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Mattel, Inc., is one of the largest producers of toy lines with processes including designing, manufacturing, and marketing. Among the products that are produced by the company are Barbies, Hotwheels, Tyco, and even some Fisher-Price brands. The company has been known for their trustworthiness and has been ranked as one of the Best Corporate Citizens, by CRO magazine. Today, Mattel employs 30,000 people all over the world and sells products in more than 150 countries. Toy manufacturing over the years has become more advanced and an increasingly globalized process. In the 1980’s, Mattel began outsourcing some of its work in Asia. To control property rights and their standard of production the company has since acquired their own manufacturing facilities in Asia. Nearly 50 percent of their toy revenue is sourced from one of these plants. To help facilitate production, Mattel also contracts work to nearly 50 Chinese companies.
Mattel issued a recall of 1.5 million toys made in China on August 1st of 2007. In July of that year, a European Retailer found that a Mattel product contained lead paint. The company responded by launching an investigation into the source of this problem. The Investigation continued and a second recall was made for an additional 18.2 million toys. These toys did not contain any lead paint, but did contain some strong magnets that when dislodged from the toy could potentially be swallowed by a child. If the child had swallowed more than one of these magnets, the magnets could draw together and possibly perforate their intestines. In September the company issued a third recall of 11 different products.
There were two major issues to address that were uncovered in this investigation. These were the presence of lead paint in their products and the magnets that could potentially be swallowed. The problem with the magnets was mostly a design issue. They redesigned the products so that they could no longer be dislodged. The problem with the lead paint was an entirely different issue. Mattel already had policies in place to ensure that their facilities and the companies that they contracted work to. The investigation found that subcontractors of the companies they had contracted work to were cutting corners to save time and money. These subcontractors used lead paint because it dries more quickly and is considerably cheaper. In the case of their Cars toy-line, the company Mattel hired to produce the toys hired a third company to paint them. This third company was supplied with the appropriate and safety tested paint, but still used lead paint instead. The investigation also found another company that failed to test the paint that they had acquired from another firm. After the investigation was complete the company found a total of seven contractors that had produced products containing lead paint.
Many people were affected by this issue and in a number of ways. Mattel and their customers were likely affected the most by this situation. In response to the increased attention to the issue, several organizations were also invested in the outcome of the recalls and investigations. Some of these groups were mentioned earlier, like the Consumer Product Safety Commision which helps regulate and assess the safety of consumer goods in the United States. International Center for Corporate Accountability was also discussed and is a regulatory group that audits companies and seeks to ensure that they are practicing safe and sustainable business operations internationally. In China, government regulators were also affected. The Chinese policy for quantity of lead paint in household or consumer products is set to be no greater than 90 parts per million. In contrast, the policy in the United States is 600 parts per million. The problem did not occur because of a lack of legislations, but instead a lack of enforcement. Companies in China are relatively unregulated as they did not have the infrastructure to constantly monitor all of the incoming and outgoing products. When this issue came to light the Chinese government took steps to remedy this issue including suspending the business operations of two manufacturers, establishing a new recall system for food and toys, and prohibiting the export of lead paint on toys exported to the United States. These measures combined with increased inspections of exports have gone a long way to fix the issue. Monitoring by the CPSC has since increased for products coming from China. The United States Senate hearing to discuss the issues had several stakeholders testify. These included the Consumers Union, the American National Standards Institute, the Toy Industry Association, and Toys ”R” Us.The first three of these are private advocacy groups involved in regulating and ensuring the standard of products and, in this case specifically, toys. Each call for increased inspection, standardized safety measures, and the implementation of new legislation to enforce these standards. The company, Toys “R” Us, and others like it are incredibly invested in this issue and some have employed independent third-party testing of their toys to ensure that the products are safe for children. Toys “R” Us also suggested at the Senate meeting that the CPSC might need more funding. As it was, the CPSC was incredibly underfunded for the job that they have been given to do. Monitoring millions of products with less than 400 people on staff is no easy feat. The Company also suggested that the recall process should be reformed. They suggested legislation that would shorten the time between identification of a problem and the issuance of a recall. They also thought that it would be a good idea to include a stamped production code on products would help facilitate the process of identifying products or particular batches of products that were compromised.
When the European Retailer brought the lead paint problem to the attention of Mattel, they responded by launching an investigation into the source of the problem and in to what extent that the problem extends. Over the course of the investigation Mattel found the source of the problems and identified several other problems with parts of their supply chain. They issued three major recall on millions of toys. They took steps to inform the public of the situation and sought actively to fix the problem. The government in the United States and China responded in investigating the matter and working on legislation and procedures to remedy the issue. Organizations outside the governments have also sought to solve the problem by proposing legislation and procedures. Some of these organizations also pursued the independent testing of these products.
I believe the responses made by both Mattel and the regulating bodies of the government were very appropriate. This is not an easy situation for any company and even more so when addressing a problem that affects children. The company did not take the easy way out of this issue. Instead they investigated the issue and issued recalls, likely costing the company millions of dollars. They made every effort to inform the public of the problem and took the necessary steps to prevent the problem in the future. The company acted in the best interest of its customers, even though the cost was high.
This issue could have been avoided if the measures that have been made since the incident were already in place. If there were a stronger regulatory presence in China this might not have become an issue. I do not know for sure if the measures that were made in the wake of the incident would have prevented it in the first place, but it is likely. I think that it is a very good step and an important one for social responsibility of businesses. I hope other companies saw the outcome of issue as a good thing instead of just a PR nightmare.
Case Study: The Issue of Toy Safety
- The Company
- The Issues
B. Who Was Affected: Stakeholder Analysis
C.How the Issue Was Handled
D.Was the Response Appropriate
E. Could This Issue Have Been Avoided
History: The Company
Mattel, Inc., is one of the largest toy
manufacturers in the world. They produce a
large product list that includes the Barbie,
Hotwheels, and some FisherPrice brands. The
company has a rigorous labor policy that
ensures that their employees are of age, paid
well, safe, and healthy.
History: The Issue
Lead paint was found on one of Mattel’s
products. This lead to an investigation that
prompted three major recalls. Most of these
recalls were for containing lead paint, but
another recall was issued to take toys
containing magnets that could be dislodged off
the market and out of homes.
History: The Source
The investigation found several Chinese
companies that they had hired to produce some
of their products were in turn outsourcing the
painting labor. Though the contractor supplied
safe paint the subcontractor used lead paint
instead. Several other similar cases were
reported underlining the need for increased
regulation in Chinese manufacturing.
Who Was Affected: Stakeholder Analysis
● Mattel’s consumers
● The United States government
● The Chinese government
● Regulation Committees and Groups
o Including: Consumer Product Safety Commision, International
Center for Corporate Accountability, Consumers Union,
American National Standards Institute, Toy Industry
● Toys “R” Us and related distributors
How the Issue Was Handled
Upon notice of the situation an investigation
was made and when the extent of the damage
was identified a recall was issued.
Both governments followed up with new
legislations so that the problem can be
addressed at both ends and prevented in the
Was the Response Appropriate
Yes, the response was appropriate. The
company took every step necessary to keep
people safe including informing the public about
Their interest was geared towards the safety
of their consumers and less about saving face
or saving money.
Could This Issue Have Been
It is hard to determine if this issue could have been
avoided. I think the legislation and increased
regulation will undoubtedly help the situation. Mattel
did already have a policy in place to prevent this
issue and even provided safe paint, but the company
still decided to break policy and use the wrong paint.
I think increased government regulation of
manufacturers will help this issue significantly.
Lawrence, Anne; Weber, James (2013-01-01). Business and Society: Stakeholders, Ethics, Public
Policy, 14th edition (Page iii). Business And Economics. Kindle Edition.