The Toy Manufacturing Industry: Mattel Inc and Branded Toys - Case Study Example

? Mattel Inc Toy Recall 2007: Case Study Mattel Inc Toy Recall 2007: Case Study Case Scenario Mattel Inc, the global leader in the toy manufacturing industry, headquartered in El Segundo, California, recalled its millions of toys worldwide in 2007 so as to comply with the corporate and legal accountability. Mattel’s branded toys include Barbie dolls, Fisher-Price toys, Hot Wheel Cars, etc. among which many are produced in overseas factories, especially in Asia (Lawrance & Weber, 2010, p. 401). Mattel had its own factories in China, and it contracted the production of toys to outside contractors as well without considering the risk associated with the act. The result was that the company had to recall the major part of its production as the toys manufactured by the contractors contained toxic components. For instance, its toy Sarge contained high levels of lead, and some other items such as Batman, Polly Pocket and Doggie Daycare contained powerful magnets that could be easily swallowed by children. This paper will analyze to what extent Mattel Inc demonstrated its legal and ethical responsibility while responding to the issue. It will also discuss the role of other parties involved. Finally, the paper will suggest an essential approach for the society to ensure that their children are protected from harmful toys. 1. Evidently, Mattel acted in a responsible way by performing a series of product recalls in 2007. Although the U.S. Consumer Product Safety Commission (CPSC) announced Mattel’s five initial recalls on August 14, subsequently, on 4th September, Mattel announced the recall of other items that contained lead and harmful magnets (Case study). This was the real indication of the firm’s ethical and social responsibility toward the entire world. At the same time, the incident shows that Mattel must reconsider its outsourcing or international business strategies. Evidently, Mattel did not clearly analyze the risk factors associated with outsourcing business in China. It also failed to forecast the likeliness of “quality compromise” while choosing Chinese contractors. These strategic flaws cause people to doubt the ethical accountability of the firm as well as the effectiveness of current regulations. Although Mattel’s strategic decision on producing toys in China flawed, the way the firm responded to the 2007 issue was very substantial. Mattel has been very keen on maintaining its public transparency despite certain issues such as that of the 2007 recall. As Lawrence and Weber (2010) point out, in 1997 Mattel developed its own detailed code of conduct and since then, it added its genuine effort to comply with the code in every aspect with the extended help from ICCA, an independent audit firm. For instance, the issue associated with Mexican plants, where workers complained that they had to “stand without a break for eight hours a day,” was immediately addressed by the company in a very reasonable way (p. 104). As per the SICCA report, Mattel Inc in 1997 defined its “global code of conduct (Global Manufacturing Principles) for its production facilities and contract manufactures”; and the GMP “covers such issues as wages and hours, child labor, forced labor, discrimination, freedom of association, legal and ethical business practices, health and safety, protection of the environment, and respect for local culture, values, and traditions” (SICCA, 2010). Again, as the case study states, in China itself Mattel had its own facilities and special test labs for testing the quality of the products; and the company had its own specific standards with regard to the levels of lead in paint. Undoubtedly, the company initiated an extensive investigation in “July after a European retailer found that paint on a Mattel product” (Case study). Moreover, the company never wanted to hide its fault and instead, informed the world that it was earnestly trying to resolve the issue in union with the Consumer Product Safety Commission in the United States and other regulatory agencies worldwide. As described in the case study, Mattel provided a comprehensive list of recall products and a toll free number to respond to customers on time regarding their query on product safety. Its ads in Wall Street Journal, the New York Times, and the USA Today and press releases reassured the safety procedures the firm would take up in future (Case study). Hence, Mattel’s corporate history and its response to the particular issue of 2007 as a whole clearly show that the firm gives more emphasis to its ethical accountability than profit maximization or business expansion. 2. As per the BBC report dated 14 Aug (2007), Mattel Inc blamed Hong Li Da, a subcontracted Chinese company, for “using paints from unauthorized companies.” However, Mattel cannot simply save face by blaming its contactor firm Hong Li Da. As the mother firm and responsible global entrepreneur, Mattel is accountable to the world for any sort of complaints regarding their product quality. Though Mattel can outsource its projects at its own discretion, the legal and ethical responsibility cannot be handed over to a third party for any reason. Mattel should have assessed the risk and opportunities of outsourcing business in the Chinese market. For instance, as BBC (2007 Aug 14) reports, there had been a series of alerts about the “made in china products” even before the Mattel recall. Evidently, the event raised concerns over the product safety across the globe, and as many believe, this could be attributed to the failure of the safety inspection processes of the company. As per the regulations of CPSC, a federal agency that monitors the safety of products, companies must report a recall within 24 hours of discovery. And it was alarming that Mattel, one of the top 100 Best Corporate Citizens who maintained GMP – ethical standards at factories – had to announce five recalls in a year that involved 21 million toys. The incident also reveals the weakness of Chinese regulations in this industry. Hence, in this context, Chinese authorities and CPSC also are responsible for the fact that children are exposed to potentially dangerous toys. Product recall occurs only once any defect is reported, and it does not mean that hazards are always detected on time in every case. Although Mattel had its own quality standards and testing systems, the profit driven firm (Hong Li Da) that sub-contracted the painting of the toys to another company created the problem. Therefore, from the ethical point of view, the firm that used cheaper paint for monetary gain is answerable for the misdemeanor. Although China itself has reasonable levels of regulations on the quality of the paints to be used in toys, the laws are not enforced effectively. At this juncture, the Chinese authorities also are to be blamed for the issue. Hence, in the given case, Mattel Inc together with Chinese authorities, contracting firms, and CPSC are responsible for giving children access to potentially hazardous toys. 3. Although most of the countries have defined their own “toy safety” standards with an intention to prevent accidents, still mild and severe toy-related accidents are reported across the globe. Admittedly, all accidents cannot be attributed to faulty design of toys such as what happened in the case of Mattel’s toys Barbie, Batman, Polly pocket, and doggie daycare playsets. Even if safety depends on the way children use toys, manufacturers are often answerable to the mishaps. In other words, the level of customer satisfaction of toys solely depends on how the child makes use of it or enjoys it to his content. In addition to all, manufacturers of toys have to comply with ethical as well as legal norms streaming along with production in order to ensure the quality of the product. It is essential to see that the toys are of standard quality and safety guaranteed. According to Lerbinger (1997, pp. 25–26), toy manufacturers have to illustrate their moral management by thoroughly testing the quality of toys before they release the products to the market. In the United States, the Consumer Product Safety Commission (CPSC) is responsible for ensuring the safety of toys by reserving the right to control the sale of considerably harmful products. It monitors the market and toy industry by encouraging the customers to report toys at its hotline numbers, surveys hospitals for toys related injuries and even conducts research on potential hazards associated with consumer products including toys (Consumer Product Safety Commission, 2009). The regulations of the toy industry must function at the best of its effect in order to guarantee stringent actions against violators of security norms. There must be some provisions for sustainable and comprehensive after-sales responsibility of the consequences. The recent Consumer Product Safety Improvement Act has been hailed as a stringent law for the manufacturers in the toys industry as it makes the use of chemicals such as phthalates and substantially lowers the acceptable level of lead from 600 ppm to 300 ppm (Locker, 2009; Mattel Inc., 2008). Considering the elements of social justice and customer safety, it is therefore essential that the toys manufactures have a voluntary ethical standard for safety over and above the standards fixed by the governments. Manufacturers have to adhere to strict standards for “flammability, toxicity, and durability” during the safety testing process (Lerbinger, 1997, p. 26). Ethical concern for the consumer is inevitable for any business to survive in the long run. As it is evident from the case of Mattel, since the toy industry is a very lucrative one, manufacturers tend to ignore the quality standards set by regulatory authorities. Hence, consumer advocates and unions can do a lot to ensure the safety standards. For instance, recently an environmental research group has found that in a sample of 15,000 toys taken from various toy stores across the United States, one in three contained large amounts of lead, flame retardants and arsenic (Clifford, 2008). Beyond compromise and debates, the raw materials used in the production of toys must be driven towards the social responsibility of the company concerned. As an example for better moral management, Hasbro-Bradley, Inc eliminated more than 2000 toy concepts in one year before it finalized its 100 toys for the year. 4. What role the society can play with ensuring toy safety depends on how the society perceives the responsibility of corporations toward the world. As an emerging trend, today the world expects comprehensive outcomes from organizations rather than maximum financial gains to shareholders. The term “corporate responsibility” refers to the corporate management’s obligations to meet the legal and ethical rights of an ever-broadening team of stakeholders. It shows the intensity of pressure stakeholders can use on a firm with regard to its business activities, supply chain, product quality, etc. The responsibility of keeping children safe from toxic toys mainly lies with the parents. However, parents are not often aware of the risks associated with chemicals used in many of the toys. They tend to believe that toys that come to market are proven safe as there are government regulations in this regard. Unfortunately, even regulations are sometimes not effective to pace with the changing technology and the innovation of new chemicals. Even CPSC does not have the authority to verify the safety of toys before they come to the market. Usually government intervention takes place only when some accidents are reported. And therefore, it takes time for governments to enforce new regulations to address the new issues. This clearly points to the need of awareness in the society. Parents must give emphasis to toys made from natural materials so as to reduce their children’s exposure to chemicals. The society/stakeholders of the corporations must insist that companies must list the levels of chemicals, if any, they use in each product. People must promote only the firms that strictly comply with legal and ethical norms. Conclusion “Mattel Inc recall 2007” indicates the alarming levels of children’s exposure to dangerous toys. Although the company displayed higher levels of corporate responsibility in addressing the issue, the incident reminded the world the inevitability of collaborated efforts and regulations to ensure the protection of children from toxic toys. In order to make governmental intervention more effective in safety measures, there should be provisions that ask manufactures to disclose the components they use in each toy. Also, toys must be proven safe before they are introduced in the market. References BBC News. (2007, August 14). Mattel recalls millions more toys. Retrieved from http://news.bbc.co.uk/2/hi/6946425.stm Case study. Clifford, C. (2008, June 29). Environmental group says many items for sale have high levels of lead, arsenic and other chemicals. CNNMoney.com. Retrieved from http://money.cnn.com/2008/12/03/news/companies/toxic_toys/index.htm. Consumer Product Safety Commission. (2009, February 9). Notice of stay of enforcement of testing and certification requirements. Federal Register, 74 (25). Lawrence, A. T., & Weber, J. (2010). Business and society: Stakeholders, ethics, public policy. Tata McGraw-Hill Education. Lerbinger, O. (1997). The crisis manager: Facing risk and responsibility. Lawrence Erlbaun Associates, Inc. Locker, F. (2009). Children’s Products Containing Lead/ Lead Paint Rule. Section 101 of the Consumer Product Safety Improvement Act (CPSIA). NY: Locker Greenberg and Brainin. Mattel Inc. (2010). SICCA reports. Retrieved from http://www.icca-corporateaccountability.org/reports.php. 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