Mattel Inc. ‘’The serious business of making toys’’

Mattel, Inc. is the world leader in designing and manufacturing family products such as Barbie, American girl, hot wheels and cabbage patch kids. With a 5. 5 billion in annual revenue and products being marketed in more than 150 countries around the world this company has managed to stay very successful and incredibly ethical throughout the years.

These are some of the examples of Mattel’s commitment to ethics and social responsibility:

  • Produced a dangerous toy back in 1996 (snack time kids) but handled the situation perfectly by pulling the product out of the market voluntarily soon after some complains surfaced and by offering a cash refund of $40 when returning the dolls.
  • The difficulties and potential issues when marketing to children were recognized and dealt with by Mattel, especially when using advanced technologies and websites. Mattel got the parents involved in the process and emphasized on their consent for giving out any private information like emails etc…
  • Conducted a full ethics audit to make sure there isn’t any forced labor, child labor in any of their manufacturing sites or facilities, especially overseas.
  •  Instituted a code of conduct called’’ global manufacturing principles’’ one of these principles require all Mattel owned and contracted manufacturing facilities to favor business partners who are committed to ethical standards like they are. By doing so, Mattel seems to prioritize ethical considerations over profit.
  • Established international workplace and business practice standards. These standards reflect on the importance of respecting cultural, ethical and philosophical differences. Giving out considerable wages based on the governing laws and with working hours that are set by Mattel Inc.
  • The company’s partners must at minimum comply with the local and national laws of the countries on which they operate, when signing an agreement with any of Mattel’s manufacturing partners part of that contract is an agreement with the Mattel global manufacturing principles.
  • Created Mattel independent monitoring council (MIMCO) to make sure that Mattel’s global manufacturing principles are met by evaluation and monitoring.
  • Founding the Mattel children’s foundation to create charitable investments aimed at furthering Mattel’s goal of bettering the lives of children in need, in 1998 they gave $25 million gift to UCLA children hospital for a new state of the art facility, the hospital was renamed Mattel ‘s children hospital.
  • When actively engaging in businesses around the world as economic pressure increase, normal business procedures can be changed resulting in unethical and sometimes illegal practices. If any manufacturing facility or business partner violates the global manufacturing principles the business relationship can either be terminated or corrected with a corrective action plan.

Questions 1. What role does the chief executive officer have in creating an organizational culture that values ethics and compliance? Mattel Inc. has shown incredible resilience over the years when it comes to its code of ethics, as mentioned in the case the company has been under the control of a number of executives over a short period of time but through all its changes in the managerial style, company structure and profit rates Mattel Inc.

has always kept its ethical values in the front center of it all. Meaning that both CEO’s Jill Barad (from 1997 to 2000) and Robert Eckert realized the importance of an organizational culture that values ethics and decided that it was for the best interest of all to create and maintain it. Robert "Bo" Ewald, CEO of Silicon Graphics offered a description of four principles that he sees as critical steps for CEO’s to follow in order to create an ethical environment ‘’

  1. The CEO's job is to lead. Model the behavior you want to see.
  2. Do the right thing and do it in the right way.
  3. It is impossible to communicate too much. Talk frequently about the company's values in a way that appeals not only to employees' intellects but also to their emotions
  4. If you can't figure out what to do, that's baloney. Usually people know the right thing to do, but sometimes it is difficult!

As he summed it up, "You lead it, you live it, and people watch. " ‘’ (1). The CEO’s task is to analyze and manage the processes and practices that would guarantee an organizational culture that values ethics and compliance.

Amplifying on the importance of the ethical values is highly important, Mattel’s chief executive officers did not just create a code of ethics and simply legislated it and moved on, they made that code their breathing core and center through all their activities and business transactions and that made an impression not only on their employees to act more ethical but on their partners, associates, customers, society and community through their charity and generous acts. 2. Do manufacturers of product for children have special obligations to consumers and society?

If so, what are these responsibilities? If not, why not? Yes, manufacturers of products for children definitely have special obligations towards the consumer and society mainly because they’re dealing with the vulnerable and easily affected part of the society, making it temptingly easy to take advantage of the young consumer hence ethical dilemmas are more likely to occur with this type of manufacturers,’’ Children are the most pure consumers you could have’’ (4).

The Mattel Inc. for example, got the parents involved with every step of the business transaction by mandating parental consent(2); the company took the societal concerns towards children’s rights very seriously. The product should be consistent with moral and ethical standards of the society and consumer not only as a wholesome product but also in the process of manufacturing (for example, no child labor, forced labor or discrimination). 3. How affective has Mattel been at encouraging legal and ethical conduct by its manufacturers?

What changes and additions would you make to the company’s Global manufacturing principles? What are other companies doing in this area? Mattel has been amazingly affective at encouraging legal and ethical conduct by its manufacturers, through their Global manufacturing principles they set rules that advocate ethical and moral behaviors at all time, strictly requiring a continuous commitment to business ethics at the risk of losing Mattel as a partner. Mattel has also hired third-party auditing agencies to make sure that manufacturers abide by their strict ethical conduct.

If any of the manufacturers happen to violate any of the Global manufacturing principles, Mattel will not automatically terminate the business relationship; instead they might implement a corrective action plan to help this partner or manufacturer back on the right track (2), Because they care about more than just their ethical environment, Mattel is concerned with creating and encouraging ethical companies within the society as well. In addition, any company that wants to go into business with Mattel must comply with Mattel’s legal and ethical conduct.

The changes that can be made to the Global manufacturing principles should include more testing on the toys before distributing them because there are still injuries and lawsuits against Mattel that are concerned with the product’s safety such as, the Keller Rohrback L. L. P. case, Filed Suit Against Mattel, Inc. for Selling Toys Covered in Lead Paint ( aug. 3, 2007)(3), Mattel applies internal operating procedures to insure safety of products but perhaps hiring the services of a third-party company would improve and bring more light into the safety issue at hand.

Other than that, in my opinion the Global manufacturing principles do not need any changes. Based on the World’s most ethical companies by the Ethisphere Institute in their ‘’100 list of businesses as model cooperate citizens’’ include ford motors and L’OREAL (6), Ford motor company established a code of business conduct and ethics for members of the board of directors to help them recognize and deal with ethical issues (5), Ford was recognized for their ethical environment, contribution to the society and evaluation of investment in innovation.

L’OREAL on the other hand has established a whistleblowing hotline for customers, employees and the general public for issues concerned with their code of business ethics while offering a safe and secure mechanism. (7) The lead paint crises Despite all Mattel’s hard work and effort into keeping their organization’s environment ethical no one is perfect and errors, lawsuits and complaints are bound to arise every now and then, especially when dealing with products directed to children.

As mentioned earlier, the Keller Rohrback L. L. P. case, Filed Suit Against Mattel, Inc. for Selling Toys Covered in Lead Paint ( aug. 3, 2007)(3) , Lead is very toxic to children under the age of seven because it can cause permanent damage to developing bodies and brains. Such damage can include brain damage, learning disabilities, and neuropsychological deficits.

Children who are exposed to lead may not exhibit signs of poisoning until years after the exposure, making immediate testing vital in detecting cases of lead poisoning(9). Mattel has reacted to this incident by recalling over 84 different kinds of toys worldwide on august 14th 2007 and continued doing so through may, the case has won a multi-million dollar settlements providing for damages and, in certain cases medical monitoring.

Mattel has publicly apologized to all its customers and to china because at a press conference earlier that month when the CEO Bob Eckert was asked how this incident could possibly occur, knowing that using lead paint on children’s toys was clearly banned in the USA, he blamed it on a subcontractor who violated Mattel's policies and "utilized paint from a non-authorized third-party supplier. "(10), an accusation that left the nation wondering whether all china made toys were dangerous.

In the 21st of September 2007 Eckert apologized for that statement and took full responsibility of the incident. Mattel released a video with a heartfelt apology on their website and promised that it would never happen again , stating that from now on they will test every toy before it leaves china rather than relying on testing only the raw materials. Mattel Inc. now “Our commitment to ‘play fair’ is at the core of our organization’s culture and is the cornerstone of our ethical compliance program,” said Robert A.

Eckert, chairman and chief executive officer of Mattel after announcing that they have been named one of the 100 most ethical companies in the world again in 2010(6). At Mattel, they believe that how they achieve success is just as important as the success itself, and this commitment to ethics is sustained by firm dedication to high standards from employees at every level. Mattel describes its corporate responsibility in 3 fun company values (8):

  • Play Fair by continually encouraging the Mattel organization to align decision-making with the company's values.
  • Play Together by working with employees, partners, vendors and regulators to bring the world safe toys that grown-ups trust and children love.
  • Play to Grow by committing to a sustainable future through efforts to work smarter and reduce our impact on the environment.
  • Play with Passion by volunteering in our communities and helping underserved children experience the joy of play.