The Mattel Company, best known for its Barbie dolls, is the world's largest toy maker.

In March 1997, it acquired Tyco toys the third largest U.S.-based toy maker. Its product lines include Fisher-Price and Sesame Street preschool items, Disney-related products and Hot Wheel miniature vehicles. They type of industry Mattel is located under, is dolls and stuffed toys, although they have other types of products such as Hot Wheels. This company is under monopolistic competition. They sell their products in many stores, such as Toys R Us, KB Toys, KMart, Walmart, and others. Some of Mattel's competitors include Marvel Enterprises Inc. and Hasbro Inc. Marvel Enterprises (formerly Toy Biz) publishes comics based on more than 3,500 characters including Spider-Man, The Incredible Hulk, and the X-Men. The company, North America's top comic publisher through its Marvel Entertainment subsidiary, also makes action figures, games, and puzzles based primarily on its Marvel characters. Hasbro is a worldwide leader in the design, manufacture and marketing of toys, games, interactive software, puzzles and infant products. Included in its offerings are games, traditional board and card, hand-held electronic and interactive CD-ROM, and puzzles, preschool, boys' action and girls' toys, dolls, plush products and infant products. The company's business activities include many things. The standards address a wide spectrum of issues, ranging from on-the-job concerns, such as factory lighting, air quality and health care facilities, to acceptable parameters for dormitories and recommendations for recreational programs. They serve as the principles by which Mattel's internal and independent monitoring programs are measured around the world. While the development of a code of conduct/manufacturing principles is essential to success, enforcement of the code is equally as important. Mattel has initiated an extensive three-stage auditing process, which is overseen by an independent monitoring council, to thoroughly inspect both the company's owned-and-operated facilities around the world, as well as those of all core contractors. If a contractor facility is either unable or unwilling to work with Mattel in order to meet and maintain its standards, however, Mattel will discontinue the working relationship. I think that the stock price rose due to the company flourishing. Mattel has many extraordinary products that have been around for years, and many more to come. This company seems very stable. They keep their customers happy and keep them coming back for more. Now that the holidays are coming near, I predict that the company will do very well and the stock will go up once again. The article "Mattel Appoints Two New Members of Senior Management Team" introduces the two new members, Bryan G. Stockton and Thomas A. Debrowski. Stockton has been named executive vice president of business planning and development. Robert A. Eckert, chairman and chief executive officer of Mattel, Inc. believes that Stockton will, " provide Mattel with the clear, strategic thought required as we refocus on generating sustainable, profitable growth for Mattel " Bryan Stockton formerly served as president and chief executive officer at Basic vegetable Products. In

his new position at Mattel, his primary responsibility is to identify and develop synergies throughout all cross-functional departments in order to support Mattel as a whole. More elements of his function are the management of the company's strategic planning, as well as supervising all merger and acquisition activity. Debrowski is appointed to executive vice president of worldwide operations. Eckert believes, " Tom will utilize his proficiencies in operations and manufacturing to ensure better management of the all-important supply chain." Debrowski was formerly the vice president and director of grocery operations for Kraft USA. At Mattel, Tom will be responsible for all worldwide manufacturing and distribution activities and eventually, he will be responsible for the entire supply chain. In the article "Barbie Magic Genie Adventure for Game Boy Color Flies into Retail Stores Nationwide; Mattel Media Introduces New BARBIE Adventure Game for Girls On-theGo", Mattel Media announced today, November 1, 2000, that Barbie Magic Genie Adventure for Game Boy Color was shipped into retail stores nationwide. It is available for a suggested retail price of $29.99. In this game, girls lead BARBIE Genie on an adventure to search for missing genie lamps stolen by Evil Sultan Kardal. Throughout the game, players help BARBIE Genie find the missing lamps to defeat Kardal and save the city. Girls discover hidden treasures and secret areas in each land. By successfully completing the activities, girls are rewarded with clues and special powers to help them on the mission.

Case Summary: Mattel, Inc has the vision of being the worlds premier toy brand, for the present and the future. It currently sells products in over 150 nations. The company was founded in 1945 by Harold Matson and Elliot Handler. It has gone to be 30,000 employees strong working in 43 countries. Mattel, Inc includes a number of toy brands such as Barbie, Fisher Price, Hot Wheels, American Girl, Tyco, and others. In 2008, the company was recognized by FORTUNE magazine as one of the 100 Best Companies to Work For. Key Marketing Issues: International marketing: International marketing is the application of marketing principles across the borders of countries. Since Mattel, Inc. sells products in over 150 nations, the company has to advertise their products in those countries and therefore actively participates in international marketing. Importing: Importing means purchases goods and services from a foreign source. Mattel, Inc. imports stereoscopes from Mexico and China to be used in the ViewMaster products because there is no U.S. production of these items. Outsourcing: Outsourcing is the subcontracting of a noncore business process to a third partner that specializes in that process. Mattel outsourced its die-cast production to subcontractors in China and was very profitable until the 2007 recalls of millions of toys because of high lead paint levels. Joint Venture: A joint venture is a partnership between a U.S. firm and a foreign firm or government. Mattel Inc. is involved in numerous joint ventures. In 2003, Indiatimes.com teamed up with Mattel to create and market the largest on-line toy store in India. The toy store will carry Mattel brands of Barbie, Hot Wheels, Fisher Price and more. Strategic Alliance: Strategic Alliance is defined as partnering with traditional rivals to create competitive advantage. Mattel entered a strategic alliance with Disney in 1988 when Disney granted Mattel the licensing rights to produce a line of infant and preschool toys incorporating Disney classic characters such as Mickey Mouse, Donald Duck and Pluto. Multinational Enterprise: A multinational enterprise is a corporation that is based in one country but carries out business such as manufacturing and marketing in another country. Walmart is the largest company that is an example of a multinational enterprise. Mattel Inc also fits into this category since it is based in the U.S. in California but has production and management in 43 countries around the world.

Answer Questions Given in the Case Analysis 1. Describe Mattels target market for Barbie and Hot Wheels. How did the firms marketing strategy appeal to this market internationally? According to my research, the

target market for Barbie and Hot Wheels are kids ages 6-12. Mattels primary method of advertising is commercials on Television during shows catered to this same target market often building a connection to the show or a kids movie. In fact, Mattel was the one of the early toy companies to use TV marketing. The ads are meant to target children in a way that they will pressure their parents or other adults into buying the products, often out of guilt. 2. How has Mattel tried to be a socially responsible firm in its numerous world markets? Mattel donates approximately 2% of its pre-tax profits to charities and organizations serving children worldwide that is executed through Mattels Childrens Foundation. There are five key partnerships supported by the Mattels Childrens Foundation such as the Special Olympics, Save the Children, National Association of Childrens Hospital and Related Institutions, Children Affected by Aids Foundation, and Mattels Childrens Hospital at UCLA. Mattel donates funding to other organizations in addition to these five and Mattel employees volunteer at these organizations as well as other foundations throughout the world. In addition to its charitable contributions, Mattel has made changes to affect the environment such as reduce the amount of materials and energy in packaging in products, introduced energy efficient devices in its manufacturing process, and the recycling of materials to be used again in its manufacturing. 3. What environmental forces have created challenges for Mattel as it continues expansion into global markets? Which markets have created opportunities? The biggest environment force affected Mattel recently has been legal and regulatory with the high levels of lead paint found in their die-cast toys in 2007. This issue created a voluntary recall from Mattel for over 2 million toys and created doubt in customers to the quality of their Mattel toys. Mattel responded by immediately implementing a check system to accept paint only from certified suppliers, tightened controls throughout the production process and testing every production run to ensure compliance. Mattel said that it is working in cooperation with the U.S. Consumer Product Safety Commission and other regulatory agencies worldwide. Mattel is also working with retailers worldwide to identify and remove affected products from retail shelves. In addition to legal factors, economic forces also affect Mattel, especially the global economy because of its international operations and markets. The fluctuations in currency and the rising energy costs have Mattel concerned. Mattel has made energy saving changes in its production to offset the costs. Although Mattel has its challenges, Mattels market in Asia has created opportunities for outsourcing as a way to save money and continue to expand its market. Mattel also continues to build joint ventures and strategic alliances to expand its global market such as the merger with fellow rival Tyco. Conclusions Case Analysis Mattel, a toy company founded in 1945, is recognized as a worldwide leader in the design, manufacture and marketing of toys and family products, including Barbie, the most popular fashion doll ever introduced. It is a multinational enterprise consisting of 30,000 employees operating in 43 countries. Its vision of a worldwide leader has led the company to engage in international marketing and produce products for over 150 countries since its beginnings in California. Much of the global expansion has been

gained through strategic alliances and joint ventures, such as the joint venture with Bandai, the largest Japanese toy company, to market and sell products in that country. However, the company isnt without its share of issues. The recall of die-cast toys and magnetic toy sets has left a stain on the companys reputation. The question in the industry is one of company greed that has found the company with limited oversight of its subcontractor outsourcing in China. Consumers have called for a ban of Chinese toy imports which would severely affect profits. Of course the company immediately put in measures to fix the oversight issues but it has still left doubt in the public eye. The big question now in my mind is how long will the public scrutiny last. With the U.S. economy in a depressed state, are consumers more concerned with a lower price that they will turn a blind eye to questionable materials in the toys.

What Went Wrong at Mattel The toymaker is recalling more dangerous toys made in China. Its troubles may be a warning sign for other multinationals Elmo, Barbie, Big Bird, and Dora. They are some of the most familiar and best-loved children's characters. Now they're caught up in the global debate about the safety of Chinese-made products. Mattel (MAT), the world's largest toymaker, announced on Aug. 14 an expanded product recall, involving vehicles based on the hit movie Cars that had lead paint on them, as well as Barbie, Polly Pocket, and Batman toys that had small, powerful magnets that could harm children if swallowed. The move follows the Aug. 2 announcement of a similar recall of Fisher-Price toys with lead paint. Policing Subcontractors Is Hard Chinese-made products have come under increasing fire in recent months, as recalls have been announced in everything from dog food to tires (see BusinessWeek.com, 7/23/07, "Broken China"). In July, the former head of China's food and drug administration was executed for taking bribes from an antibiotics manufacturer that lead to the deaths of consumers. On Aug. 13 news reports surfaced that the head of the company that made the lead-contaminated Fisher-Price toys had committed suicide at his plant over the weekend. But Mattel is not just another company suffering because it uses low-cost Chinese suppliers. The company goes to great lengths to try to ensure that the companies it does business with operate properly and ethically, even subjecting them to outside audits. Mattel's recalls illustrate how difficult it is for a multinational company, despite its best efforts, to keep tabs on all sorts of suppliers around the globe. The company has had at least 15 product recalls in the past five years, from jewelry at its American Girl doll business that contained lead to a Batmobile with dangerously pointy tail wings. For the latest recall, Mattel took out ads in national newspapers such as the The New York Times to reassure parents that it was doing everything it could to keep children safe. A new Web site, www.mattel.com/safety, features a video of Chief Executive Robert Eckert in what looks like a tiny Etch A Sketch screen explaining the recall. "As a parent of four children myself I know that nothing is more important than the safety of our children," he says in the video. "I want to ensure that every parent hears about these issues and returns these products to us. I can't change what's happened in the past, but I can change how we work in the future. A Promise of Renewed Scrutiny In a press teleconference on Aug. 14, Eckert and Jim Walter, Mattel's senior vicepresident for worldwide quality assurance, announced a number of steps they were taking to prevent further recalls. Mattel said the lead paint on the latest products resulted from malfeasance in the company's supply chain. Mattel's main supplier of the Cars products, Early Light Industrial, had subcontracted out the painting to another company, Hong Li Da. While the subcontractor was supposed to use paint supplied by Early Light, it instead used paint that contained potentially poisonous lead. "Early Light, the vendor, is every much a victim as Mattel is," Eckert said. "The subcontractor chose to violate the rules." Mattel does more than many companies to make sure its Chinese suppliers operate ethically, including treating their workers fairly. The company relies on the International

Center for Corporate Accountability to monitor its plants and publishes the sometimes critical reports on its Web site for review. About 65% of Mattel's toys are made in China. The rest come from Thailand, Malaysia, Indonesia, and Mexico. Whereas Mattel used to randomly test finished toys, Eckert say it will now test every single batch of toys produced. Safety checks will also get beefed up at the supplier and subcontractor level prior to the finishing of the product. The recalls today involved 436,000 toy cars contaminated with lead paint and 18.2 million magnetic toys manufactured between 2002 and January of this year . Not all recalls are due to suppliers cutting corners. In the case of the recalled magnetic toys, technology advanced faster than toymakers' perceived risk. Mattel's quality guru Walter noted in an interview with BusinessWeek in late July that the company puts products through rigorous stress tests. The industry didn't anticipate, however, that if two or more of the high-powered magnets were ingested at once they could close off the intestines of small children. In newer versions of the toys the magnets will be locked into the products in such a way that a child cannot break them free Will Holiday Toy Sales Suffer? On Aug. 2 Mattel announced that it had taken a charge of $29 million to cover the cost of product recalls this year. That amount is unlikely to have a major impact on the company. Mattel earned $592 million on sales of $5.6 billion last year. But BMO Capital Markets analyst Gerrick Johnson said Aug. 13 in a report that he expected the recalls to have an ongoing impact on the company's sales. He adjusted his estimates for the company's revenues down by $25 million this year and by $40 million in 2008. It's still unclear to what extent parents will shun toys this holiday season as repeated recalls of products undermine consumer confidence. "They have to prove they can manufacture these products safely or parents will stay away," says Dr. Stevanne Auerbach, author of The Toy Chest, a guide to toys. Other toymakers and retailers have already begun promoting the fact that their toys are made in the U.S. Kidbeam.com, of Asheville, N.C., says its plush dolls are not only made locally, but manufactured from organic cotton. Green Toys says its line of gardening kits and pretend cookware are made from bioplastics derived from corn (see BusinessWeek.com, 7/31/07, "Not Made in China"). Eckert told reporters he was not pushing for any kind of federal safety standards. "I don't rely on anyone else to ensure the safety of our products," he said. "This is our concern." He also said he's hoping his ads and Web site will ease parental concerns. "I think it's important to establish a dialog with parents," he said. "I want to make sure they hear from me."

ANSWERS:

Q1:

Because of the companys product and designs primary for children, it must be sensitive to social concern about childrens right: By assuring parents that their childrens privacy will be respected, Mattel demonstrated that it takes its responsibility of marketing to children seriously. In 2007, Mattel conduct entitled Global Manufacturing principles. In this principle, Mattels business partners must ensure high standard for product safety and quality, adhering to practices that meet Mattels safety and quality standards, make sure that the entire product will not be harmful to the children. Partners must also comply with all import and export regulation and they must strictly adhere to local and international customs law. An example of Mattel responsibility to the children is the Mattel children foundation which is found in 1998. The gift was mean to support the existing hospital and provide for a new state-of-art-facility. To the society, the company is not using any child labor, forced labor or uses any type of that labor itself. The company stated that it does not tolerate discrimination, the employee should be hire according to their ability to complete the job, not their believes or characteristics.

Q2:

*Strengths One of Mattels most important strengths is the history that it has behind their company. Mattel turns 60 this year, with much of that time spent at the forefront of the toy industry. Staying power such as that, leads to brand recognition: in Mattels case, this is a positive thing. The brand remains very popular amon g

customers. This long history has also allowed ample time to develop effective corporate strategies. This includes an integrated focus on the customer. One of the most significant ways this is accomplished is through market research in an attempt to satisfy the markets wants by releasing new products annually. Mattel also follows a code of ethics, as well as requiring ethical actions of their suppliers. Such a move also helps ensure the positive perception of their company continues. Finally, Mattel contributes to the communities in which it operates, particularly to causes benefiting children. It makes it very easy for stakeholders to support a company that will reciprocate the support. Specifically, Mattel has a handful of very recognizable brands. The largest, of course, is Barbie, which put Mattel on the map at the beginning, and currently accounts for over half of the firms revenue. Other products include Hot Wheels and American Girls. Further, Mattel has merged with or struck licensing deals with a number of other established brands, including Disney, Fisher Price, NASCAR, and even Microsoft. In addition to diversifying Mattels product line, working with these successful and popular names will increase chances for success. Mattels new management ha s helped to turn one of the companys former weaknesses into strength. *Weaknesses Although there are still improvements to be made, Mattels weaknesses appear to be far fewer than they were just a few years ago. New leadership appears to have righted the ship, but Mattel has had a history of management struggles and uncertainty since the original co-founders, the Handlers, left the company in the 1970s. Many of the decisions that have led to trouble can be attributed to this fact. One frequently occurring mistake is that of unprofitable mergers and acquisitions. While some mergers, such as that with Fisher Price, have proved profitable, others have cost the company severely. Two of the largest financial disasters are the purchase of Intellivision in the late 1970s, and the Learning

Company in 1999, coincidentally both electronic firms. In fact, until the acquisition of Fisher Price, most of Mattels attempts to expand beyond their primary market of childrens toys were largely unsuccessful. The most concerning piece of news for Mattel, however, must be the slipping popularity of their core product, Barbie. As of 2002, Barbie dropped out of the top five selling dolls. Mattel has been scrambling to recapture market share by expanding the Barbie line to items such as computer software and girls clothing.

*Mattel has made many of the same products nearly since it was established, with the exception of picture frames and doll furniture, which were short lived products. Barbie has changed a little bit, but other than that, the products have remained unaltered. In order to have a competitive advantage, Mattel needs to grow with the market. As of right now, Mattel has four major subsets of their company: Barbie, Hot Wheels, Fischer Price, and American Girls. Mattel may want to consider either expanding on what these sectors make, or developing brand-new sectors to keep their company up to date.

Q4:

Opportunities The American toy market is becoming increasingly saturated and competitive, along with a downward shift in age of when children abandon tangible toys such Hot Wheels and Barbie for more interactive and technological products. This makes for little opportunity domestically for Mattel if they continue with the same product line. Fortunately, ample opportunity exists in Mattels new primary focus, international markets. Barbie has become an extremely recognizable brand worldwide, and has been selling very well in the markets it has been introduced to, namely Europe and Latin America. An alliance with an Asian company,

Bandai, should also prove very beneficial as numerous eastern countries open their markets to western goods. This market has been left largely untapped, and offers a huge increase in customer base. Another positive signal for international sales is the weakening dollar. This makes Mattels products more affordable in many of these new markets. Furthermore, the company does not experience the downside to a weak dollar in the form of overseas imports and production, as new corporate strategy has reemphasized in-house manufacturing.

Threats The most notable threat in the domestic market is the systematic movement away from tangible toys, which account for a majority of Mattels core products, at an earlier age. Children are adopting more interactive and electronic toys earlier in age today, eroding Mattels primary market of children under the age of 10. This has already forced Mattel to enter, and may force Mattel to further their involvement in the technological realm, a product category in which the firm has performed very poorly. Mattels attempts to follow their market into the technological realm have included the development of a number of childrenfriendly websites to accompany their toys. Targeting children with internet sites, however, brings about extra concerns. Mattel must be very careful to protect their legal and moral reputations by respecting the privacy of the children and their families, which is put in jeopardy every time the website asks a minor to provide information. To their credit, Mattel has worked extremely diligently to follow the guidelines of the Better Business Bureaus Childrens Advertising Unit, and encourage parental supervision. Other threats include those that have affected most firms in recent years, including the lackluster economy following September 11th. The national recession has led to more frugal spending, and decreasing returns by a majority of companies. Stocks in general have also been more volatile than in the late 1990s. Mattels stock specifically has lacked stability for

years, dropping and rising upwards of $30 per share in a matter of years. Such instability can lead to wary investors, and the firm could find itself having trouble generating funds. Finally, the firm has experienced a recent cultural backlash; to some degree here at home, but very dramatically in some locations abroad.