Mattel Toy Recalls

Mattel, Inc. is the largest play keep play along in the world. This largest play beau monde in the world was founded by Harold Matson and Elliot Handler in 1945, as they started to produce picture frames. However it was Elliott Handler who had a visionary of a side business in dollhouse furniture out of the reborn garage (Mattel). As a top play along, the primary activities of Mattel atomic number 18 to design, manufacture, and merchandise the encounters. As the companys sales growing slowly, Mattel started to produce varieties of luxuriously quality products and became one of the of the best toy companies around the nation at the time.The major move by Mattel was when it sponsored Walt Disneys Mickey Mouse hostelry television launch that put the company in spotlight and companys sales increased significantly. That sponsorship of Mickey Mouse Club helped the company to attract a very high proportion of young capability customers. In 1959, the wife of Elliot Handler, Rut h Handler came up with an outstanding conceit that changed Mattel forever. As Ruth Handler watched her daughter playing with paper dolls, she suggested the creative thinker of making three dimensional dolls to her husband.Elliott loved the idea of making such(prenominal) dolls and introduced the doll with a full wardrobe and accessories to the market. The doll initially named aft(prenominal) the nick name of daughter of Elliott and Ruth. The introduction of the refreshed doll was a huge success for Mattel and immediately the doll became the major product canal of Mattel (Finding). With the success of Barbie doll, Mattel was named a public company and ranked soon as one of the largest industrial companies in the United States. In 1968, Mattel realise introduced an otherwise(prenominal) consumer-loved product called importunate Wheels. This was second biggest hit since the company introduced Barbie.Hot Wheels immediately labelled Mattel as the largest toy company in the world . As the toy fabrication was changing and new competitors were coming in, Mattel saw a stiff arguing rising in the mid 1980s. Like other companies in the toy industry, Mattel faced a stiff from the electronic entertainment. The electronic entertainment introduced umpteen electronical videos games in which children switched to at an change magnitude young age from the traditional entertainment. To have sex up with the competition and attract the new generation, Mattel decided to expand into engineering by producing lectronic gaming products. Mattel failed to attract a high proportion of consumers, and were uneffective to fit in with the new system as there were new competitors producing electronic games with lower prices. Later, Mattel decided to boil down on producing the core products of the company. This schema to refocus on the core products and make everywhere close to of the core products was a s nearly success for Mattel. For example, after doing makeover, in 1988 t o 1993, the sales of Barbie doll increased to $ 1 Billion dollars from $430 Million dollars (Sansweet).As Mattel is known for making nigh of its own products in their owned manufacturing facilities, the company owned and operated 10 manufacturing plants worldwide. Half of the manufacturing plants be find in mainland China (Jiangyong). Since Mattel started its business, the company produced its products aboutly in developing countries to encounter the advantage of cheap manufacturing costs. Un uniform galore(postnominal) toy companies, Mattel produced 70% to 80% of its products in their own manufacturing facilities. The company believed that making products in-house pull up stakes be to a greater extent stable and high competent products.According to Mattel, in-house facilities have high standard asylum measures and high quality potency that produce high-quality products. Besides making most of its products in Mattels own manufacturing facilities, some of its work was outs ourced to China and other developing countries in order to focus on domestic strategical efforts such as Research and Development and Marketing. However these outsourcing products were not efficient as products were made in in-house facilities. These outsourcing products were less stable and not as efficient.Many times these products ask to be recalled as they do not put up the safety standards and tend to stick out the image of a well-known government like Mattel. Therefore, Mattels strategy was to focus on making most of its core products at their own manufacturing facilities, and outsource the products that are less general and non-core. Due to outsourcing to other developing countries, the toy industry faced many hardships. The products that are made in developing countries that had substandard quality control were recalled many times collect to the safety reasons.Mattel too faced a stiff pressure from the government and consumers for the products that were not safe and stable which are made in manufacturing facilities in China. Recently, Mattel recalled several of its products because they were not safe for consumers. Recalling megs of products, not only reduced the total revenues of the company, as well as it hurt the companys image at the same time. Mattel had been endlessly indisputable by its consumers for making providing its consumers high-quality products and stable products.The recalls that are connected with lead headstone made by Mattels lont-time manufacturers. These manufacturers are responsible for not having upstanding safety regulations and not complying with the quality control within the organization. The manufacturer, Early send off Industrial, was responsible for the second major recall of about 1 million toys. The manufacturer had more than 200 employees to inspect if the contractors were complying with safety regulations, but none of them were stationed on-site to inspect the products. Failure to inspect the products lef t the company with rooms or errors.In order to understand a companys situation, monetary statements are very fundamental. Financial statements allow you to see the companys performance, fiscal condition, and financial trend. By examining financial statements of Mattel, we can clearly previse where the company is heading financially. Looking at ROA and PM, both ROA and PM increasing year to year from 2005 to 2007 which is very good news for Mattel. Despite the recalls, Mattels total revenue is still increasing year to year. These analyses clearly show that Mattel is performing very well in making profits.Some of the key financial highlights of Mattel recorded below Selected Financial Highlights of Mattel, Inc. YEAR 2007 2006 2005 Net Sales 5,970. 09 5,650. 16 5179. 02 Cost of Sales 3,192. 79 3,038. 36 2,806. 15 Net In know 599. 9 492. 93 417. 02 Total Assets 4805. 46 4955. 88 4372. 31 ROA (%) 12. 4 9. 5 9. 53 PM (%) 10. 4 8. 72 8. 05 Firm Strategy unitary of the Mattels primary strength is that the company is the stellar(a) nock named leading toy company in the toy industry. Ever since Mattel started its business, the company always produced high-quality and consumer-loved products. Mattel has plenty of name brands products that are very popular among the customers. Mattels brand name recognition stared in 1959 when the company first introduced the famous doll, Barbie.Other products, Hot Wheels, Fisher Price, and NASCAR also are very popular products and behind the huge success of Mattel. In order to continue making the high-quality products Mattels main focus is to keep doing what the company is doing and find out what the customers want and impulse by research and development. Mattels main goal is to maximize production efficiency while minimizing the risks, controlling expenses, and nourishing flexibility. In order to focus on that strategy, Mattel has decided to use the third party manufacturers to produce its non-core products.Slowly, Mattel has been moving its manufacturing to countries like China, Japan, Indonesia, Thailand, and many other developing countries. As Mattel has contracts with thousand of vendors in those countries, the company does not need to rely on a single manufacturer. However, this strategy may not convey quality self-reliance of the products and also parent concerns over safety regulations. Due to substandard safety measures revolving toy figure and manufacturing in China, Mattel has been facing some tough challenges.During 2007, Mattel has made five recalls of over 21 million toys are made in China due to the excessive lead paints on toys and having loose magnets that normally impose risk of infection to the children while playing with them. These loose magnets and lead paint can advantageously be consumed by the children. These recent recalls started to hurt the image of the company and as well as the reputations of the company. Sales in some areas started declining, however, the total revenue s of the company is increasing than the previous year.Possible Options As we have detected causes of the problems, we need to come up with pick solutions to solve the problems. There are some alternative strategies Mattel can apply in order to stay on the of the toy industry. Possible alternatives include rebuilding strategy, and manufacturing in United States. Option 1 Rebuilding Strategy Mattel should focus on rebuilding strategy. The company needs to rebuild the consumer trust in toys, rebuild the trust of the industry, and as well as the trust of China.Accountability and responsibility needed strongly to repair the image. demurral and accusations will just hurt the image of the company more as it could bring counter attack by the accused. Option 2 Manufacturing in United States Mattel may decide to move its manufacturing back to United States as they are facing many problems in alien countries. However, this strategy will be really costly to Mattel financially. Also, it will harm the relationship with foreign countries. Therefore, rebuilding strategy is strongly recommended. Recommendations and ImplementationsDuring the crisis management, accountability and responsibility is very important to maintain the reputations and sales of the company. Admit the wrongdoing, instead of throwing blame on China. Blaming China will just hurt the relationship with the Government China. Mattel, Inc. is also required to change its strategy to address the concerns in design, manufacturing, quality control, and safety assurance of the products. In order to implement the rebuilding strategy, Mattel needs to take some of the important steps. The company needs to be open and truthful.Confess to wrongdoing is a great tool to start re-establishing the trust. The company also needs to focus on communicating with the consumers to address their needs. For better standard safety measures, Mattel should call a third party for sudden inspections of the products in manufacturing fa cilities. The company should maintain its current strategy and continue outsourcing in China where it could focus on expanding product lines. The company may also incorporate with established manufacturing facilities where they have standard quality control and strong safety measures.Most importantly, the company needs to focus on more modifying the safety operations in facilities by inspecting standards of production and examining the materials that are supplied by third-parties. October 26, 2010 Robert D. Katz Ishaque Mohammed Ibrahim Mattels Case Memo executive director Summary California-based Mattel, Inc. is well-known to the world for making the high-quality and brand-name recognized products. Recently, the Mattel Company recalled millions of products that are mostly made in China for the safety concerns that raised many questions about the sustainability of the companys products.Due to these recent recalls, now Mattel is totally alive(predicate) of the perils of manufacturi ng in developing countries, where the safety measures and working environment were totally unacceptable. The conclusion of this type analysis is to understand the problems that occurred and how Mattel will come to solutions to solve them. This case analysis will review the problems Mattel is facing, analyze firm strategy by using SWOT, and recommend alternative strategies to solve the problems and best way for Mattel to locomote successfully in the future.