Mattel Company - Leadership and Ethics - Case Study Example

Mattel Company Name Institutional Affiliation Mattel Company Introduction From the toxic triangular analysis of Mattel Company, there are many factors that contributed to the failure of that firm. The leader of the company was charisma that made the company not be innovative . The company was affected with the negative life theme where the competitors were cautioning the consumers about the diverse effects of the Barbie product on their children lives. The was a negative ideology that was used to discredit the products of the company by assuming that all the products that are manufacture in China have some defects and consumers should refrain from purchasing them. Further, the company has bad values when it recalls the toys that were originally sold due to poor quality which tarnished the reputation of the business in the world market. There was also unable to meet the needs of its customers and there were some perceive threats such as changes in the consumer trends that negatively affected the company. The company was also affected negatively by its cultural values as the employees and the structure as there was much shifting and reorganization that interfered with the smooth operations. The company also was non-compliance with the legal requirements that resulted to legal liabilities and also instabilities that were caused by the disease and political crisis that affected the areas of operations. Moreover, I learnt several lessons in the case of Mattel failures. Poor leadership , instabilities, non-compliance and other factors can make a company to make losses that eventually leads to exist from the market. A toxic triangle is a tool that is usually used to gain the meaning and interpretation of the reality that affects a given business entity in the market. The toxic triangle consists of the destructive leaders, Susceptible Followers, and the Conducive Environment. Mattel is a company that is located in the California, United States (U.S) and other offices in other countries across the world. The company manufactures the toys products Mattel is one of the firms that were recently declared as failed business entity in the corporate world, and therefore toxic triangle can be used to analyze the causes of failures. Destructive Leadership Charisma Leader There is a disastrous leadership at the Mattel Company. According to Motley Fool, the company is facing challenges with the technological development. The physical toys that the firm is manufacturing are currently having shorter life spans as compare to those that were being produced in the previous years. During the holiday season, the company started introducing less innovative products in the market (Story and Barboza, 2007). The company was able to report low sales from some of its principal markets such as U.S in the third quarter of 2016. The company lost its glory in the market to other world’s biggest companies such as Danish that also deals with the toy products. The problem of innovation is believed that it was caused by the bureaucratic culture that diminished chances of creativity in the company. Creativity is one of the most important elements of success in the toy industry (Story and Barboza, 2007). The problem is believed to have been caused by lack of charisma leadership that was brought by the C.E.O of the company, Mr. Stockton. The C.E.O is described as an individual who is affable and smart, however, he not a charisma leader. Negative life themes There are negative life themes that have affected the image of the company. Barbie is one of the main products of Mattel company and there negative issues that the competitors are using to discourage people from buying it. The competitors of the Mattel Company are claiming that the Barbie’s are unhealthy and can be dangerous to children especially young girls. It is because of its unrealistic body (Choi and Lin 2009). They are convincing young girls that they can transform themselves to be anything that they would desire. Barbie is a reminder to young girls that they would never become intelligent. In the film titled “I Can Be a Computer Engineer,” Barbie is portrayed as incompetent students that would consistently require the help of male classmates to pass exams. Ideology of hate Mattel Company is having the problem of hate ideology in its brand as there is a widespread use of the “Made in China” in the market (Egels-Zandén, 2014). During the recalls of toys due to technical problems and unsafe products from China that composed of all the necessities that an individual would require, people were cautioning the word “Made in China.” It made the people in the global market to shy away from buying products that Mattel Company manufactures. However, the government of China acknowledged the impact of the problem and was seeking for the ways to change the mind of the consumers that the products named “ Made in China” is a suggestion that those products are of high standards as not low quality as it is being perceived (Economy and Lieberthal, 2007). The government even went further to assure the consumers that it would begin the inspections of goods to eliminate those that violates the set standards for health and safety. It is believed that the reason why the defective products were produced by Mattel Company is due to the motive of lowering done the cost of manufacturing the products (Story and Barboza, 2007). The chain of production was subdivided into small units with the intention of selling products in the market at lower prices as compare to that of the competitors. The analysts in the market were urging the Company to monitor its production process directly the way other countries that are targeting the western market are doing. The enterprises in China with Mattel Company included are being guided by the motive of competing in prices that make them subcontract their manufacturing processes as they receive high pressure to reduce the production cost and there is the limited flow of information that leads to the production of low standards products. Susceptible Followers Bad Values The bad values were exhibited by the company on its calling back the sold dolls. The company was highly criticized across the world for its negligence as it ignores the element of the safety of its products. According to Consumer Federation of America (CFA), the company recalled its products due to the increase cases of the magnet components of the dolls were becoming loose (Roloff and Aßländer, 2010). Many welfare organizations across the world accuse the company of being ineffective in its recalls initiatives. The company was using the media where most people would not be aware of the recalls, and they continue to use the harmful products while others would dispose of the away. The company was expected to inform the medical practitioners about the dangers of the products and also the offices of the children welfares. Further, the firm should have used its channel of distribution by notifying its retailers about the defects on the products. Further, there was an issue of reverse marketing practices that the company was expected to use where they use advertisements to create awareness to the consumers about the defects of the products. All this issue of recalling back the sold products had severe effects on the reputation of the company (Oppenheimer, 2009). The users across the world started creating negative ideas about the quality of the enterprise’s products. The majority of the potential consumers refrained from buying dolls during that recall period for fear of their health and safety issues. It made the company incur losses concerning the expenses of correcting the problems and loss of revenues due to the reduction in the volume of sales. Low Maturity Mattel Company experienced the low level of maturity between the period of 2008 and 2009. The net sales of the company decreased below $ 500,000. It is stated that low performance was significantly contributed by the discretionary consumer expenditure. Mattel Company mainly depends on the level of spending of the consumers, and as they become low, the profit forecast of the company also falls below (Egels-Zandén, 2014). The global economic crises that occurred in 2008 forced the U.S government to raise the interest rates made the Company have a high level of debt ratio. It made the company to experience financial losses even in the environment that was being considered to conducive for the growth of the enterprise. It was during this period that many companies entered the toy industry that made the Mattel Company experience constant level of sales at a lower rate than it was expected. The company was forced to lower its prices to compete effectively in the market. The Company was majorly affected by the of consumer spending that deteriorated in the U.S and other parts of the world where Mattel Company conducts its business (Ko, 2013). It was reported that the low level of sales in the company was caused by the bankruptcies of other businesses where people are employed, reduced access to credit facilities, loss of jobs and others factors that would affect the consumer spending behavior. Due to low revenues during the economic difficulties, the company tried to maintain its sales by increasing its engagement in promotional activities. The other procedures were used to encourage the consumers and the retailers to purchase the products of the company. The initiatives introduced by the firm are what caused the net sales to be lower, and there was a cost increase that lowered the profits. Unmet needs The company does not adequately satisfy the needs and the preferences of its customers that causes an adverse impact on its operations. The performance of the operations and the business of the company mostly rely on the implications that the toys have to the customers (Oppenheimer, 2009). There are continuous changes in the market such as the preferences of the clients that if is not met could result in loss of the market. Mattel Company is competing both domestically and internationally on the various range of products lines of video games and the electronic toys that make the company be constantly in a risk position (Egels-Zandén, 2007). It forces the company to continuously involve in the innovation to satisfy the customer preferences, improving the existing products in the market, introducing and designing new products to achieve the acceptance of the products in the market. In the case where the company does not successfully satisfy those needs in a cost-effective and timely manner the demand of its products was expected to decrease which can cause the failure of the enterprise. Conducive Environment Perceived threats The leadership of Mattel Company was able to perceive threats such as effects of deforestation. In 2011, the Company was mentioned as one of the companies that are responsible for the destruction of rainforest in Indonesia. It was because the company was using paper products to wrap toys products. The leadership of the Company knew the impact that it would be ultimate cause its brand image in the market (Hienerth et al., 2011). The management decided to solve the issue by embarking on the use of sustainable forest products in the manufacturing and packaging of toys. It was done by ensuring that new procurement guidelines were introduced that would replace the purchase of all the paper and pulp materials. There was a stiff level of competition that would make it difficult for the company to achieve its goals such as the success of its brands. The company faces competitors that are committed to anticipating the tastes of the consumers, steadily diversifying their products that are competing with the Mattel’s product lines ( Lee et al., 2012). Further, it was expected that continuous forces of competition such as renewal of the popular licenses and the payment of higher royalties. All these factors later affected the operations of the company. The other perceived threat was the inability of the company to predict the future changes and trends in the movies, media, traditional cultures that may diversely affect the sales. The films and characters in the literature of the children would usually change the preferences of the play, and many of the company’s products would depend on the intellectual property licenses that are done by the media companies (Egels-Zandén, 2014). The licensing would make a particular line of toy products to be accessed by the parents, families, and children immediately they are released in the market. The trends in the movies, the characters of children and the in the media could result in the uncertainty in the preferences of the plays. Further, the revolutions in the entertainment sector such as interruptions of releasing individual media programs can be caused by the labor strikes could have the adverse impact on the operations of the company about the sales (Economy and Lieberthal, 2007). The company would need to react to such developments and the trends by refreshing, modifying expanding and extending the products that are being provided in the market continuously to survive. However, the company did not predict those developments and trends accurately in the market that made its products not be accepted by the families, parents and the children. It resulted in several effects on the revenues, operation performance and the profitability of the company. Cultural Values The company lacks cultural values that can make to succeed in the competitive business environment. The company has no organizational structure that operates efficiently that can enable it to concentrate on the firm and in the market competitiveness. There is persistent shifts and reorganization that reduces the capability of the company to be productive. The rapid structural changes such as at the human resource it makes the operations of the company to be unsustainable (Lyles, 2008). The employees are moving to different places in search for promotion and development of their careers. The constant movement of the workforce it makes the company portrays a confused image. The management of the company has no clear direction where they want their brand to be moving. It lacks plans and strategies that can be used to win the trust of customers. Legal compliance The company failed to comply with the legal requirements in China. From the time the company launched its code of conduct, the industry has increasingly become competitive. The biggest manufacturers such as Toys R Us have been compelled with the situation to lower their price in countries such as China (Sethi et al., 2011). It made the awareness of the consumer and workers rights to emerge that forced Mattel Company transfer that pressure to factories of the suppliers where they demanded low the cost of manufacturing and better working conditions. The China Labor Watch wanted the companies to make reasonable profits by lowering the market prices. However, Mattel Company was not ready to comply with those regulations as it adopts the means of transferring the burden to the manufacturers. It made the company incurs various legal liabilities that consumed much time and tarnish its reputation in the market. The factories of Mattel Company have constant problems with the auditing process. The stakeholders in 20087 through the Global Citizen report demanded the company to provide the statements about the upgrading working and living conditions of the staffs, and its investment portfolios which were filed through a resolution (Tang, 2008). The company was expected to use the implementation of the auditing methods and policies to promote its Corporate Social Responsibilities (CSR). For example, the company is intending to introduce the minimum wage and the employees are anxious to determine whether or not is would be a living wage. Some businesses in the industry such as Hasbro have signed a code of conducts with its suppliers where they specify the standard of the supplies that are required ( Lee et al., 2012). It matches the best rates of the Ethical Consumers. Contrary, Mattel Company has not signed a similar code of conducts which would provide loopholes for the executives to exploit the workers by paying them below the minimum wage that is required in the market. Instability Mattel Company has been affected with instabilities that range from the disease outbreaks to political which have negatively affected the financial position and the business operations. The company manages factories in various countries in Asia continent especially Indonesia, China, Thailand and Malaysia and uses the third party where there have been a series of civil and political instability (EARTH, 2008). The instabilities could have disrupted the operations of the factories of the Mattel Company that are situated in those areas. Further, there has been SARS outbreak in the past years especially in the Asian countries such as the province of Guangdong in China and Hong Kong. It is where the manufacturing and the development of the company’s products are located which could have possessed a negative impact on the workforce and the suppliers (Ko, 2013). Some other communicable illnesses also affect the labor force of the organization which makes them unable to perform their duties and responsibilities. However, the company developed emergency plans which were implemented to control the effects on the operations. Personal Reflection I have learned that Toxic Triangle can be used to gain an in-depth analysis about the causes of business failures. Unethical leadership in the business organization can result in the failure of an entity. The charisma leadership can result in the bureaucracy that hinders the innovation which is one of the major factors for the survival in the stiff competition. A leader should always be ready to create a conducive environment where creativity can be enhanced to ensure that the needs of the customers are satisfied. The negative life themes about a company’s products can make the consumers restrain from purchasing them. For instance, the negative issues regarding the Barbie made many consumers avoid buying their children kind of doll. It eventually affected the financial position of the company. I have also learned that the ideology of hate can be propagated against the products of the company which would make the consumers avoid buying particular products from a given brand due to the negative issues that they have previously heard other people saying. Therefore, the organization should always be prepared with the strategies to counter such allegations. If the problem is not mitigated, the company will experience a diminished volume of sales that ultimately force the company to exit the market. Bad values are not suitable for the growth of the enterprise. Having impressive values in the market can always is an advantage over other competitors. The company should ensure that its products meet the recommended standards through strict checks before leaving the factories. I have also realized that the changes in the economic conditions and the competitions in the market can do the business to experience low maturity. The maturity rate can be low in a situation where an excessive number of new entrants in the market that makes the firms to compete on low prices. It would make the business to make reduce revenues and increase advertisement cost to that results to low profitability. Further, I learned that the needs of the customers are always dynamic in nature and the business should create ways of satisfying them continually to retain and attract the potential customers so that dominant the market. Also, the company should be able to perceive any threats that may negatively affect the operations of the business. The uncertainties about the changes in trends would do the business to produce the products that have minimal demand in the market. The compliance with the legal requirements in the operational environment is critical. I learned the lesson that failure to adhere to regulations is the beginning of failure as a business because there would be a series of legal liabilities that would cost the company and eventually put the financial position at risks as well as the reputation in the market. Moreover, I realized that instability could diversely affect the performance of the company. The outbreak of diseases can negatively influence the productivity of the company as it makes the workforce not to be able to attend to their duties. The political crisis and the civil wars would create an unsafe environment as people would fear for their lives and the operations of the business would be interrupted. References Choi, Y., & Lin, Y. H. (2009). Consumer responses to Mattel product recalls posted on online bulletin boards: Exploring two types of emotion. Journal of Public Relations Research, 21(2), 198-207 EARTH, S. (2008). 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