of their product with the regulations of each countries law. Researching possible
complications can prevent future harmful obligations of the company.
Mattel will need to begin testing their entire product. Once the product is assembled, it
will need to be inspected and tested. The only products that will be released will be safe toys,
free of any apparent danger. Preventing as many product recalls as possible is the major factor.
Doing so will prevent harmful publicity and law-suits from injured customers. If any additional
products are deemed hazardous, rapidly establish a recall before any further damage may be
dealt to the company. A blog page for upset customers and parents will bring angry customers
to a single location. It will establish an opportunity to re-establish a relationship with a
customer which has been harmed. It also prevents negative publicity to reach a greater number
of profitable customers.
Advantages:
An advantage of keeping the existing manufacturing company and focus on improve it is
the cost criteria. The reason this company was chosen to manufacture our products was
because they were the best option at the time. They are capable of accomplishing their tasks in
addition to doing their job at the most affordable rate.
The time to complete criteria would also be an advantage because it would only require
the additional time needed to train the manufacturing company. The company may only need
to be told the US regulations for toys. Staff may need additional training to spot substandard
products.
The ease of implementation criteria is another advantage of this option. The company is
currently under contract and has already been employed. All time can be concentrated on
preventing additional recalls. The company should be aware of their mistakes and fix them
accordingly.
Disadvantages:
A disadvantage of this option would be the effectiveness. This option may be effective if
the improvements were to be implemented, it would create an effective supply chain. Mattel
needs a manufacturing company which will produce their products, without creating any need
for a recall.
Option Matrix
Cost Effectiveness Time to
Complete
Ease of
Implementation
Option 1 XX XX XXX XXX
Option 2 XXX X XX XX
Option 3 XXXX XX XXXX XXXX
Cost- More X’s refer to a lower cost option
Effectiveness- More X’s refer to more effective option
Time to complete- More X’s refer to less time needed to complete each option
Ease of Implementation- More X’s refer to easier options to implement
Recommendation
Mattel is already an established company. The recommendation will need to help
Mattel fix the negative publicity, prevent lost revenue and prevent injuries of customers.
Option 3 is the most efficient option for Mattel to consider. Mattel already has the cheapest
alternative they can find. They need to improve their current manufacturing supply chain.
After five incidents occurred, consecutively, Mattel needs to focus on the final product
they are releasing. Children toys should not contain objects will small pieces or pieces which
can be broken easily. Children may be harmed by any malfunction of a product. Every angle of a
product must be inspected and tested before release of product. In addition, the exterior of
products may harm children as well. Children don’t know any better; they have the urge to
place everything they can into their mouths. The paint of our products will be a major priority
to discuss with our supply chain manufacturers. Each incident which occurs, severely damages
Mattel’s reputation and their profits.
The main priority of this option is to prevent recalls. Mattel will need to eliminate their
batch testing system by testing their entire finished products. Hazardous products may slip past
the production line and reach the final customer. Increased production tests will prevent any
harmful toys from being released. In order to guarantee assurance of the product, they would
need to be inspected before the delivery.
Lastly, a blog for unhappy customer would be a great strategy, in order to contain the
bad publicity of these disgruntled purchasers. The blog page for their complaint will be located
in a harmless environment. It will allow Mattel an opportunity to make amends for the issue
they may be responsible for. The location would be an opportunity to retain these customers.
The customers may be extremely loyal; losing the lifetime customer value may deplete profits.
Conclusion
Mattel has been operating for nearly 70 years. Recently, the company has begun
producing products of poorer quality. The company needs to focus on producing quality
products, like they originally did. The owner began manufacturing the original products.
Now the company ships its manufacturing labor elsewhere.
In conclusion, Mattel Inc. needs to implement option three. If successfully
implemented, Mattel will reduce and prevent future recalls from occurring within the
public. Recall prevention is the issue at hand. Mattel needs to become better aware with
products which may become hazardous. Preventing future incidents will reduce the
number of recalls and also the number of law suits against them. Preventing future
incidents will increase profits and increase the reputation of the company. The reputation
of a company takes time to build.
References
Lynn Yang, J. (2008, January 22). Mattel's ceo recalls a rough summer. Retrieved from http://money.cnn.com/2008/01/21/news/companies/mattel.fortune/
Mattel. Mattel history. Retrieved from Mattel.com
Mattel Inc. (2008, January 01). 2007 mattel annual report.
Mattel recalls 2007. (n.d.). Retrieved from http://www.awpagesociety.com/wp-content/uploads/2011/09/Mattel_CaseStudy.pdf
Story, L., & Barboza, D. (2007, August 15). Mattel recalls 19 million toys sent from china. Retrieved from http://www.nytimes.com/2007/08/15/business/worldbusiness/15imports.html?pagewanted=all&_r=1&
UK Essay’s. Mattel inc global leader in manufacturing toys and family products read more: http://www.ukessays.com/essays/marketing/mattel-inc-global-leader-in-manufacturing-toys-and-family-products-marketing-essay.php
Annotated Bibliography
Lynn Yang, J. (2008, January 22). Mattel's ceo recalls a rough summer. Retrieved from http://money.cnn.com/2008/01/21/news/companies/mattel.fortune/
Mattel had a few articles regarding their poor manufacturing procedures. The articles analyzes the CEO during the time of the recalls. Bob Eckert was the CEO and had to keep employee moral high during a rough period. The articles also analyzes some questions that needed to be answered at the conclusion of the recalls.
Mattel. Mattel history. Retrieved from Mattel.com
Mattel’s website assisted in providing information. It helped provide the product history of the company. It provided an in depth analysis of the current key players of the company. The website informed visitors of the history of the founders in the Mattel company.
Mattel Inc. (2008, January 01). 2007 mattel annual report.
Mattel’s 2007 annual reports helped with retrieving information of the project. Mattel had a difficult year in 2007 with the disasters of the product releases. It was interesting to learn the impact of these recalls. The lost revenue was not a key topic of the annual report but the sure needed to place information about it, into the report.
Story, L., & Barboza, D. (2007, August 15). Mattel recalls 19 million toys sent from china. Retrieved from http://www.nytimes.com/2007/08/15/business/worldbusiness/15imports.html?pagewanted=all&_r=1&
This newspaper article describes the second and third recalls which resulted in over 19 million toys recalled. The toys that were recalled were manufactured in Chinese factories. The article analyzes all the products affected by the harmful content.
UK Essay’s. Mattel inc global leader in manufacturing toys and family products read more: http://www.ukessays.com/essays/marketing/mattel-inc-global-leader-in-manufacturing-toys-and-family-products-marketing-essay.php
The essay this person wrote was a great analysis of the results of the recalls. It describes the incidents in the perspective of the supply chain manufacturer. The Chinese facilities were never guilty of any crime. The results occurred by accident and if anybody was to blame; it should be Mattel. Mattel took full responsibility for the recalls because it was their design, the manufacturing company was assembling
top related