Mattel Organizational Crisis - Communication Strategies Used - Essay Example

Table of Contents Introduction In 2007, Mattel was forced to recall over 21 million toys a cross the world. Mattel attributed most of the recalls to high percentage of lead pain contained in Chinese-manufactured toys. Defects in manufacturing process at Chinese plants were faulted for his shortcoming (The Wall Street Journal (2007). However, according The Wall Street Journal (2007) the company recalled about 18 million toys, most of them had tiny magnets that could easily come off the toys ad when swallowed could be so deadly. The paper as well claimed that a huge percentage of the recalled toys were due to designs failures from Mattel and not due to Chinese manufacturing processes. Reports from the Consumer Product Safety Commission (CPSC, 2007) indicated that three children had been hospitalized due to ingesting some particles from the toys and all these three were diagnosed with intestinal perforation, hence required surgery. Owing to this recall, the company lost over $30 million and nearly 1.5 million toys it had sold were removed from the shelves. The Wall Street Journal (2007) notes that previous to the recall, Mattel was the biggest toy manufacturer reputed for its strict safety standards. As noted by Mitroff (1989) a positive public image could easily be destroyed in the course of a crisis. Scholar, nonetheless, have established that strategic application of corporate information, proper crisis communication and effective crisis management can assist in wining back public confidence, since communication has the ability to determine how information reaches the public as well as the media (Coombs, 2007). This paper examines Mattel crisis, the paper will specifically examine how the crisis happened, corporate communication of crisis, crisis management and give conclusion. Reasons for Recall Mattel recalled 19 million toys from August to September in 2007 because of two separate reasons (Media Statement, 2007). This was the biggest recall in the history of the company because both recalls happened at the same time. The first reason for recall of toys was due to faulty magnets used. The toys were designed in such a way that most parts had high-energy magnets. These magnets are of great effect to infants and young children because they can ingest some parts and be affected in their digestive tract. When children shallow several magnetic particles there are high chances of that they will pull together in the stomach and rip by use of stomach tissue. The combination of magnet strength with poor design of Mattel toys made these toys dangerous to the health of young children. Mattel listed in their website 71 models of toys that they recalled due to faulty magnets (Press release, August 2, 2007). The second reason for recalling of Mattel toys was due to high-level of lead that were used to paint most of the toys. Before this, Mattel had given producers in China a list of eight suppliers who were to supply the paint to be used, but in order to cut down on costs; subcontractors used suppliers that the company did not approve (Media Statement, 2007). In some cases lead content was 180 times over the legal limit. Paints of lead are dangerous to children because high levels of lead slows down bone and muscle growth, developing learning problems, loss of hearing, anaemia, damage of brain, coma and even death. Mattel recalled 91 models and types of toy that have harmful level of paint (Press release, August 14, 2007). Crisis Communication: Discussion of communication strategies used The purpose of this section was to establish communication strategies used by Mattel during the recall crisis. The analysis has proved that different restoration communication strategies formulated by Benoit (1995) were applied by the company, the most common strategy was bolstering. For example, Mattel took action following the crisis by immediately announcing recalls of its products that were defective. By taking this action, it showed that the company was doing a right thing, despite of the mistakes that resulted in the crisis. On many occasions, when the public feels that a company is taking steps to rectify a problem created, the likelihood of image restoration is very possible. When a crisis occurs, the affected company would normally try to reach its constituents through a number of media, for example newspapers, press releases, press conference, television and corporate web site. However, newspapers and televisions seem to be the most used media used. Benoit (1995) formulated a communication typology of image restoration strategies, these strategies include, simple denial, shifting blame, bolstering, minimizations just to mention but a few. This section will examine how Mattel communicated the crisis; Benoit (1995) typology will offer a basis for our analysis. Mattel used various communication strategies to respond to the crisis. It was a mix of denial, diminishing and rebuilding. As noted by CSR Asia Weekly (2007) first it was denial, whether this was done in good faith or in bad faith is not clear. Mattel at first made consumers to believe that its Chinese supplier caused the toy recall, owing to previous pet food and toothpaste recalls in China, the American media to easily accept Mattel’s claim Mattel later tried to use diminishing strategy, by downplaying the severity of recalls by restating its stringent safety rules, inspection procedures and lowering the number of toys recalled. The company claimed that the 2.2 million toys it had recalled was due to lead paints that comprised merely 0.3% of its yearly production, while the 17.4 million toys recalled due to design defects comprised just 0.5 % of its three years production (from 2003 to 2006) ( Mattel Media statement, 2007). When giving press statement, Mattel shifted the blame and diminished the recall to calm it shareholder, the company went on to claim that American media as well as government interest in lead paint in the pat had overly exaggerated the lead paint problem in the company. The company did not overlook the rebuilding communication strategies. In order to rebuild its standing among parents and other consumers, Mattel applied mortification and compensation strategies. The company used it website and the media to apology, it gave coupons to customers who were affected by the recall. Etheridge (2007) notes that in future the company can do better by allocating extra resources in carrying out a creative rebuilding strategy. The issue of Recalls in Mattel Product safety and quality control issues in Mattel are not new. In deed over a period of less than 10 years (1998-2007), the company has had 36 recalls. (Etheridge, 2007) Lead paint contaminations seem to top the causes of recalls, and has attracted more attention with a number of watchdogs entirely watching it. More so, the U.S government, consumer groups and private agencies, have for many years been worried about low quality and cheap products from China(Barboza, 2007).The toothpaste contamination, melamine pet food contamination in 2004 and fake baby formula in 2007 all happening in China has heightened the concerns of many people (BBC.com, 2007). Could it be prevented? Industry experts assert that it is basically impracticable to monitor each supplier or analyze each layer of paint used in toy manufacture (Etheridge, 2007). However, Mattel still has to make sure that it is doing its best. For instance, the company can allocate extra funds and personnel to safety inspection, build extra testing sites, employ people to carryout regular tests and recruit more third-party agencies to carryout tests. In addition, to improve its communication and suppliers of manufacturers, the company ought to assign communication teams from America to its Chinese plants. The main role of these teams should be carrying out regular meetings with the suppliers and performing surprise evaluations, and making sure that directives from the headquarters are followed. Lastly, Mattel must lobby for the government to enact laws and regulations that subject importers to stricter standards and evaluations carried out by third party agencies such as (CPSC, 2007). Page principles: Tell the Truth Mattel possibly adjusts its definition of truth to correspond to its interest at a certain time. By waiting for about one month to announce a potential toy danger to the public, Mattel avoided the truth. Though, Mattel started an informational centre immediately it recording its first recall with CPSC, a lot of people new much later. A number of investors believe that the delay in reporting was aimed at falsely boosted stock prices and to allow the company to sell as many defective toys as possible limiting the financial implication. The CPSC possibly can take legal actions towards the company. And adjusting communication to blame China for defects that resulted in toy recalls is just another example of avoiding the truth to reduce reputational damages. Nonetheless, posting new releases as well as video interviews on the company website kept the informed of new developments and created some level of transparency and truthfulness. Prove it with actions The company assured its consumers and other stakeholders three important actions owing to the recalls; starting of a corporate responsibility department, implementation of a restructured safety audit platform managed by a third part assessors and to implement a three-point safety examination system. However, to successful apply this principle, the company must carryout each of these three actions and ensure the news of its implementation are made public (Media Statement, 2007). Certainly, stakeholders will not forget these assurances and they will be waiting to know if the company fulfils its promises. For instance, Mattel has to formulate an evaluation system for its three point safety audit platform. On a number of occasions, it should carry out audits using the platform and make public the results. Listen to the Customer During the crisis, Mattel used it favourite one-way approach of communication. For instance, the company communicated safety information to parents by using one-way Q&A webpage links on its homepage (Mattel, 2011). Apart from its recall hotline, the company had few communication ways available to make possible two-way communication. Luckily, the communication team of the company recognized the need to advance. Accordingly, the vice president of the company, Sarah Rosales, noted that the company promotion campaigns would take into account toy safety and the buying of age-suitable toys. The company also redesigned its website in 2008 to increase its interaction with its consumers. In addition, the company started to use social media to monitor consumer responses. For instance, using the social sites, Mattel found out that mothers were specifically worried about Polly Pocket magnet recalls (CSR Asia Weekly, 2007). Maybe an interesting observation from this analysis is the probability to predict the sequence of image restoration strategies applied by the company in the face of recall crisis. It has been observed that when bolstering was applied as the initial strategy, the next strategy used was minimization and lastly shifting of blame. The pattern is not surprising since it appears very logical for a company to use this pattern. In this instance, the company announced immediate recall, continued to minimize the damage by stating that no serious damages occurred and the number of toys recalled was a small percentage of the overall production, and shift blame to Chinese plant. Crisis management: Discussion of management strategies used One key objective of crisis management strategy is maintaining the image of the organization, which has a direct relation on how the public perceive an organization (Mitroff, 1989). Coombs (2007) adds that an image has two sides, positive and negative. It is clear that each organisation attempts to protect its positive side and reduce its negative aspects when a crisis happens (Coombs, 2007). Scholars in crisis management have formulated various classification systems for crises. General dimensions that have been applied include, internal-external , intentional-unintentional, high-low, severe-normal among others (Pearson and Clair, 1998), basing on all these types of classifications, resulted in a crisis-type matrix depending on the focal point of origin intentionality (intentional or unintentional) and (internal or external). The focal point implies whether the crisis resulted from the organisation (internal) or by outside groups or forces (external). On the other hand, intentionality implies the purposefulness of someone who caused the crisis. This means that if the crisis was done purposefully, then it will be intentional, Smith (1990) notes that it is easy to control the intentional act than the unintentional act. According to Pearson and Clair (1998) internal-external and intentional-unintentional elements can be crossed to create four mutually selective crisis types. One of these is accident, as mentioned by Smith (1990) accidents are unintentional since they occur during the normal operations of the organisation. A number of scholars have further divided accidents into natural acts, such as hurricanes and earthquakes, and human induced mistakes, such as industrial accidents and product defects. Transgressions as noted by Smith (1990) are intentional activities done by an organisation that deliberately put the public at danger. Owing to the fact that Mattel has over 10 years history of toy recalls as a result of same reasons, that is lead-paint and magnet detachment issues, Mattel toy recalls crisis appear to be under accidents, particularly human induced mistakes, and transgressions. Crisis Plan After Mattel realized it was in a very serious problem, it consulted Federal Agency in charge of overseeing problems of toys as well as safety of products. The company thereafter opened a crisis plan of 100 pages (CSR Asia Weekly, 2007). Since the company was producing defective product and it was at difficult moments with its supplier, the company had to recall its products to control the situation. Federal officials announced the first recall by Mattel, 16 public relations officers called the press of top 40 media outlets. The officials sent out e-mails together with a recall press release informing reporters about teleconference with managerial allowing the press to arrange for TV appearances or conversations over phones executives from Mattel. On the recall day, the CEO of Mattel, Robert Eckert did 14 interviews on television. By the end of that week, Mattel had answered more than 300 media requests in the United States. The company got a full-page coverage the Wall Street Journal as well as New York Times (CSR Asia Weekly, 2007). The company began a massive online campaign aimed at informing the public about the recall; they regularly posted updates to their website to inform their clients. A connection to a website that was in charge of crisis response was set up on their website page immediately. However, there were some reports that claimed that Mattel was aware of the defective toys long time before they announced publicly. The company defended itself that despite them having testing procedures that ensure on very high standards and thorough safety testing procedures, no particular system can be perfect while operating (Media Statement, 2007). Mattel’s apology to China After it was clear that Mattel’s toys manufactured in China were defective; it was all over the world that companies in China produce defective products. This damaged reputation of manufacturing companies with plants in China. This caused a negative impact on most of manufacturers in China because most of customers objected their products. Mattel Company together with its lawyers had to apologise to China (Press release, 2007). The company said in the apology that it was in takes full responsibility. The apology also addressed design flaws of Mattel because this accounted for a huge percentage of recall, toys that were affected by lead constituted a small percentage of toys recalled. The government of China accepted the apology (Media Statement, 2007). Mattel improvement measures The management of Mattel did their best after they appeared honest and gave reasons for the recall. On the first page of the webpage of this company, Mattel devoted bold red link to recall toys. This link had information for the recall for all countries that had defective toys worldwide. It notified customers about reasons as to why they recalled toys and full information about three-point system that Mattel used (Mattel Tackles Crisis with Solid Comm). The three-point check system of Mattel covers the steps that the company is doing in present days to make sure that all their toys are safe for children. They state that: Mattel will ensure that manufacturers apply paint only from authorized suppliers and came with a strategy of measuring each batch from all vendors. Mattel never use paint that does not meet their standards, Mattel will increase control at every stage of production process and carrying out random inspection for all facilities at vendors. Lastly, Mattel promises to be testing vigorously all finished toys before reaching target customers. The toys must meet all strict safety standards before distributing them on the market (Press release, 2007). Conclusion Mattel dealt with the crisis in the same way textbook tell corporation to deal with incidents that damage their reputation. While recalling, the company smoothly executed all features of their management plan. The management team of the company including the CEO were available to handle the situation. They were open about the problem, apologized in public and promised to take immediate actions to fix the issue (Mattel Tackles Crisis with Solid Comm). After Mattel accepted all the blame, it was able to move on and focus on implementing measures to ensure that manufacturing processed are improved. Customers viewed Mattel as a dependable and responsible company because it was doing all it could to deal with the problem. Mattel clearly shows that it is hard to know the manufacturer’s composition and mechanisms for regulating products. But by opening up, customers are able to know procedures that products take from industries into their homes. However, for better communication Coombs (2007) suggest that the company ought to improve on its two-way communication and manufacturing processes as to minimize on recall crisis the company has continued to suffer over the past. References: Barboza, D (2007): Fake Goods and Unsafe Foods Threaten Chinese Exports: International Herald Tribune, May 18, http://www.iht.com/articles/2007/05/18/business/trade.php BBC.com, (April 22, 2007): China Fake Milk Scandal Deepens: Retrieved on 16th August. 2011. Benoit, W. (1995): Accounts, excuses and apologies. Albany, NY: State University of New York Press. Consumer Product Safety Commission (August 2007): Recalls and product safety news (n.d.): Retrieved on 16th August. 2011. Coombs, W. (2007): Ongoing crisis communication: Planning, managing, and responding (2nd ed.). Thousand Oaks, CA: Sage. CSR Asia Weekly (2007): The Stories Behind the Mattel Recall," CSR Asia Weekly, Vol.3 Week 32, August 8, 2007, http://www.csr-asia.com/upload/csrasiaweeklyvol3week32.pdf Etheridge, S. (2007): Lead Paint Prompts Mattel to Recall 967,000 Toys. [Online]. Available at: http://www.nytimes.com/2007/08/02/business/02toy.html?_r=1&ref=worldbusiness: Retrieved on 16th August. 2011. Matera, F., and Artigue, R. (2000): Public Relations Campaigns and Techniques. Needham Heights, MA: Allyn & Bacon, pg 169-170 Mattel (2011): Creating the Future of Play: http://corporate.mattel.com/our-toys/ Mattel Tackles Crisis with Solid Comm: Retrieved on 16th August. 2011. Mattel Tackles Crisis with Solid Comm: Retrieved on 16th August. 2011. Media Statement, September 21, 2007, Retrieved on 16th August. 2011. Media Statement, September 21, 2007: http://www.shareholder.com/mattel/downloads/09-21-07%20China%20Meeting%20Media%20Statement.pdf> Retrieved on 16th August. 2011. Mitroff, I. (1989): Programming for crisis control. Security Management, pp. 75–79. Pearson, C., & Clair, J. (1998): Reframing crisis management. Academy of Management Review, 23(1), 59–76. Press release (August 14, 2007): Mattel Announces Expanded Recall of Toys: Retrieved from Retrieved on 16th August. 2011. Smith, D. (1990): Beyond contingency planning: Towards a model of crisis management. Industrial Crisis Quarterly, 4(4), 263–275. Smith, D. (1990): Beyond contingency planning: Towards a model of crisis management. Industrial Crisis Quarterly, 4(4), 263–275. The Wall Street Journal (2007): Mattel Does Damage Control after New Recall: Toy Maker Pledges to Boost Inspection at Chinese Plants; Sarge Cars, Barbie Affected :< http://online.wsj.com/article/SB118709567221897168.html> Retrieved on 16th August. 2011. Read More