Mattel, Inc: Vendor Operations in Asia
Mattel is a leading company in the toy industry created in 1945, which owns a number of iconic toys and renowned brands. Mattel differentiate between core and non-core products, manufacturing its core products in-house and outsourcing non-core products. And core products include Barbie, Hot Wheels products, selective Disney and Fisher Price lines, while non-core products tended to be promotional items, or toys with short life cycles. Currently, Mattel wholly owned manufacturing facilities in China, Malaysia, Indonesia, Mexico, and Italy. It also has a subsidiary—VOA, which manages its outsourced production. In the year 1997, Mattel merged its second largest rival, Tyco Toys, adding Matchbox cars to the die-cast family of miniature cars. Since the company faced risks that the capacity didn’t match the rising demand, Montalto, the manager of VOA, was wondering how to match the future demand: whether to expand the current factories, build up a new plant or depend on outsourcing. The capable and vigorous description of this case is:
1. Select a location for the toy giant-Mattel, to expand its current capacity or build up a new plant to meet the future demand with minimum cost, be sure that the financial cash flow supports the expansion. 2. Factors like Currency Fluctuation, Productivity and Quality, Political Stability should be taken into account. Capacity-Demand Analyze
To correspond to the increased demand, Mattel should find a way to increase production. In terms of improving capacity, it is obvious that the fastest way would be to expand capacity in the existing Mattel facilities. Since the limitation of the saturation of the existed facilities, Mattel is considering outsourcing (short-term) and off-shoring(long-term) as a way out. In 1997, the production capacity of Mattel is 219 million die-cars, including 155 million of Hot Wheels (HW) and 64 million of Matchbox (MB)...
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