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Group 11: Ahmed Al-KadriNick Colarossi Kechi Emelike Reshma ParikhYena Soro

HISTORY OF MATTEL• Mattel is an American toy manufacturing company that was

founded in 1945.• Founders: Harold Matson & Elliot Handler• It is known for manufacturing some of the top toy brands

including Fisher-Price, Barbie Dolls, Monster High Dolls, Hot Wheels, and Matchbox toys.

• In 2002 they fully moved all of their manufacturing over seas and outsourced all their jobs to China.

• In 2008 it was ranked 413 on the fortune 500.

CONCERNS CREATED BY MATTEL RECALLS• On August 14, 2007, Mattel recalled over 18 million products. Many of the

products had exceeded the US limits set on surface coatings that contain lead. 

• Additional recalls were because it was possible that some toys could pose a danger to children due to the use of strong magnets that may detach. Mattel re-wrote its policy on magnets, finally issuing a recall in August 2007

Issues Included: • Toys and products safety• Quality control when outsourcing to China• Toy safety inspection processes: Batch testing

WHY THE RECALL• Lack of internal control

• The use of Lead Paint

• Mattel products integrity and corporate responsibility

• Toys and products safety

CSPC TOY SAFETY STANDARDS

• Companies must report defectives products and recalls

within 24 hours of discovery.

• Paint and other similar surface-coating materials

• The role of the CPSC.

SOCIAL RESPONSIBILITY • Global Manufacturing principle and ethical standards in

the factories• Poorly designed magnets: Lack of control over the

material use. • 35 % of Toys produced outside of China

MATTEL’S EXTERNAL ENVIRONMENTCompetition:• Mattel’s stocks price declines due to the high competition• The level of toys safety check have increase with CPSC• Increase of outsourcing and subcontractorsLegal:• Lawsuits• Allegations of failure to disclose recall in timely manner• CPSC standards

THE SAFETY STANDARDS OF MATTEL• Children Health • Promote the company integrity and loyalty to its

consumers• Legal requirements and industry standards for product

quality and safety

MATTEL’S OUTSOURCING

• China:

- Human capital : The foundation of Intellectual Capital

- Tremendous increase of its population

- Low average wage per month- $200 per month

- Chinese’s currency, Yuan, was undervalued

Strengths

•One of the largest toy producers in the market•High volume of sales per year•Brand recognition and loyalty •Company longevity has created iconic toys•Leader in the production of traditional toys•Diversification in global toy market, providing toys for various ethnic backgrounds

Opportunities

•Development of new toys to support technological changes •Create stronger online marketing segment to connect to new generation of consumers•Increase quality control to decrease safety concerns and subsequent recalls of popular toys•Reorganization of management team

Threats

•Imitability of products in other cheap labor markets by other low cost producers •Advancing technology influencing consumer tastes •Company products run the risk of being antiquated and viewed as less important

Weaknesses

•Weak online presence in the new millennium•Inability of traditional toys to hold modern interest •Product safety concerns and regulations that have arisen since 1945 (Such as choking hazard warning signs) •Utilization of cheap 3rd world labor despite large profit margins, questionable management team decisions surrounding this practice

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Primary factorsSWOT ANALYSIS : MATTEL

S WO T

SWOT ANALYSIS : MATTEL Due to the size of Mattel, they are able to stay

afloat on high sales volume even at lower costs than modern video games, in large part due to their utilization of 3rd world labor for cheaper quality products. This has led to numerous product recalls and hurdles complying with government safety regulations. Their iconic products such as the Barbie and Ken line, as well as board games such as Scrabble have been around for decades and have established a reputation and brand loyalty that persists to this day. While these lines can technically be continued indefinitely, at some point they will begin to languish in the face of advancing technology and changing consumer entertainment tastes. In order to survive, Mattel must begin to develop its technology driven segment and work on new age marketing tactics to remain relevant.

Generic Strategy: Mix Between Cost and Differentiation      Lower price by: Economy of Scales                          Move Factories to growing countries with lower cost.     Licensing with Cartoon and Movie makers. Internationalization and Cooperation Strategy.     Outsourscing: Toy Parts      Alliance: Walt Disney, Wal Mart, Toy R'us.        Global Strategy: -Invest Oversea                              -Standard Products. 

Mattel Strategic Business Strategy1. Low Threat of New Entrants: - Time & Capital require to establish a brand name  - Big Existing Players                                               - Economies of Scale 2 Medium Powers of Buyers: - Effect to Price                                          - Effect to R&D, Strategy 3.High Threat of Substitute: - Many substitute products                                         - Different from price to quality                                         - Different brands4.Low Power of Suppliers: - Low bargaining power                                      - Wide variety of Alternative                                       - Cost based decisions

Strategic Issues 1. They Outsourced without full quality control which led to Product quality. However, in August 2, 2007 they had to recall over one million Chines made toys because of the potential hazard of lead paint. Also in August 14 2007 Mattel recalled over 18 million products due tot he possibility of danger to children from detachable magnets.  2. Production/sales Geographic is not optimize which made different strands of the Toys they were making that leads to a high risk.  3. No Diversification products type so it an not satisfy the market needs which is also a High risk.

Recommendation  - Reevaluate Production facilities location & Diversification manufactures and Suppliers.-Rebuilt and strengthen Mattel Brand's image. - Research and plan to invest in new technologies for a new product to fit growing trends.- Mattel would consider building new production plants in other growing countries.