Case 7: Mattel: Overcoming Marketing and Manufacturing Challenges The Problem:
The problem surrounding Mattel Inc., one of the world’s largest toy companies, is their mismanagement of international subcontractors and vendors and the production of certain toys (the manufacturing process), as well as their inability to adapt their marketing strategy or product to the constantly changing “demographic and socioeconomic trends” (Ferrell, et. all 466). This is supported by Mattel’s legal battle with Carter Bryant and MGA, their forced recall of certain toys that were manufactured overseas, and the increasing rate at which traditional toys are becoming less appealing to today’s young audience. Essentially, Mattel’s mismanagement and oversight lead to violations in terms of ethical and social responsibilities and safety standards. Issues Relevant to the Problem:
Mattel’s problem of mismanagement can be divided into several issues that need to be considered: legal issues, international supply chain issues, and an increase in technology-based toys. In regards to legal issues, Mattel has been involved in prolonged litigation with Carter Bryant and MGA over a breach of an employment contract and copyright infringement. Due to Mattel’s poor management of its overseas manufacturers, in which unauthorized subcontractors and third-party suppliers were hired and unsafe materials used, several toy products were recalled. Advances in technology and changes in socioeconomic and demographic trends have created marketing, privacy, and product development issues for Mattel. Analysis of Issues:
It is evident that Mattel has used poor management practices, in which their HR and Operations Departments have failed to ensure that employees adhere to confidentiality clauses in their employment contracts. The creation of MGA’s line of Bratz dolls and the legal battle that ensued are a direct reflection of this practice. Since 2004, Mattel, their former employee Carter Bryant, and MGA Entertainment, Inc. have been “embroiled in a bitter intellectual property battle…over rights to MGA’s popular Bratz dolls” (Ferrell, et. all 459). Although Barbie remains one of Mattel’s core products, Barbie’s popularity has suffered over the last several years due to new and innovative competition. Unlike Mattel, this new competition, like MGA’s Bratz dolls, has been able to successfully keep up with the changing lifestyles of today’s youth by creating dolls that feature “contemporary, ethnic designs and skimpy clothes” (Ferrell, et. all 459). According to Mattel, Carter Bryant designed the Bratz dolls while he was employed with Mattel. He then left Mattel “to work at MGA, which began producing Bratz in 2001” (Ferrell, et. all 459). Mattel then decided to sue Carter Bryant and MGA for engaging in fraudulent activities. Mattel and a federal jury agreed that Carter Bryant was in breach of his employment contract when he developed the Bratz concept while working for Mattel. The jury also found MGA guilty of copyright infringement, “intentional interference with contractual relations, aiding and abetting breach of fiduciary duty, and aiding and abetting breach of the duty of loyalty” (http://www.msnbc.msn.com/id/26410627/). They “deemed MGA and its CEO liable for what it termed ‘intentional interference’ regarding Bryant’s contract with Mattel” (Ferrell, et. all 459). In terms of copyright infringement, MGA built the popular Bratz brand “to include more than 40 characters and expanded it with spin-offs such as Bratz Babyz, Bratz Petz, Bratz Boyz and items such as helmets, backpacks and bed sheets” (http://www.msnbc.msn.com/id/26410627/). Due to the popularity of these highly stylized dolls among Mattel’s target audience of “tweens,” domestic sales of Barbie went “down 15 percent in 2007 and 12 percent in the first quarter of 2008, while international sales increased 6 percent in 2008 as opposed to 12 percent the previous year”...
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