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However, in doing so the company loses control over its quality control mechanisms (Slack et al 2009, 2010).
Mattel made a key strategy shift with regards to its outsourcing…
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XXXX XXXX Mattel Case Study 01/11/11 Mattel Case Study Mattel has lost control of its quality process through outsourcing and processes designed to ensure compliance of suppliers appear to be ineffective.
2
There are many factors affecting the profitability of the sector, namely increasing costs, competition from substitute products and a shortening product life cycle of individual toys.
3
By outsourcing, Mattel is able to produce at a lower cost, largely through reductions in labor costs. However, in doing so the company loses control over its quality control mechanisms (Slack et al 2009, 2010).
4
Acquisitions:
Fisher-Price
Tyco
Matchbox
Attempted Acquisitions:
Hasbro – Largest rival
5
Mattel made a key strategy shift with regards to its outsourcing strategy, the company chose eventually to outsource its high volume lines of core products so as to facilitate a relationship with suppliers based upon stable volume and thus a higher consistency in quality levels. Overtime, Mattel may be seen as mirroring the strategy of its major competitor Hasbro who outsources almost 100% of production.
6
a)
Unfortunately the recalled products relate to Lee Der, one of Mattel’s long term suppliers. Lee Der have been working with Mattel for the past 15 years. This suggest that problems have not been caused by a new relationship in outsourcing.
B)
Although Mattel has dedicated employees to ensure the quality of products produced by sub-contractors, it is believed that the erosion of margins and pressures in the market have lead to such employees turning a blind eye to bad practice and corner cutting in the manufacturing process.
7
The Chinese government responded to the incident with the revocation of a third of export licenses of manufacturers in the region. In addition, Mattel has subsequently reviewed it quality processes and increased to level of testing do on products before items are exported for sale.
Bibliography
Jiangyong, L, Zhigand, T, Linhui, Y. 2011. Mattel’s strategy after its recall of the products made in China. Asia Case Research Centre. University of Hong Kong.
Slack, N, Chambers, S, Johnston, R, Betts, A. 2009. Operations and process management. 2nd ed. Harlow: Prentice Hall.
Slack, N, Chambers, S, Johnston, R. 2010. Operations management. 6th ed. Harlow: FT Prentice Hall. Read More
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