MATTEL RECALL By Jackie, Tashunda, Sandra and Eddie

Mattel History In 1945 Ruth and Elliot Handler and Harold “Matt” Masson launched Mattel out of a garage workshop in Southern California. In 1945 Ruth and Elliot Handler and Harold “Matt” Masson launched Mattel out of a garage workshop in Southern California. In 1960 Mattel became a publicly owned company. In 1960 Mattel became a publicly owned company Mattel merged with Tyco, the third largest toy company in the world, resulting in the Sesame Street License Mattel merged with Tyco, the third largest toy company in the world, resulting in the Sesame Street License. May 2000 under the leadership of Bob Eckert Mattel unveiled a new vision with a clear focus on building brands, cutting costs and developing people. May 2000 under the leadership of Bob Eckert Mattel unveiled a new vision with a clear focus on building brands, cutting costs and developing people.

Mattel Today World’s Largest Toy Company World’s Largest Toy Company Toy Lines Include Barbie, Hot Wheels, Harry Potter and American Girls, Fisher- Price Toy Lines Include Barbie, Hot Wheels, Harry Potter and American Girls, Fisher- Price Toys are produced in company-owned manufacturing facilities in China, Indonesia, Malaysia, Mexico, Thailand, as well as through independent contractors located in United States, Europe, Mexico, the Far East and Australia. Toys are produced in company-owned manufacturing facilities in China, Indonesia, Malaysia, Mexico, Thailand, as well as through independent contractors located in United States, Europe, Mexico, the Far East and Australia.

Mattel Leadership Current CEO – Bob Eckert Current CEO – Bob Eckert MBA from Kellogg School of Management MBA from Kellogg School of Management 23 years with Kraft Foods becoming CEO 23 years with Kraft Foods becoming CEO Joined Mattel in May 2000, replacing “the flamboyant” Jill Barad as President and CEO Joined Mattel in May 2000, replacing “the flamboyant” Jill Barad as President and CEO

Mattel Leadership continued Bob Eckert has a Transformational leadership style Bob Eckert has a Transformational leadership style Innovative, productive, and committed to organizational learning Innovative, productive, and committed to organizational learning Concerned with socialization of new employees Concerned with socialization of new employees Creative strategies to overcome the uncertainties of adjustment to new organizational culture Creative strategies to overcome the uncertainties of adjustment to new organizational culture

Mattel Recalls Mattel's difficulties stem from two sources: lead paint and small magnets. Mattel's difficulties stem from two sources: lead paint and small magnets. On August 2 nd, the company announced a recall of approximately 1.5 million Fisher-Price toys that contain lead paint- including Ernie, Elmo, Dora the Explorer and Big Bird. On August 2 nd, the company announced a recall of approximately 1.5 million Fisher-Price toys that contain lead paint- including Ernie, Elmo, Dora the Explorer and Big Bird. August 14, 2007 Mattel announces recall for 9 million more Chinese made toys, including popular Barbie, Polly Pocket and “Cars” movie items, and warned that more could be come because of lead paint and tiny magnets that could be swallowed August 14, 2007 Mattel announces recall for 9 million more Chinese made toys, including popular Barbie, Polly Pocket and “Cars” movie items, and warned that more could be come because of lead paint and tiny magnets that could be swallowed On September 5 th, Mattel announces a third recall of Chinese toys, saying it would take back more than 800,000 units globally that contain "impermissible" levels of lead On September 5 th, Mattel announces a third recall of Chinese toys, saying it would take back more than 800,000 units globally that contain "impermissible" levels of lead

Mattel Recalls cont. About 65% of Mattel's toys are made in China, with half of those toys made in Mattel owned plants and the rest in about a dozen vendor factories. According to the company the problems occurred after its Chinese contractor subcontracted the painting of the toys to a supplier that used inferior and unauthorized products. About 65% of Mattel's toys are made in China, with half of those toys made in Mattel owned plants and the rest in about a dozen vendor factories. According to the company the problems occurred after its Chinese contractor subcontracted the painting of the toys to a supplier that used inferior and unauthorized products. Those inferior and unauthorized products being lead. If lead is ingested it can lead to developmental problems in children or the fetus of pregnant women. Those inferior and unauthorized products being lead. If lead is ingested it can lead to developmental problems in children or the fetus of pregnant women.

Consumer Reaction to Recall According to the Harris poll: 91% of adults are aware of a toy recall 91% of adults are aware of a toy recall 33% of adults will stop buying toys manufactured in china 33% of adults will stop buying toys manufactured in china 31% of adults threw out a toy impacted by recall 31% of adults threw out a toy impacted by recall 13% of adults returned the toy for a refund 13% of adults returned the toy for a refund Of all the adults that believe a recalled toy is in their home, only 55% have discarded the toy Of all the adults that believe a recalled toy is in their home, only 55% have discarded the toy

Government Reaction to Recall Senate Hearing with Consumer Product Safety Commission Senate Hearing with Consumer Product Safety Commission House Bill being proposed to increase fines from $1.25 M to $100 Million House Bill being proposed to increase fines from $1.25 M to $100 Million The bill, headed next for the House floor, would also require more independent safety testing of products, wider use of tracking labels and better recall procedures. The bill, headed next for the House floor, would also require more independent safety testing of products, wider use of tracking labels and better recall procedures. The California attorney general and Los Angeles city attorney filed a lawsuit against 20 companies, including Mattel, accusing them of knowingly exposing children to lead and failing to provide warning of the risk. The California attorney general and Los Angeles city attorney filed a lawsuit against 20 companies, including Mattel, accusing them of knowingly exposing children to lead and failing to provide warning of the risk. If the suit is successful, the complaint says the companies could pay a $2,500 fine for each violation. If the suit is successful, the complaint says the companies could pay a $2,500 fine for each violation.

Mattel’s Response & Resolution Bob Eckert wrote and published an opinion statement that was published in the September 11, 2007 issue of the Wall Street Journal Bob Eckert wrote and published an opinion statement that was published in the September 11, 2007 issue of the Wall Street Journal On September 21st Mattel apologized for damaging the reputation of Chinese goods admitting it targeted some good goods that were up to scratch. In addition the chairman and CEO Robert Eckert apologized by continuously publicizing its recalls the including the example above. On September 21st Mattel apologized for damaging the reputation of Chinese goods admitting it targeted some good goods that were up to scratch. In addition the chairman and CEO Robert Eckert apologized by continuously publicizing its recalls the including the example above. “We are by no means perfect. The company could have done a better job overseeing subcontractors in China that produced more than 21 million recalled toys. ” “We are by no means perfect. The company could have done a better job overseeing subcontractors in China that produced more than 21 million recalled toys. ” As a result of the recalls Mattel will now require that every batch of paint from every vendor be tested for lead, that random inspections be instituted and that every production run of finished toys be checked for compliance. As a result of the recalls Mattel will now require that every batch of paint from every vendor be tested for lead, that random inspections be instituted and that every production run of finished toys be checked for compliance.

Consumer Response to Mattel Observers see the CEO's apology as a welcome action compared to companies in the past that have initially failed to acknowledge a problem or tried to shift the blame on others. "High profile public apologies are a good idea for two reasons" says Jaques deLisle "First, they tend to get the word out even more effectively about the recall. Seocnd, many studies show that victims of harm often do care a great deal about an apology and may actually settle for less money if the defendant apologizes and atones rather than denies liability.“ Observers see the CEO's apology as a welcome action compared to companies in the past that have initially failed to acknowledge a problem or tried to shift the blame on others. "High profile public apologies are a good idea for two reasons" says Jaques deLisle "First, they tend to get the word out even more effectively about the recall. Seocnd, many studies show that victims of harm often do care a great deal about an apology and may actually settle for less money if the defendant apologizes and atones rather than denies liability.“ Believability of Mattel CEO Bob Eckert Believability of Mattel CEO Bob Eckert "A lot of what is happening is pushback towards China, and there are those in other nations who are happy to take potshots at the country over this," says Dr. David Strutton, director of UNT's New Product Development Scholars Program. "A lot of what is happening is pushback towards China, and there are those in other nations who are happy to take potshots at the country over this," says Dr. David Strutton, director of UNT's New Product Development Scholars Program. It's clear that China is to blame for the problems with the toys, just as Chinese vendors were to blame for recalls of products earlier this year. In March, many brands of dog and cat foods were pulled from shelves because they contaminated rice protein from a source in China that was identified as being associated with kidney failure in pets. In June, the U.S. Food and Drug Administration announced it would block sales of Chinese catfish, basa, dace, shrimp and eel, after repeated testing turned up contamination with drugs not approved in the U.S. for farmed seafood. It's clear that China is to blame for the problems with the toys, just as Chinese vendors were to blame for recalls of products earlier this year. In March, many brands of dog and cat foods were pulled from shelves because they contaminated rice protein from a source in China that was identified as being associated with kidney failure in pets. In June, the U.S. Food and Drug Administration announced it would block sales of Chinese catfish, basa, dace, shrimp and eel, after repeated testing turned up contamination with drugs not approved in the U.S. for farmed seafood.

Group’s Recommendations The real challenge for Mattel is to improve it’s image. One way this can be done is by making a massive effort in the area of quality control by instituting new safety-check systems. The real challenge for Mattel is to improve it’s image. One way this can be done is by making a massive effort in the area of quality control by instituting new safety-check systems. Secondly, Mattel should have massive educational campaigns. For example, they could consider publishing information about toys and how children should play with them safely. Secondly, Mattel should have massive educational campaigns. For example, they could consider publishing information about toys and how children should play with them safely. Lastly, manufacturing labels that include where all toy parts were manufactured and materials that have gone into the toys should be placed prominently on all toy packaging. Lastly, manufacturing labels that include where all toy parts were manufactured and materials that have gone into the toys should be placed prominently on all toy packaging.

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