Mattel Final

Presented By:
Jayesh Parab-35
Vishal Raj-41
Dipti Save-47
Daljit Sound-53
Vibha -59
 Outsourcing is subcontracting a
process, such as product design or
manufacturing, to a third-party
company.
 The decision to outsource is often
made in the interest of lowering
cost or making better use of time
and energy.
 It is essentially a division of labour.
 Outsourcing involves contracting
with a supplier, which may or may
not involve some degree of
offshoring.
 Offshoring is the transfer of
an organizational function to
another country, regardless
of whether the work is
outsourced or stays within
the same
corporation/company.
 Major Countries:
USA, UK, Australia, etc.
 For eg: 65 percent of its toys
are manufactured in China
 The Chinese Toy Industry:
 80 percent of U.S. toys are made in
China
 $6.5 billion in toys are exported to
the U.S. from China annually
 65 percent of Mattel’s toys are made
in China
 Quality Control Challenges

Unique to China:
 Supply chain likened to “intellectual
property.”
 Chinese “happy with crappy”
mentality
 Inspections:
 Mattel often outsources “batch
testing” to factories themselves
 Mattel helps contractors build
inspection facilities.
 Reality: can’t check all.
 China Recalls:
 177 recalls since 2006 were of
products
made in China
MATTEL Inc.
Type: Public (NYSE: MAT)
Founded: 1945
Headquarters:
El Segundo, California, U.S.
Key people:
Robert A. Eckert, Chairman and CEO.
Kevin M. Farr, CFO.
Industry:
Toys and games
MATTEL Inc.
•The world's largest toy company based on
revenue.
•The products it produces include Barbie dolls,
Hot Wheels and Matchbox cars,
Masters of the Universe, American Girl
dolls, board games, and, in the early
1980s, video game consoles.
•Mattel closed its last American factory,
originally part of the Fisher-Price
division, in 2002.
•As of 2007, Mattel's toys were primarily
manufactured by subcontractors in China.
Mattel’s Safety Standards
Mattel’s website states that:
“Children’s health, safety and well-being
are our primary concern.”
“We could damage our consumer’s trust if

we sell products that do not meet our
standards.”
“We will meet or exceed legal requirements

and industry standards for product quality
and safety.”
 The CPSC is a federal agency
that monitors the safety of
5,000 products.
 Suggests standards.
Companies are expected to
comply.
 The CPSC can inspect,
monitor, prosecute and fine,
but its budget is limited.
 Key regulation: companies
must report a defect/recall
within 24 hours of discovery.
 Key regulation: stipulates
legal lead toxicity levels
June 8 Mattel is first alerted to possible lead paint contamination.
June 9 The CPSC deadline for Mattel to report the problem.
June 10 CPSC deadline passes; Mat tel fails to act.
July 26 Mattel files full recall report with CPSC.
Aug. 14 Mattel voluntarily recalls 17.4 mill products with loose magnets.
Sept. 4 Mattel voluntarily recalls 850,000 toys with lead paint.
Oct. 25 Mattel voluntary recalls Go Diego Go! Rescue Boats coated in

paint containing hazardous levels of lead.
Nov. 6 Mattel voluntarily recalls 155,000 toys manufactured in Mexico

because of choking hazards.
 August 2, 2007: Mattel's
Fisher-Price subsidiary
recalled almost one million
Chinese-made toys, because of
potential hazards from parts
of the toys which were colored
using lead-based paint that
may have exceeded the US
Federal limit of 600 part per
million.
 August 14, 2007: Mattel
recalled over 18 million
products because it was
possible that they could pose a
danger to children due to the
use of strong magnets that
may detach.
 September 4, 2007: Mattel
recalled a further 530,000
affected toys in the United
States — and 318,000 outside
the United States
 June 5, 2009 : The Consumer
Product Safety Commission
fined Mattel and its' Fischer-
Price division $2.3 million
dollars for violation of Code
16 of Federal Regulations
CFR 1303, the Federal lead
paint ban.
 Declining market share and
flat sales of its core toys.
 Mattel toy boycott.
 Expense of litigation
 International Bad Product
Awards, presented at CI's
World Congress in Sydney,
Australia
 Fortune magazine rated the
recall of Mattel's products
as one of the 'Dumbest
Moments' in business for
2007.
 Worked with the CPSC
to launch an external
media blitz
 CEO Eckert apologized
to parents in a video
posted on website
 New Corporate
Responsibility
organization
 New three-point safety
check system
 Shifted blame to China
 These Recalls Have Created
Concern Over:
 Toy safety and product
safety
 Quality control when
outsourcing to China
 Toy safety inspection
processes
 Mattel should adapt  Framed communication to
truthfulness to match its make China appear culpable
interests at a given for the magnet recalls in
moment. order to minimize
reputational damage.
 By waiting over a month to
make a potential toy hazard  On the other hand, posting
public, Mattel evaded the news releases and video
truth. interviews on its website
kept publics informed and
created a degree of
transparency and honesty.
 Mattel should improve two-way,
interpersonal communication
with two key customers:
 parents
 shopkeepers/retailers
 Corporate communication
campaigns should increase
interaction with consumers
online: chat rooms, message
boards, social media.
 Shopkeepers have the most face-
to-face contact with consumers.
Mattel should equip them to
answer consumer questions
comprehensively and accurately.
 Anticipate future crises by
scanning domestic and
international consumer watch
groups and industry websites.
 Understand domestic and
international markets. Be
ready to circumvent any
safety related issues that are
brewing.
 Ensure that each country
receives products held to the
same safety standards. Sub-
standard products should not
be dumped on developing
markets.
 Generate goodwill with its
international customers.
Understand cultural nuances.
 To reassure parents that child safety
and product safety come before the
bottom line.
 To collaborate with Chinese
suppliers and government agencies
to adopt realistic quality control
solutions for which it can be held
accountable. To communicate these
actions to its stakeholders.
 To improve international, cross-
cultural communication.
 To delicately and deliberately
manage and balance its supplier,
customer, governmental, media and
investor relationships.

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What are the challenges faced by Mattel in quality control when outsourcing production to China?

What steps did Mattel take to address the toy recalls?

Presented By:

 Quality Control Challenges

“We could damage our consumer’s trust if

“We will meet or exceed legal requirements

June 9 The CPSC deadline for Mattel to report the problem.

June 10 CPSC deadline passes; Mat tel fails to act.

July 26 Mattel files full recall report with CPSC.

Sept. 4 Mattel voluntarily recalls 850,000 toys with lead paint.

Oct. 25 Mattel voluntary recalls Go Diego Go! Rescue Boats coated in

Nov. 6 Mattel voluntarily recalls 155,000 toys manufactured in Mexico

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