School of Business and Management
MT 460-04 Management Policy and Strategy
Dr. K. Peterson
Unit Four Mattel Case Study Analysis
In 1944, the Mattel brand was founded by Ruth and Elliot Handler and Harold “Matt” Matson. They launched Mattel out of a garage workshop in Southern California. The first Mattel products were actually picture frames, but Elliot soon started using the scrap from the picture frames to create dollhouse furniture. Harold Matson eventually sold out to his partner, Ruth and Elliot Handler. The Handler’s, encouraged by the success of the doll furniture and turned the emphasis of the company to toys. By 1955, Mattel was advertising toys through the popular show “Mickey Mouse Club”; this revolutionized the way toys were marketed (Teagarden, 2008). By 1959 Mattel had introduced Barbie, named after their daughter Barbara’s nickname. Barbie would soon lead Mattel to the forefront of the toy industry and fascinate girls all over the world for decades. The company rolled out the equally iconic product, Hot Wheels, a decade later. Mattel, a true toy industry off-shoring pioneer, began manufacturing toys in offshore locations to take advantage of lower manufacturing costs and to focus corporate resources and attention on building brand (Mattel inc. -," 2012). In 1960, Mattel became a publicly owned company, stock was listed was listed on the New York and Pacific Coast Stock Exchanges in 1963. By 1965, sales topped $100 million and the company joined the Fortune 500. In the years to come Mattel would enter the ever growing electronics industry, they would also enter several joint ventures and licensing agreements that would earn them more profit (Mattel inc. -," 2012). A host of external factors can influence a firm’s decision of direction and action. Influencing Mattel’s decisions are economic factors, social factors, political factors, technological factors and ecological factors (Pearce & Robinson, 2010).
Being a leading toy company, Mattel soon found that they had to recall many of their products. The company that Mattel was paying in China to manufacture many of their toys was using paint that contained lead. The lead levels exceeded the U.S federal safety regulation when it came to toys. The excess levels of lead caused Mattel to recall 967,000 Chinese made toys (Teagarden, 2008). The biggest issue for Mattel was determining what company in China was responsible for providing the lead based paint. They also questioned how they would deal with the future manufacturing needs and what will they do about the profit loss from the recalled toys. Other issues in that Mattel would have to face was how this was going to affect their stockholders, their credibility and how they would be able to maintain their customer base. The problem that Mattel faced was being able to rebound from the recall of all of the toys that had levels of lead in the paint. This recall led them to more than just one problem. The issue of losing their consumer based confidence in their products could lead to profit loss and other unforeseen problems. Having different standards and moving companies into the global economy can sometimes lead companies to losing their focus on things that are important. They began to cut costs and with that, the quality of the product loses its value and the consumer doesn’t receive a great product. In Mattel’s case, by moving their manufacturing overseas, toy companies shifted their focus to research and development, product design, marketing, and other core business activities of strategic importance (Teagarden, 2008). In order for Mattel to come to a solution to regain their customer confidence and make sure that their toys were safe for children to play with, they first needed to determine which company in China was using the lead based paint. Secondly, there needs to be guidelines or standards that are in place...