Mattel Recalls 2007
Communication Implications for Quality Control, Outsourcing, and Consumer Relations [ABSTRACT] In August 2007, America's largest toy manufacturer announced the first of what would become five recalls involving 21 million toys—most of which were manufactured in China. This case study and teaching note examine a corporate response to a global crisis and consider the unique communications challenges facing a corporation that operates in an international, crosscultural arena. The teaching note critiques the response’s suitability to the level and impact of the crisis and recommends alternatives. It illustrates that communicators should be cognizant of their international stakeholders and should proactively manage global issues of public concern such as outsourcing and product safety. An example would be that to avert future recalls, Mattel should work closely with its Chinese suppliers and government agencies to implement realistic quality control solutions for which it can be held accountable. The company must reassure stakeholders that outsourcing to China does not mean sacrificing quality. Regaining consumer confidence and controlling the dissemination of product safety information requires strong corporate communicators who can delicately and deliberately balance complex relationships.
Table of Contents I. Case Study 1. Overview 2. Company History 2.1 Beginnings 2.2 Reorganization as Mattel, Inc. 2.3 Products 2.4 Accolades for Ethics 2.5 Financial Performance and Annual Report (2006) 3. Toy Safety in the United States 3.1 Consumer Product Safety Commission (CPSC) Standards 3.2 Mattel's Independent Standards 4. Issues in Outsourcing to China 4.1 China as the World’s Workshop 4.2 Quality Control Challenges and Implications 4.3 Mattel’s China Operations 4.4 Managing International Communication 5. Mattel's Recall History 5.1 Power Wheels Product Recall 1998-2001 6. The Competitive Environment and Competitor Recalls 6.1 Toy Industry Overview 6.2 MGA, Hasbro, and JAKKS 6.3 Financial Impacts on Competitors 7. Mattel Product Recalls 2007 7.1 Recall Timeline 7.2 Mattel's Response: Successful External Communication 7.3 Mattel's Response: Internal Reorganization 7.4 Mattel's Response: Shortcomings 7.5 Competitor Response 7.6 Industry Response 7.7 Investor Response 7.8 Watchdog Response 7.9 Parent/Consumer Response 7.10 Government Response 8. Current Dilemma II. Appendixes 1 2 2 2 2 3 3 3 4 4 4 5 6 6 7 7 8 8 8 9 9 10 10 11 11 12 13 14 14 15 16 16 17 17 17 18
1. Overview: During the summer and fall of 2007, international toy giant Mattel and childhood favorites Barbie® and Elmo® dominated media headlines for weeks. Reports talked not of Christmas sneak previews or of rising sales, but of recalls, lead poisoning, and deadly magnets. In total, an excess of 21 million toys were pulled from shelves in little over a month, either because they were coated in toxic lead paint or contained small, poorly designed magnets, just the right size to be swallowed by curious kids. The voluntary recalls offered Mattel the opportunity to become a model of effective shortterm crisis communication strategy. Working with the Consumer Product Safety Commission to execute the communication component of the recall at an accelerated pace, Mattel placed notifications in 20 languages on its website, sent personal letters to its entire customer database, sent letters and posters to its retailers, manned a hotline, placed full page ads in major newspapers, and worked closely with the media. However, the CPSC's subsequent revelation that Mattel first suspected lead contamination in early June, a good two months before it announced the first of four recalls on August 4, has overshadowed much of what the company claims it did right. The disclosure calls into question Mattel's prioritization of its customer's interests and the quality of its products over its business interests. According to CPSC regulations, companies must report suspected...
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