Mattel Toy Recalls

Mattel, Inc. is the largest diddle gild in the being. This largest bet beau monde in the world was founded by Harold Matson and Elliot managing director in 1945, as they started to start out picture frames. However it was Elliott Handler who had a visionary of a cheek business in dollhouse furniture out of the converted garage (Mattel). As a top association, the primary activities of Mattel argon to design, manufacture, and market the playthings. As the clubs gross tax revenue growing slowly, Mattel started to produce varieties of proud feature point of intersections and became one of the of the best play companies around the nation at the time.The major(ip) move by Mattel was when it sponsored Walt Disneys paddy field Mouse Club television see that put the confederacy in suck up and familys sales change magnitude significantly. That sponsorship of Mickey Mouse Club helped the go with to invoke a precise noble proportion of young potential customers. In 19 59, the wife of Elliot Handler, pity Handler came up with an outstanding idea that changed Mattel forever. As Ruth Handler watched her daughter playing with report dolls, she suggested the idea of devising three dimensional dolls to her husband.Elliott loved the idea of making such dolls and introduced the doll with a full insistency and accessories to the market. The doll initially formd after the mountain pass name of daughter of Elliott and Ruth. The introduction of the fresh doll was a huge victor for Mattel and immediately the doll became the major fruit line of Mattel (Finding). With the victory of Barbie doll, Mattel was named a oert confederation and ranked soon as one of the largest industrial companies in the fall in States. In 1968, Mattel read introduced an early(a) consumer-loved product called resilient Wheels. This was countenance biggest hit since the follow introduced Barbie.Hot Wheels immediately labeled Mattel as the largest toy follow in the wor ld. As the toy industry was changing and new competitors were approach shot in, Mattel saw a stiff competitor rising in the mid 1980s. manage other companies in the toy industry, Mattel approach a stiff from the electronic entertainment. The electronic entertainment introduced few(prenominal) electronical videos games in which children switched to at an increasing young age from the conventional entertainment. To cope up with the competition and attract the new generation, Mattel opinionated to expand into applied science by producing lectronic gaming products. Mattel failed to attract a richly proportion of consumers, and were unable to scene in with the new dodging as there were new competitors producing electronic games with note prices. Later, Mattel decided to focus on producing the effect products of the company. This system to refocus on the snapper products and makeover some of the core products was a enceinte success for Mattel. For example, after doing mak eover, in 1988 to 1993, the sales of Barbie doll increased to $ 1 one thousand thousand dollars from $430 Million dollars (Sansweet).As Mattel is kn deliver 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 located in china (Jiangyong). Since Mattel started its business, the company produced its products approximatelyly in ontogenesis countries to fool away the advantage of cheap manufacturing costs. Unlike more toy companies, Mattel produced 70% to 80% of its products in their own manufacturing facilities. The company believed that making products in-house willing be more motionless and high efficient products.According to Mattel, in-house facilities have high beat recourse measures and high quality tame that produce high-quality products. Besides making most of its products in Mattels own manufacturing facilities, some of its business was ou tsourced to China and other developing countries in order to focus on domestic strategic 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 postulate to be recalled as they do not meet the refuge standards and tend to meet the image of a healthful-known organization 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 atomic number 18 less touristy and non-core. Due to outsourcing to other developing countries, the toy industry approach many hardships. The products that ar made in developing countries that had deficient quality underwrite were recalled many times referable to the guard reasons.Mattel too faced a stiff pressure from the political relation and consumers for the products that were not safe and stable which are made in manufacturing facilities in China. Recently, Mattel recalled some(prenominal) of its products because they were not safe for consumers. Recalling millions of products, not solely reduced the total revenues of the company, as comfortably as it hurt the companys image at the same time. Mattel had been constantly impudenceed by its consumers for making providing its consumers high-quality products and stable products.The recalls that are connected with lead paint made by Mattels lont-time manufacturers. These manufacturers are responsible for not having strong safety regulations and not complying with the quality control at bottom the organization. The manufacturer, Early Light Industrial, was responsible for the second major recall of about 1 million toys. The manufacturer had more than two hundred employees to chitchat if the contractors were complying with safety regulations, but no(prenominal) of them were stationed on-site to inspect the products. Failure to inspect the products left the company with rooms or errors.In order to understand a companys situation, pecuniary statements are real primal. Financial statements allow you to see the companys performance, financial condition, and financial trend. By examining financial statements of Mattel, we can understandably prevent where the company is heading financially. Looking at ROA and PM, both ROA and PM increasing course of study to year from 2005 to 2007 which is very good discussion 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. class 2007 2006 2005 Net sales 5,970. 09 5,650. 16 5179. 02 follow of Sales 3,192. 79 3,038. 36 2,806. 15 Net Income 599. 9 492. 93 417. 02 nitty-gritty Assets 4805. 4 6 4955. 88 4372. 31 ROA (%) 12. 4 9. 5 9. 53 PM (%) 10. 4 8. 72 8. 05 Firm Strategy virtuoso of the Mattels primary strength is that the company is the leading brand named leading toy company in the toy industry. forever 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 alimentation doing what the company is doing and find out what the customers compliments and desire by research and development. Mattels main goal is to maximize proceeds efficiency go minimizing the risks, controlling expenses, and guarding 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 verify on a single manufacturer. However, this strategy may not convey quality sanction of the products and also raise concerns over safety regulations. Due to substandard safety measures revolving toy designing and manufacturing in China, Mattel has been set about some tough challenges.During 2007, Mattel has made five-spot recalls of over 21 million toys are made in China due to the excessive lead paints on toys and having loosen up magnets that normally impose danger to the children while playing with them. These loose magnets and lead paint can easily be consumed by the children. These novel recalls started to hurt the image of the com pany and as well as the reputations of the company. Sales in some areas started declining, however, the total revenues 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 alternative solutions to do work the problems. There are some alternative strategies Mattel can make in order to stay on the of the toy industry. Possible alternatives include reconstruct strategy, and manufacturing in fall in States. Option 1 Rebuilding Strategy Mattel should focus on construct strategy. The company of necessity to rebuild the consumer corporate trust in toys, rebuild the trust of the industry, and as well as the trust of China.Accountability and responsibility required strongly to desexualize the image. Denial and accusations will honorable 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 sand to United States as they are veneering many problems in overseas countries. However, this strategy will be really pricey 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 piece on China. Blaming China will just hurt the relationship with the Government China. Mattel, Inc. is also required to change its strategy to utter 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 yield and truthful.Confess to wrongdoing is a great appliance to start re-establishing the trust. The company also needs to focus on communicati ng with the consumers to send their needs. For better standard safety measures, Mattel should deal a third party for jerky inspections of the products in manufacturing facilities. The company should maintain its received strategy and continue outsourcing in China where it could focus on expanding product lines. The company may also incorporate with accomplished 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 fountain Memo Executive Summary California-based Mattel, Inc. is known to the world for making the high-quality and brand-name recognized products. Recently, the Mattel union recalled millions of products that are mostly made in China for the safety concerns that ra ised many questions about the sustainability of the companys products.Due to these recent recalls, now Mattel is totally aware of the perils of manufacturing in developing countries, where the safety measures and working surround were totally unacceptable. The purpose of this case digest is to understand the problems that occurred and how Mattel will come to solutions to wreak them. This case analysis will check over 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 proceed successfully in the future.