Assignment was to choose a company and dissect it from its past mistakes; I chose MATTEL because of their third party production and issues in China

1. MATTEL
Creating ethical responses for the future of play
Alexis McDonald
February 7, 2015
Managerial Ethics

2. Creation
• Founded in 1945 by Matt Matison and Elliott and Ruth Handler, it began as a picture frame
company before switching to the toy industry.
• In 1960, it became a publically traded company with sales exceeding $100 million by 1965.
• In 1990s, sales declined due to bad investments.
• In 1997, Jill Barad built the brand to $2 billion.
• In 2000, Robert Eckert came in and helped the company continue to flourish by acquiring Harry
Potter.
• In 2003, Mattel was recognized by UNICEF with Corporate Responsibility Award.
• In 2011, former COO Bryan Stockton became CEO.
• In 2014, it was recognized by Fortune’s “100 Best Companies To Work For” in five years.

3. Core Products
• Barbie
• American Girl
• Hot Wheels
• Cabbage Patch Kids

4. Ethics and Social Responsibility
• Marketing to children requires notifying parents of
changes to its Internet-based tools
• Privacy policy which does not collect marketing
information from children under the age of 13 without
parental consent
• Expectations of their business partners to uphold safety
and human rights standards
• Legal protection of assets such as intellectual property,
trademarks, patents, etc.
• Dealings with business partners of high ethics when it
comes to product safety and quality standards
• Philanthropic foundation and community involvement for
employees for children with specific investments in needs
and their future
• International manufacturing principles which address
issues of child labor, fair wages, working conditions,
hours, etc.
Encouraging
commitment to
children’s rights as a
social responsibility
and strong business
ethics

5. Overseas Manufacturing Paint Issue
• In 2007, a European retailer discovered lead paint was being used with toys
which resulted in the recall of 10 million toys.
• Hong Kong partner, Early Light’s Chinese subcontractor, Lee Dur bought
unauthorized paint to use on Cars product.
• Mattel halted production at Lee Dur who switched to avoid increasing costs.
• The lead paint incident resulted in China revoking the company’s export
license

6. Overseas Manufacturing Magnet Issue
• In 2007, Mattel recalled toys due to magnets which posed a choking hazard.
• The result being 21 million toys returned and lawsuit filed on behalf of parents.
• Blame shifted between Mattel and Chinese partner who felt there was an issue in the
quality control of the manufactured toy.
• Consumer International recognized Mattel with an award as “Bad Product” company
• Mattel introduced a stipulation that their manufacturing partners cannot hire
subcontractors tiers below for business.
• Three point plan instilled to control production of its toys.

7. Intellectual Property Employee Issue
• In 2002, Mattel investigated a former employee Carter Bryant after the release of
BRATZ dolls.
• Due to its success, Mattel sued Bryant who may or may not have deigined the doll
while employed with them.
• MGA, the current owner of the property, sued Mattel for trying to corner the market
with their BARBIE version of the dolls.
• In 2008, Mattel was rewarded $100 million for breach of contract and banned MGA
from making the doll.
• !n 2010, the ruling was overturned by Ninth Circuit Court of Appeals.
• In 2011, MGA Entertainment Inc received damages of $85 million in liabilities, $225
million in damages and legal fees as well as an antitrust claim filed but it was dropped.
• In 2013, the ruling was overturned by the US Court of Appeals in favor of Mattel but
$137.2 million in legal fees must be settled.

8. Commitment to Children
Manufacturing companies have special obligations to consumers and society.
According to Ferrell, Fraderich & Ferrell (2013), global business recognizes
that international partners must be sensitive to their own cultures, beliefs and
practices as well as other countries. Thus Mattel’s Global Manufacturing
Principles establishes the respect for cultural, ethical, and philosophical values
in countries of operations. Companies which discriminate, force children to
work, force adults to work longer hours or fail to provide safe working
environments for its employees will not be contracted with Mattel.

9. Ethical and Legal Conduct
Although there have been some safety issues, Mattel
continues to align itself with companies dedicated to
improving and achieving. It encourages partners by offering
to help when there are issues. Any changes or additions to be
made should come in the form of corrective action plans.
The corrective action plans would be the same for all
partners. Instead of creating divisions, managers from the
higher standard partners would be sent to assist the lower
standard partners with creation of solutions to make their
business legal and ethical according to the Global
Manufacturing Principles.
According to Ferrell et al.
(2013), Mattel prefers to
partner with companies of the
same high ethical standards.

10. Mattel’s issue with China
Was Mattel responsible?
• To a certain extent, Mattel was
responsible for the lead paint and
magnet issues which led to the recall
of millions of toys. Although Mattel
respected the Chinese manufacturing
company, this was still their product
being produced. There should have
been an oversight committee auditing
each partner to make sure that no
loopholes were being created.
Could the issue have been avoided?
• With respect to the Chinese, Mattel
could have avoided the issue by
checking up on their partners during
the manufacturing. The company
could have stressed the importance of
product quality and the impact of bad
products on the entire company as a
whole with training and open
communication as it does today. If
there is transparency and honesty, the
partners would have come to Mattel
with their fears and the situation could
have been avoided.

11. Creating the future of PLAY!
• In 2012, CEO Bryan Stockton released a code of conduct
which outlined to the employees and consumers of Mattel
the legal, ethical, and social responsibilities. This code of
conduct presented the global audience with regulations
and laws the CEO felt should be adhered to by the
company and its partners.

12. References
Ferrell, O.C., Fraedrich, J., Ferrell, L., (2013) Business Ethics, Ethical Decision Making and Cases,
Stamford, CT: Cengage Learning, 10th edition.
Mattel (2012). Retrieved from https://corporate.mattel.com/about-us/pdf/CodeOfConduct2012.PDF