MATTELCreating ethical responses for the future of playAlexis McDonald

February 7, 2015

Managerial Ethics

Creation

• Founded in 1945 by Matt Matison and Elliott and Ruth Handler, it began as a picture frame company before switching to the toy industry.

• In 1960, it became a publically traded company with sales exceeding $100 million by 1965.• In 1990s, sales declined due to bad investments.• In 1997, Jill Barad built the brand to $2 billion.• In 2000, Robert Eckert came in and helped the company continue to flourish by acquiring Harry

Potter.• In 2003, Mattel was recognized by UNICEF with Corporate Responsibility Award.• In 2011, former COO Bryan Stockton became CEO.• In 2014, it was recognized by Fortune’s “100 Best Companies To Work For” in five years.

Core Products

• Barbie• American Girl• Hot Wheels• Cabbage Patch Kids

Ethics and Social Responsibility

• Marketing to children requires notifying parents of changes to its Internet-based tools

• Privacy policy which does not collect marketing information from children under the age of 13 without parental consent

• Expectations of their business partners to uphold safety and human rights standards

• Legal protection of assets such as intellectual property, trademarks, patents, etc.

• Dealings with business partners of high ethics when it comes to product safety and quality standards

• Philanthropic foundation and community involvement for employees for children with specific investments in needs and their future

• International manufacturing principles which address issues of child labor, fair wages, working conditions, hours, etc.

Encouraging commitment to children’s rights as a social responsibility and strong business ethics

Overseas Manufacturing Paint Issue

• In 2007, a European retailer discovered lead paint was being used with toys which resulted in the recall of 10 million toys.

• Hong Kong partner, Early Light’s Chinese subcontractor, Lee Dur bought unauthorized paint to use on Cars product.

• Mattel halted production at Lee Dur who switched to avoid increasing costs.• The lead paint incident resulted in China revoking the company’s export

license

Overseas Manufacturing Magnet Issue

• In 2007, Mattel recalled toys due to magnets which posed a choking hazard.• The result being 21 million toys returned and lawsuit filed on behalf of parents.• Blame shifted between Mattel and Chinese partner who felt there was an issue in the

quality control of the manufactured toy.• Consumer International recognized Mattel with an award as “Bad Product” company• Mattel introduced a stipulation that their manufacturing partners cannot hire

subcontractors tiers below for business.• Three point plan instilled to control production of its toys.

Intellectual Property Employee Issue

• In 2002, Mattel investigated a former employee Carter Bryant after the release of BRATZ dolls.

• Due to its success, Mattel sued Bryant who may or may not have deigined the doll while employed with them.

• MGA, the current owner of the property, sued Mattel for trying to corner the market with their BARBIE version of the dolls.

• In 2008, Mattel was rewarded $100 million for breach of contract and banned MGA from making the doll.

• !n 2010, the ruling was overturned by Ninth Circuit Court of Appeals.• In 2011, MGA Entertainment Inc received damages of $85 million in liabilities, $225

million in damages and legal fees as well as an antitrust claim filed but it was dropped.• In 2013, the ruling was overturned by the US Court of Appeals in favor of Mattel but

$137.2 million in legal fees must be settled.

Commitment to Children

Manufacturing companies have special obligations to consumers and society. According to Ferrell, Fraderich & Ferrell (2013), global business recognizes that international partners must be sensitive to their own cultures, beliefs and practices as well as other countries. Thus Mattel’s Global Manufacturing Principles establishes the respect for cultural, ethical, and philosophical values in countries of operations. Companies which discriminate, force children to work, force adults to work longer hours or fail to provide safe working environments for its employees will not be contracted with Mattel.

Ethical and Legal Conduct

Although there have been some safety issues, Mattel continues to align itself with companies dedicated to improving and achieving. It encourages partners by offering to help when there are issues. Any changes or additions to be made should come in the form of corrective action plans. The corrective action plans would be the same for all partners. Instead of creating divisions, managers from the higher standard partners would be sent to assist the lower standard partners with creation of solutions to make their business legal and ethical according to the Global Manufacturing Principles.

According to Ferrell et al. (2013), Mattel prefers to partner with companies of the same high ethical standards.

Mattel’s issue with China

Was Mattel responsible?• To a certain extent, Mattel was

responsible for the lead paint and magnet issues which led to the recall of millions of toys. Although Mattel respected the Chinese manufacturing company, this was still their product being produced. There should have been an oversight committee auditing each partner to make sure that no loopholes were being created.

Could the issue have been avoided?

• With respect to the Chinese, Mattel could have avoided the issue by checking up on their partners during the manufacturing. The company could have stressed the importance of product quality and the impact of bad products on the entire company as a whole with training and open communication as it does today. If there is transparency and honesty, the partners would have come to Mattel with their fears and the situation could have been avoided.

Creating the future of PLAY!

• In 2012, CEO Bryan Stockton released a code of conduct which outlined to the employees and consumers of Mattel the legal, ethical, and social responsibilities. This code of conduct presented the global audience with regulations and laws the CEO felt should be adhered to by the company and its partners.

References

Ferrell, O.C., Fraedrich, J., Ferrell, L., (2013) Business Ethics, Ethical Decision Making and Cases, Stamford, CT: Cengage Learning, 10th edition.

Mattel (2012). Retrieved from https://corporate.mattel.com/about-us/pdf/CodeOfConduct2012.PDF