business ethics report case 19 mattel responds to ethical challenges

BUSINESS ETHICSREPORTCASE 19: Mattel Responds to Ethical ChallengesStudent ID : 11212738Class : International Business Management 63AHanoi, October 3... The company operates in more than

NATIONAL ECONOMICS UNIVERSITY

BUSINESS ETHICS

REPORT

CASE 19: Mattel Responds to Ethical Challenges

Student ID : 11212738

Class : International Business Management 63A

Hanoi, October 3VIETNAM MINISTRY OF EDUCATION AND TRAINING

BUSINESS ETHICS

REPORT

CASE 19: Mattel Responds to Ethical Challenges

Student ID : 11212738

Class : International Business Management 63A

Hanoi, October 3

BRIEF CONTENTS

I INTRODUCTION TO MATTEL, INC 1

II THE HISTORY OF MATTEL 2

III MATTEL’S KEY MOMENTS 4

IV MATTEL’S CORE PRODUCTS 6

1 Barbie and American Girl 6

2 Hot Wheels 7

V MATTEL’S COMMITMENT TO ETHICS AND SOCIAL RESPONSIBILITY 8

1 Privacy and Marketing Technology 8

2 Expectations of Mattel’s Business Partners 9

3 Legal and Ethical Business Practices 10

4 Social Responsibility – Mattel Children’s Foundation 11

5 International Manufacturing Principles 12

VI OVERSEAS MANUFACTURING – SAFETY ISSUE 12

The Chinese Government’s Reaction 14

VII MATTEL VERSUS FORMER EMPLOYEE AND MGA - INTELLECTUAL PROPERTY RIGHT ISSUE 14

VIII MATTEL LOOKS TOWARD THE FUTURE 15

IX QUESTION ANSWERS 16

1 Question 1 16

2 Question 2 17

3 Question 3 18

REFERENCES 20

I INTRODUCTION TO MATTEL, INC.

Mattel, Inc is a leading global toy company and owner

of one of the strongest catalogs of children’s and family

entertainment franchises in the world founded in

January 1945 and headquartered in El Segundo,

California The company operates in more than 35

locations and its products are sold in more than 150

countries in collaboration with the world’s leading

retail and ecommerce companies

The name of the company is a blend of two of the

company's founders: the surname of Harold Matson and the

first name of Elliot Handler

Mattel engages consumers through portfolio oficonic brands, including Barbie, Hot Wheels,Fisher-Price, American Girl, Thomas & Friends,UNO, Masters of the Universe, Monster High andMEGA, as well as other popular intellectualproperties that it owns or licenses in partnershipwith global entertainment companies Its offeringsinclude film and television content, gaming anddigital experiences, music, and live events

Empower the next generation to explore the

wonder of childhood and reach their full

potential

Create innovative products and experiences that inspire, entertain and develop children through play

Mattel Logo

Mattel Headquarters in California

II THE HISTORY OF MATTEL

It all began in a garage in 1945, as a collaboration between Ruth and Elliot Handler, and Harold

“Matt” Matson The company began selling picture frames, and later dollhouse furniture out ofsediments from those frames Matson sold his share and stake to the Handlers due to poor healththe following year, in 1946, which Handler's wife, Ruth took over In 1947, the company had itsfirst hit toy, a ukulele called "Uke-A-Doodle" In 1948, the company was incorporated inHawthorne, California

Mattel reached several important firsts in 1955 In what seemed a risky venture, the Handlers agreed to sponsor a 15-minute segment of Walt Disney's Mickey Mouse Club on the ABC television network The Handlers signed for 52 weeks at a cost of $500,000, equal to Mattel's networth at the time Up until this time, toy manufacturers relied primarily on retailers to show and sell their products and advertising occurred only during the holiday season; never before had a toy company spent money on advertising year-round With television, however, toys could be marketed directly to children throughout the country Thus, with the slogan, "You can tell it's Mattel, it's swell," the Handlers began a marketing revolution in the toy industry that produced

an immediate payoff The company sold many toys Burp Guns and made the Mattel brand name well known among the viewing audience

The Barbie doll debuted on March 9, 1959, going on to become the company's best-selling toy inhistory

In 1960, Mattel introduced Chatty Cathy, a talking doll that was voiced by June Foray and revolutionized the toy industry, leading to pull-string talking dolls and toys flooding the market throughout the 1960s and 1970s

The company went public in 1960, and the New York Stock Exchange listed them in 1963 Mattel also acquired a number of like-minded companies during the 1960s

In 1965, the company built on its success with the Chatty Cathy doll to introduce the See 'n Say talking toy, spawning a line of products

On May 18, 1968, Hot Wheels was released to the market Hot Wheels was invented by a team

of Mattel inventors, which included a rocket scientist and a car designer

brands to just Mattel and launched the iconic "red sun" logo with the Mattel wordmark in all capitals for better identity

In 1974, the Handlers left the company and pursued other interests

The company entered the home video game console market in the 1980s but racks up a $394 million loss in 1983 and almost files for bankruptcy Chairman John W Amerman improved the company’s financials in 1987 by focusing on core brands Mattel returned to working with the Disney company in 1988

In 1993, 1997, and 1998, Mattel purchased Fisher-Price Inc., Tyco Toys, Inc and Pleasant Company, maker of the American Girl brand, respectively

Mattel purchased The Learning Company (formerly SoftKey) in 1999 for $3.5 billion but sold it the following year at a loss The company had a $430.9 million net loss that year

In 2000, Mattel signed a deal with Warner Bros to become the master licensee for Harry branded toys

Potter-In 2002, Mattel closed its last factory in the United States, originally part of the Fisher-Price division, outsourcing production to China, which began a chain of events that led to a lead contamination scandal On August 14, 2007, Mattel recalled over 18 million products The New York Times closely covered Mattel’s multiple recalls Many of the products had exceeded the USlimits set on surface coatings that contain lead Additional recalls were because it was possible that some toys could pose a danger to children due to the use of strong magnets that may detach Mattel re-wrote its policy on magnets, finally issuing a recall in August 2007 In 2009 Mattel would pay a $2.9 million fine to the Consumer Products Safety Commission for marketing, importing, and selling non-compliant toys Mattel was lauded as a gold standard for its crisis response by several publications, including the Los Angeles Times, FORTUNE Magazine and Business Management

In early 2010, HiT Entertainment licensed Thomas & Friends to Mattel for toys Mattel agreed topurchase HiT Entertainment in October 2011 for $680 million The merger was completed on

under its Fisher-Price unit.

Mattel was named by Fortune magazine as one of the top 100 companies to work for in 2013, noting that only 1,292 positions were newly filled out of 164,045 job applications during the previous year, as well as the fact that more than 1,000 employees have been with the company longer than 15 years

In October 2013, Mattel launched its new in-house film studio, Playground Productions, to handle multi-media production, films, TV shows, web series, live events and games, for Mattel’s brands

On February 28, 2014, Mattel acquired Mega Brands

III MATTEL’S KEY MOMENTS

1945: Ruth and Elliot Handler and Harold "Matt" Matson form a partnership called Mattel

Creations, making and selling first picture frames and later dollhouse furniture

1947: The "Uke-A-Doodle" becomes the first of many hits Mattel toys.

1948: The company is incorporated in California.

1955: In a revolutionary move, Mattel becomes a year-round sponsor of the Walt Disney

television program Mickey Mouse Club.

1959: Mattel introduces the Barbie doll, which will eventually become the best-selling toy ever.

1960: Mattel becomes a publicly traded company.

1963: The company gains a listing on the New York Stock Exchange.

1968: Hot Wheels miniature model cars, another spectacular hit, are introduced.

issued false and misleading financial reports.

1983: The company verges on bankruptcy with a $394 million loss after an ill-advised venture

into video games

1987: John W Amerman, who has been named chairman, revitalizes the company through an

emphasis on core brands

1988: Mattel revives its collaboration with Disney.

1993: Fisher-Price Inc., the world leader in infant and preschool toys, is acquired.

1997: Mattel buys out Tyco Toys, Inc., the third largest U.S toy maker.

1998: Pleasant Company, maker of the American Girl brand, is acquired.

1999: The Learning Co., a major player in computer games and educational software, is acquired

for $3.5 billion

2000: Mattel sells off Learning Co at a huge loss; the company reports a net loss for the year of

$430.9 million

2002: Mattel outsources production to China which led to a lead contamination scandal.

2007: Mattel recalls millions of products due to scandal.

2011: HIT Entertainment is acquired by Mattel.

2013: Mattel enters “Top 100 Companies to Work for” by Fortune Magazine.

2014: Mattel acquires MEGA Brands – 2 player in the overall building sets category and 1 nd stplayer within the pre-school building sets category

IV MATTEL’S CORE PRODUCTS

1 Barbie and American Girl

 Barbie

In 1959, Barbie is born Ruth Handler,one of the founders is inspired byobserving her daughter, Barbara, playwith paper dolls for hours, andrecognizes the opportunity to champion and inspire girls by introducing a three-dimensional doll that shows them that they can be anything

Sales were slow at first, but television advertising helped build Barbie into a best-seller Barbie took off to become one of Mattel’s critical product lines and the number one girls’ brand in the world Annual sales of Barbie net approximately $ 2 billion, and one doll is sold approximately every 3 seconds

The popularity of Barbie allowed Mattel to introduce many different versions of the iconic doll Mattel found that while Barbie is popular with children, many adults

enjoy collecting special edition Barbie dolls as a pastime Mattel often

releases limited-edition Barbie dolls at a more expensive price geared

toward adult collectors

Not all of Mattel’s Barbie creations were readily accepted by

stakeholders When Mattel released its limited-edition Tokidoki tattoo

Barbie, some parents got worried that the tattoos would set a bad

example for the kids while others thought the doll just reflected

current pop culture But according to Mattel, the dolls were not

marketed to young girls but aimed for adult doll collectors

Ruth Handler – Barbie’s founder

Tokidoki Barbie Doll

messages for girls For instance, Mattel created a special baldBarbie doll distributed only to hospitals to help young girls copewith the difficulties of cancer

 American Girl

In 1998, Mattel acquired Pleasant Company, maker of the AmericanGirl brand to diversify their doll lines The special thing is American Girl dolls are sold with books about their lives Apart from dolls, American Girl also provides book series, accessories, clothing for dolls and girls and

a magazine ranking top 10 US children’s magazine

2 Hot Wheels

Hot Wheels roared into the toy world in 1968 Elliot Handler,

co-founder of Mattel, decided to produce a line of die-cast toy

cars for boys His idea was to capture a portion of the huge

market for small car models dominated at that time by the

British company Lesney Products with their Matchbox cars

More than thirty years later, the brand is hotter than ever and

includes the variety of products for children of all ages The

brand began with cars designed to run on a track and evolved

into a “lifestyle” brand with licensed Hot Wheels shirts, caps,

lunch boxes, backpacks, and more Much like Barbie, there are many adult collectors of hotwheels Together, Hot Wheels and Barbie generate 45% of Mattel’s revenue

Some fast facts about Hot Wheels:

 Hot Wheels is the NO 1 SELLING TOY IN THE WORLD according to NPD Group

 Annual sales total approximately $1 BILLION

 519 MILLION Hot Wheels are produced per year

 2 Hot Wheels cars are sold every second of every day

Bald Barbie

 Adult collectors are estimated to have about 1,550 CARS on average

V MATTEL’S COMMITMENT TO ETHICS AND SOCIAL

RESPONSIBILITY

Code of Conduct

The Code of Conduct (COC) is Mattel’s general statement of ethical business conduct, based on Mattel’s commitment to adhere to their values and to comply with the law It embodies values, reflects culture, and guides relationships with each other and business partners All employees globally participate in COC training when they join Mattel Mattel provides employees with ongoing training on topics and policies aligned to their job duties and require annual refresher training for all employees

1 Privacy and Marketing Technology

Mattel’s Online Privacy Statement sets the standard for what information they do and do not collect and how they use that information Their Children’s Privacy Statement goes further to detail how they protect the privacy of children and the steps we take to keep children from engaging in unsafe behaviors while using Mattel Services

Mattel informs to not collect personal information from children without the consent of a parent

or legal guardian except in special, limited circumstances such as registering for an online scavenger hunt or club When personal information is requested, the company do not ask for more than is necessary for a child to participate in the activity Mattel takes steps to prevent children from posting or publicly disclosing personal information without parental consent In addition, parents can access, and ask us to update or delete, their children’s information at any time

Mattel adheres to the Children’s Online Privacy Protection Act of 1998 (COPPA) and the guidelines of the Children’s Advertising Review Unit of the Council of Better Business Bureaus, Inc In addition, Mattel is a valid licensee and participating member in good standing of the Entertainment Software Rating Board’s (ESRB) Privacy Certified Program ESRB’s Privacy Certified Seal demonstrates our compliance with ESRB’s rigorous program requirements

responsibility of marketing to children seriously.

2 Expectations of Mattel’s Business Partners

Mattel, Inc makes a serious commitment to business ethics in its dealings with other industries

In late 1997, the company completed its first full ethics audit of each of its manufacturing sites aswell as the facilities of its primary contractors The audit revealed the company was not using any child labor or forced labor, a problem plaguing other overseas manufacturers However, several contractors were found to be in violation of Mattel’s safety and human rights standards and were asked to change their operations or risk losing Mattel’s business The company now conducts an independent monitoring council audit in manufacturing facilities every three years

To continue its strong record on human rights and related ethical standards, Mattel instituted a code of conduct titled Global Manufacturing Principles in 1997 One of these principles requires all Mattel-owned and contracted manufacturing facilities to favor business partners committed toethical standards comparable with those of Mattel Other principles relate to safety, wages, and adherence to local laws The company is dedicated to creating and encouraging responsible business practices throughout the world

Mattel also claims to be committed to its workforce Mattel cares deeply about increasing its employees’ skill sets and providing opportunities to excel This reflects Mattel’s concern for relationships between and with employees and business partners The company’s code is a signal

to potential partners, customers, and other stakeholders that Mattel made a commitment to fostering and upholding ethical values

Diversity, Equity &

Inclusion Goals

Mattel is committed to fostering a culture where all employees have theopportunity to realize their full potential Through its DE&I goals, Mattel is cultivating a work environment that promotes equality, inclusion and empowerment

Play Fair Program

Mattel’s corporate program, Play Fair, is a multi-faceted initiative that articulates the actions it is taking to address the racism, injustice and violence against the Black community

Employee Resource

Groups

Mattel’s Employee Resource Groups are designed to foster an inclusiveworkplace, enhance engagement, and bring together colleagues across