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Slide 1
Slide 2
Mattel, Inc. in China MBA 752 Business in Asia Final Project
Group 5 David Gallo, Christina Maly, James Servi, & Brooke
Walczak
Slide 3
About Mattel, Inc. Founded in 1945 in Southern California
Worlds largest toy company by revenue Most well known toy brands
include Hot Wheels, Fisher Price, American Girl, and Barbie
Creating the Future of Play
Slide 4
Manufacturing at Mattel Started moving its manufacturing abroad
over 50 years ago Wholly owned manufacturing facilities for core
product lines Outsource the production of non-core lines
Manufacturing facilities in China, Indonesia, Italy, Malaysia,
Mexico, and Thailand
Slide 5
Approach to Quality Toy test lab Test supplies and raw
materials Independent auditor for factories and vendor
facilities
Slide 6
The Lead Paint Scandal Traced back to Lee Der Industrial Co.
Strained relations with Chinese partners and officials
Prevention
Slide 7
Fair Play Global Scholarship Program 2007 Special Olympics in
Shanghai 2008 Earthquake Relief in China
Slide 8
Play Local General Administration of Quality, Supervision,
Inspection, and Quarantine 65% of Mattels Employees in Asia/Pacific
Improved labor policies for local workers Factory Audits
Slide 9
Joint Ventures Creates Goodwill Provides an Inside Track
Mutually Beneficial Li & Fung Partnership Opportunities for
Growth
Slide 10
Recommendations 1. Only contract with manufacturing plants that
receive quality control audits 2. Hire a third-party auditing team
responsible for inspections 3. Conduct QA/QC on every batch of toys
worldwide 4. Rebuild partnership with the new Chinese government 5.
Develop a plan to resolve similar crisis situations in the
future
Slide 11
1. Manufacturer Quality Control Audits Set standards high from
the beginning Recognize that different countries have different
standards of quality Show you mean business by only contracting
with plants that have clean annual audits
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2. Outside Auditing Team Expand footprint of Mr. Sethi by
creating an entire team to perform inspections Findings should go
to executives first and then be made available to the public
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3. QA/QC All Toys Test every batch of toys not only in China,
but at all Mattel factories Revised QA/QC model with accountable
manager Additional costs but nothing compared to the cost of the
lead paint crisis $40 million in response $71 million in lost
revenues
Slide 14
4. Partner with New Government Commendable with their efforts
to repair relationships Need to continue with the newly formed
Chinese government Present newly formed crisis response plan and
build trust
Slide 15
5. Crisis Response Plan Good can result from this negative
situation Form a high profile team to write a crisis response plan
Analyze the lead paint crisis What was done correctly and what
needs to be improved Cultural aspects of the response Reaction to
future catastrophes
Slide 16
Implementation Plan Going Back to Basics
PreventionDetectionCorrection
Slide 17
Implementation #1: Manufacturer Quality Control Audits Adopting
a policy requiring a clean annual quality control external audit
Newly contracted manufacturing plants Existing manufacturing plants
Lessons from the past Quality differences in China vs. USA Hedging
lower costs for higher risks
Slide 18
Implementation #2: Outside Auditing Team Hire third-party
auditor to inspect Mattel and manufacturing plants Audits would be
independent of Mattel and external auditor, PWC Adopting a policy
for corporation with existing manufacturing plants Would report
directly to the Board of Directors
Slide 19
Implementation #3: QA/QC All Toys Review recent quality control
issues at all plants Revise QA/QC protocols New manager
policies
Slide 20
Implementation #4: Partner with New Government Continued open
communication channels with Chinese officials Present Crisis
Response Plan to re-gain trust
Slide 21
Implementation #5: Crisis Response Plan Creating the response
plan team Completing a response plan for each country Mattel
operates in Engaging with country officials prior to
implementation
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Fackler, Martin. 11 Oct 2007. Safe Food for Japan. The New York
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Global Citizenship Report. Mattel, Inc. Web. 27 Oct 2009. Retrieved
from http://corporate.mattel.com/about-us/cr-csreport.aspx
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Eric and Tom Clock. 2002. Mattel, Inc: Vendor Operations in Asia.
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Zamiska, Nicholas and, N. C. 14 Aug 2007. Another big recall may
hit mattel; latest incident from China involves cars, magnet toys;
more pressure on factories. Wall Street Journal. Retrieved from
http://search.proquest.com/docview/399045121?accountid=9355
http://search.proquest.com/docview/399045121?accountid=9355 Louise
Story. 2 Aug 2007. Lead Paint Prompts Mattel to Recall 967,000
Toys. The New York Times. Web.
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