Background Ruth and Elliot Handler and Harold Matson founded Mattel in 1945. Robert Eckert- chief executive and chairman of Mattel (2007). Gained its significance in the toy industry due to the introduction of the Barbie doll. In 2006 Mattel became the largest toy maker with revenue of $5.65 billion, owning brands such as: Barbie Hot Wheels American Girl Fisher-Price
In 1977 the United States banned the use of lead paint in toys due to harmful effects on child development. In early July 2007 lead paint was discovered on some Fisher-Price toys made by Mattel. On August 1, 2007 Mattel issued the largest toy recall in its history. Two weeks later further recalls of 9.5 million more toys in U.S. and 11 million in foreign countries. Some recalls were due to hazardous magnets found in the toys. 3rd recall was on September 4, 2007
Risking the health of children Net Income Negative media 700 coverage 600 Frustrated customers 500 400 Declining market share 300 200 Net Income Flat sales on core toys 100 Lost in net income from 0 2007 to 2008 due to: Less supply = Less purchasing The cost of testing toys Lawsuits
Due to the lead paint oversight in China Mattel decided to change their production strategy. Over 85% of all recalls came from imported products. To protect the companies core brands Mattel switched to producing their own products rather than outsourcing to other manufacturers. Mattel mixed totally owned and third-party manufacturing for its products. Mattel moved manufacturing out of the United States and into other countries like China, Indonesia, Thailand, Malaysia and Mexico where contractors follow Mattel’s specific guidelines.
S trengths W eaknesses Strong off-shoring and Outsourcing to a local outsourcing strategy manufacturer would be Branding success i/e less costly. Barbie Dependency on retailers Weakening bargaining strategies with retailers.
O pportunities T hreats Direct-mail catalog and Recalls, lawsuits and Website to reduce the accusations hindered company’s dependence their reputation on retailers. Slow growth of traditional Created larger plants to toy market and rise in produce toys more video game market efficiently. Imitation Barbie dolls Mattel partnered with Hasbro, JAKKS Pacific or Oasys Mobile to extend other major competitors their market (March 2005)