Development of Major Issue
Mattel was the world’s largest toy manufacturer with revenue over $5 billion. It had been doing business in China for 25 years. China was Mattel’s most important manufacturing country. 65% of Mattel’s toys were manufactured in China. It owned 5 factories in China and had a network of contract manufacturers for the remainder of production. In August and September, 2007, Mattel recalled for three times globally 21 million problematic toys that were made in China for the reason of containing excess level of lead. The toys recall issue in addition to the publicity of media drew public attention to the global toys inspection system and the products quality of ‘Made in China’, resulting in a trust crisis of Mattel itself and Chinese manufacturers.
Implication of Major Issue
In response to the quality crisis, Mattel’s tactic was to recall all problematic products and make public apology. Mattel’s strategy was successful. One of its contract manufacturers in China bankrupted because of the recall issue and the plant owner committed suicide. In contrast, Mattel protected the damage of its reputation to a bare minimum with effective public relationship methods. Mattel worked with the CPSC to launch an external media blitz, and its CEO apologized to parents in a video on internet. Mattel also established new corporate responsibility organization and new three-point safety check system. Although Mattel was blamed for delaying reporting to the CPSC for 1.5 months and shifting the blame to China. Its crisis management methods had given the company maximum protection from the crisis.
Except for the significant costs associated with the recalls and potential lawsuits, Mattel is experiencing decreasing market share and damage to brand image. The most important goal for Mattel is to reassure their customers that kids' safety is their highest priority and they are committed to provide...