Mattels China Experience a Crisis in Toyland

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The company’s Fisher-Price division was instrumental in developing the first toy safety standards in the industry. The company became a leader in protecting the integrity of their supply network and a toy safety champion at the forefront of the industry. However, after recovering from a financial crisis in the late 1970’s it was faced with another serious problem in relation to the safety of its products, which could have had a devastating impact on its business. Despite Mattel’s passion for implementing standards to ensure that the reputation of its brand remains intact, it was faced with a major problem which cost the company approximately $40mn. In 2007 it was faced with a major recall of 937,000 of its toys for violation of lead safety standards or magnet detaching. The problem was found only in toys made by one of its Chinese contractors. Approximately $22 million worth of toys were recalled. Of this amount, $2.4 million related to lead content in the paint used while the remainder of over $19mn related to magnet detaching. Even though the Chinese contractor was blamed for the problem, most of the recalls were related to a problem in the design of the products. The company was forced to adjust its financial results for that quarter by $30mn. Although, the company issued an apology its actions were not in harmony with its what its states as toys with lead contents of over 800% of the required standards were still sold on shelves in many states in the U.S. This was in spite of the fact that they were withdrawn from shelves in the state of Illinois. As a result of the situation, the ASTM international toy safety standard is now mandatory for all toys sold in the U.S. A SWOT analysis of Mattel’s current situation can be found in the appendix. The company has no doubt spent a lot of funds to put in place product safety standards and its Global Manufacturing Principles (GMP).