Final Case Analysis: Mattel and Toy Safety

Chi T. Mathias

BUS250: Corporate and Social Responsibility (ABU1410A)

Instructor:  Eric Smithson

April 7, 2014
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Final Case Analysis: Mattel and Toy Safety

Toy safety has always been a top priority for Mattel, Inc. Being one of the

world’s leading toy makers, Mattel, Inc has always had a reputation of being a

responsible company. A global leader in design, manufacturing and marketing of toys

and family products, “Mattel employs more than 30,0000 people in 43 countries and

territories and has sold products in more than 150 counties” (mattel.com). Toy safety

will always be Mattel’s highest priority as their mission states, “

2007 Product Recall

Unfortunately, in 2007 the industry leader issued a voluntary recall of 4.5 million

toys worldwide that contained toxic levels of lead paint. The recalls were the result of

protocol violations by a few of Mattel’s vendors. According to the 2009 GCR, “vendors

either failed to test paint received from suppliers before using it on our products, or used

an unauthorized subcontractor and failed to provide the subcontractor with properly

tested paint” (Mattel GCR, 2009). Mattel showed ethically responsible behavior by

promptly ceasing shipments of all products for nearly two weeks to test samples of all

products, followed by investigations to determine the cause and scope of the problem and

several procedure changes. To remedy this problem going forward, Mattel now has

supplier certification requirements, testing requirements and inspections for all vendors

and subcontractors. In my opinion, this was a critical step to ensure the safety of children

in the future. Toy manufacturers should be responsible for the quality and safety of toys

put into the marketplace, along with Government regulations enforced by organizations

like the US Consumer Product Safety Commission (CPSC).

.Mattel’s Global Manufacturing Principles

The Mattel toy recall was a global manufacturer’s nightmare, revealing a living

example of the cost of globalization. “When a transnational corporation buys resources,

manufactures products, or sells goods and services in multiple counties, it is inevitably

drawn into a web of global social and ethical issues” (Lawrence, A. T. & Weber, J.,

pg124, para 1). In 2007, Mattel manufactured about 65 percent of its toys in China to cut

production cost. Adherence to the Global Manufacturing Principles Mattel established in

1997 was the protocol for all Mattel facilities globally. Mattel tested products both at its

own facilities and in special labs by specific standards with respect to lead paint. In his

2007 testimony submitted to the Senate Committee on Appropriation, Mattel CEO,

Robert A. Eckert describes the companies safety protocol for paint, “For years, Mattel

has required vendors to purchase paint from a list of certified suppliers or test the paint

that they used to ensure compliance with the established standards; audited the certified

paint supplies to ensure compliance with lead level standards; periodically audited

vendors to ensure that they are complying with paint requirements; conducted lead level

safety tests on samples drawn from the initial production run of every product; and had

protocols for further recertification testing for lead on finished products” (Lawrence, A.

T. & Weber, J.p532 3). All Mattel factories, contractors, subcontractors, and suppliers

were expected to adhere to the Mattel “Code of Conduct”, which focused on working

conditions, product quality and safety.

Unfortunately, during the investigation, Mattel learned that some of its external

vendors and their subcontractors were cutting corners to save money and time.”

(Lawrence, A. T. & Weber, J. p533, para 4). The contractor subcontracted another
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company for the panting of the toys who did not use the approved paint provided. China

does not have regulations for product manufacturing; therefore, Mattel should was and

should have been held responsible for ensuring the safety of their toys by ensuring that

toys are tested before they are imported from other overseas manufacturing facilities. In

his apology to Congress and the American people, Eckert also said that “standards were

ignored and rules were broken.” Ultimately Mattel, Inc. is responsible for the products it

produces. They are also responsible for the selection and approval of external vendors

and subcontractors who manufacture the products. However, when vendors cut corners

to save time and money and do not adhere to quality and control standards established by

Mattel, they should be held responsible. Unfortunately, the law does not hold them

accountable which further drives the controversial issue of doing business globally.

As a US based multinational company owning and operating facilities and

contracting worldwide, Mattel’s Global Manufacturing Principles reflect not only its need

to conduct manufacturing responsibly, but to respect the cultural, ethical, and

philosophical differences of the countries in which it operates.

Consumer Product Safety Commission (CPSC)

Collectively, Mattel Inc., the Consumer Product Safety Commission and the

Government are all responsible for ensuring the safety of children. “In the US, the

Consumer Product Safety Commission (CPSP) had responsibility for protecting the

public from unreasonable risks of serious injury and death from more than 15,000 types

of consumer products, including toys” (Lawrence, A. T. & Weber, J. p534, para1). The

CPSP’s mandate is to develop uniform safety standard for various products and if
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necessary to issue a voluntary recall on unsafe products. Acting CPSP Commissioner

Nancy A. Nord, stated in an article in the NY Times that, “the issue of Chinese imports

cannot be adequately addresses by any one remedy but rather requires a multi-pronged

approach to the problem. The CPSC’s plan of action includes dialogue and initiatives

with the Chinese government; working with the private sector including Chinese

manufactures directly; increased surveillance and enforcement activities at the borders

and within the marketplace; and modernization of our governing statues” (Lawrence, A.

T. & Weber, J., p53 para 3). As a federal agency the CPSC monitors the safety of 5,000

products. Companies are expected to comply with the standards it suggests. For

example, companies must report a defect/recall within 24 hours of discovery and

stipulates legal lead toxicity levels. Mattel delayed reporting to the CPSC 1.5 months.

The CPSC can inspect, monitor, prosecute and fine, however, it operates on a limited

budget and staff.

Mattel’s Corporate Responsibility

Corporate Social Responsibility means that, “a corporation should act in a way

that enhances society and its inhabitants and be held accountable for any of its actions

that affect people, their communities, and their environment; it implies that harm to

people and society should be acknowledged and corrected if at all possible” (Lawrence,

A. T. & Weber, J., p50 para 2). Mattel is a socially responsible corporation according to

their 2009 Global Citizen report, Mattel's Corporate Responsibility mission is to “act with

integrity in all we do to bring the world safe toys that grown-ups trust and children love.

We are committed to positively impact our people, our products and our planet
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by playing responsibly. This commitment resonates in our actions and through our

company values each and every day, as we: Play Fair by continually encouraging the

Mattel organization to align decision-making with the company's values. Play

Together by working with employees, partners, vendors and regulators to bring the

world safe toys that grown-ups trust and children love. Play to Grow by committing to a

sustainable future through efforts to work smarter and reduce our impact on the

environment. Play with Passion by volunteering in our communities and helping

underserved children experience the joy of play” (Mattel, Inc., 2014).

Furthermore, Mattel has always listened to its stakeholders and encouraged open

and mutually transparent dialogue. “Stakeholders are all those who affect, or are affected

by, the actions of the firm” (Lawrence, A. T. & Weber, J. p21). Mattel’s communication

with its stakeholders and its management of the public relations crisis not only greatly

impacted the recall outcomes but showed socially responsible and ethical corporate

behavior.

Global Product Integrity

In order to ensure the safety of children’s toy’s I believe that toy companies, the

CPSC, and the government should work together to develop a plan. Us Senator, Dick

Dubin is calling for stricter government regulations for recalls on defective toys. In an

interview Durbin says, “When defective toys are found we don’t have the laws to enforce

it. The law requires the commission and the company responsible to negotiate and have

conversations about next steps before a press release is issued to the public. This

problem is that these negotiations can take months” (Reuters, 2007). Not having these
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regulations in place could lead to injury or possibly death. The Us Consumer Product

Safety Commission (CPSC) is also calling for new testing standards to test toys before

they are imported from other countries.

Mattel’s Global Product Integrity team is engaged to ensure that products meet or

exceed our standards and specifications. They have also added new requirements to our

processes and dedicated more resources to improve product quality and safety. Mattel

takes pride in its integrity, safety and quality of their toys. Mattel also designs its toys to

meet or exceed applicable safety standards wherever they are sold. Which includes; the

evaluation and careful selection of materials and components to create engaging toys that

are durable and safe; all while working to comply with each country’s unique regulations.

(Mattel Inc., GCR, 2009, p15).

Corporate Accountability

In my experience the collaborative accountability model has always been an

effective way to ensure not only are standards adhered to but that the rules will be

enforced. Currently, stricter government regulation and enforcement of prompt

communication between the responsible parties are being considered. Toy companies

believe they are making toys safe by testing the toys and keeping products out of the

supply chain that may compromise their safety. They have a mandatory program that

includes testing, standard procedures for verifying products conformed to the US safety

standards. In addition to developing testing methods, and working with the government

to implement legislation.
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Consumer advocates should continue to build trusting relationships with the

consumer since the consumer isn’t able to trust the toy industry or the government to

keep children safe. In addition to mandating federal regulations and inspections to keep

children’s toys safe. Other stakeholders like children’s product retailers who also want

stronger safety measures should continue to advocate for enforcement of federal

regulations; a stronger consumer product safety commission; a better production code

stamping of products and packaging to easily trace safety issues when they occur and

finally an improved recall systems.

The best way to protect children from harmful toys in the future is to do exactly

what Mattel has outlined in their third Global Citizenship Report in 2009. The report

covered everything from the evolution of the company between 2007-2008, including the

formation of a Corporate Responsibility organization that reports directly to the CEO,

who says, “We believe that making Corporate Responsibility an independent function

will ensure greater accountability and oversight of our product quality, social compliance

and environmental commitments.” (Mattel Inc., GCR, 2009, p8). The organization was

formed to ensure accountability and oversight of product quality, social compliance and

environmental commitments. Mattel also announced a three-point plan. This plan aims

to tighten Mattel’s control of production, discover and prevent the unauthorized use of

subcontractors, and test the products itself rather than depending on contractors.

As a result of the release of the 2009 report, Mattel has received several honors

including being listed at the top 10 of the “100 Best Corporate Citizens”; ranked one of
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the “World’s Most Ethical Companies”; and has been named for the second consecutive

year to Fortune Magazine’s list of the “100 Best Companies to Work For”.

In my opinion, Mattel’s reputation was quickly repaired due to how the company

responded to its market and non market stockholders. Their handling of the crisis and

subsequent issues following the 2009 recall and the establishment of a new corporate

responsibility organization will continue to keep them on top as a global leader. Mattel is

hard at work restoring goodwill and faith in its brands, even as it continues to be plagued

with residual distrust over the lead paint nightmare. Reputations are hard won and easily

lost, but Mattel appears to be steadfast in its commitment to restoring its reputation.
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References
Associated Press. (2007). Mattel CEO admits it could have done better job.

NBCNews.com. Retrieved from:

http://www.nbcnews.com/id/20738314/ns/business-consumer_news/t/mattel-ceo-

admits-it-could-have-done-better-job/#.UyiTt6hdU1M

Lawrence, A. T. & Weber, J. (2011). Business and Society: Stakeholders, Ethics, Public

Policy (13th ed.). New York: McGraw-Hill/Irwin.

Mattel, Inc. (2009). Global Citizenship Report (GCR). 3rd Ed. Retrieved from

http://corporate.mattel.com/about-us/2009GCReport.pdf

Mattel, Inc. (2014). Playing Responsibly. Retrieved from

https://corporate.mattel.com/about-us/corporate-responsibility.aspx

Reuters. (2007, Aug 14). Mattel recalls more Chinese-made toys. [Video file]. Retrieved

from http://youtu.be/hrb3CMFVeDM

Thottam, J. (2007, Sept). Why Mattel Apologized to China. Time.Retrieved from

http://content.time.com/time/business/article/0,8599,1664428,00.html

Thorne, D., Fraedrich, J., Ferrell, O.C., and Jackson, J. (2011). Mattel Responds to

Ethical Challenges. Daniels Fund Ethics Initiative, University of New Mexico.

Retrieved from http://danielsethics.mgt.unm.edu