Essay Instructions: Be very clear and precise.
Mattel Inc. is a well-known brand known for iconic toys such as Barbie, Hot Wheels, Cabbage Patch Kids, and Matchbox Cars. The company is worth billions in annual revenues and, despite having its ups and downs in recent decades, remains one of the best-known toy brands in the world. As many as 40% of Americans state that Mattel is the brand they most prefer. However, like many companies, Mattel has transferred its manufacturing operations overseas in an effort to cut costs and keep its products affordable. In fact, no Mattel toys are made in the U.S. The company closed its last American factory in 2002. While Chinese manufacturing has saved the company in production costs, it has cost money in terms of reputation. It is far more difficult to monitor overseas production operations, and because of this Mattel experienced the nightmare of having to recall millions of toys tainted with lead paint. Parents were understandably seriously upset by the scandal, and it cost Mattel in terms of reputation?perhaps even more than in lost revenues.
However, the company moved to address the situation and has overhauled its supply chain system. Mattel was the first global consumer products company to implement a standards system, Independent Monitoring Council (MIMCO), for subcontractors or manufacturers that are independently monitored. Mattel publicly discloses the results from the monitoring. For example, in 2008 the MGMP report listed the following achievements: 1. All facilities maintained a fair and harassment-free environment, 2. Employees have the freedom of association and the right to join a lawful organization. 3. Employee access to and communication with management was generally good, with suggestion boxes and meetings with management. 4. All facilities provided safe and clean dormitories with good food service available to employees. In addition, the four companies that were audited provided recreation and non-job-related training opportunities for employees, such as English-language classes and computer courses. 5. All plants were in compliance for payment of legally mandated minimum wages, social insurance, and related benefits.
The report also stated that the audited companies needed to improve in a number of areas, such as: working hours, maintenance and environment, and health and safety requirements. These audits are available to the public, and are part of Mattel?s scheme to maintain a high degree of transparency. As a result of Mattel?s response to the scandals, Mattel was voted one of the "World's Most Ethical Companies" in 2009 by the Ethisphere Institute, evidence of how far the company has progressed toward regaining trust.
The lead paint problem traced back to China, which has experienced a number of widespread scandals involving tainted products. China does not have the regulatory system that the U.S. has. Additionally, manufacturers there must compete on price. Whoever can do the job for cheapest usually gets the contract, leading to cost-cutting measures that sometimes sacrifice safety and standards. Once discovered, these problems have not been taken lightly. For example, in 2007, Zhang Shuhong, co-owner of the Lee Der Toy Company, which had made a number of toys for Mattel, committed suicide in one of his company's factories. The Chinese government has executed officials for not catching similar public health issues relating to tainted food and medicines.
An important concept in this case is the nature of the market. With children either spending or directly influencing $500 billion worth of purchases, marketing techniques have been necessarily altered. In the past, the most effective way to sell children's products was through parents. Now the opposite is true. Children are the focal point for intense advertising pressure seeking to influence billions of dollars of family spending. Advertisers are aware that children influence the purchase not just of kids' products, but of everything in the household, from cars to toothpaste. So these "adult" products are being paired with kid-oriented logos and images. With children's increased access to new communication technologies, combined with the fast pace and busy schedules of today's families, parents are less able to filter out the messages from the advertising world. Television remains a focal point for children's media entertainment.
The case also discussed other problems Mattel has had regarding intellectual property rights and the Bratz dolls. Carter Bryant, a Mattel employee, designed the Bratz dolls and pitched them to MGA. A few months after the pitch, Bryant left Mattel to work at MGA, which began producing Bratz in 2001. In July 2008, a jury deemed MGA and its CEO liable for what it termed ?intentional interference? regarding Bryant?s contract with Mattel. Mattel first requested damages of $1.8 billion, but in August 2008, they received damages in the range of $100 million. Mattel also has the rights to the Bratz dolls now, and MGA is scrambling to develop other blockbuster doll ideas.
QUESTION #1: Do manufacturers of products for children have special obligations to consumers and society? If so, what are these responsibilities? Draw your analysis, main points, arguments, examples, and/or facts.
QUESTION #2: How effective has Mattel been at encouraging ethical and legal conduct by its manufacturers? What changes and additions would you make to the company?s Global Manufacturing Principles? Draw your analysis, main points, arguments, examples, and/or facts.
QUESTION #3: To what extent is Mattel responsible for issues related to its production of toys in China? How might Mattel have avoided these issues? Draw your analysis, main points, arguments, examples, and/or facts.