Question

5 Lessons Learned from the Mattel Product Recalls of 2007:

Learning from the faults of others can be a useful training tool. However, when it’s your company’s name being tossed around in discussions of what not to do, you need to do something…fast. In 2007, toy company Mattel embarked on four major product recalls. The recalls were the result of large quantities of lead found in the paint used in a number of their products. Mattel, like many other companies, uses contractors in China to manufacture products. This case raises supply chain concerns, bringing to light the importance of quality control and keeping an eye on the actions of your overseas operations and partners.

Here are 5 key lessons learned from the crisis at Mattel:

1. Always Act Fast

A quick reaction won't solve all of your problems, but failing to do so, will open up a new can of worms to deal with.

Confront the issues, don’t hide from them. In Mattel’s case, the company was very public about the recalls and the CEO even issued a public apology. A quick reaction makes it easier for companies to cope with and take control of the situation. Reacting quickly helps companies score “bonus points” with the public, slightly reducing the negative impact that the recall has on the company’s reputation. When companies are slow to react or spend most of their time placing blame on others, the public reacts negatively, criticizing companies for their negligence and irresponsibility. A quick reaction won’t solve all of your problems, but failing to do so, will open up a new can of worms to deal with.

2. Keep an Eye on Your Supply Chain

To save on costs, Mattel has shipped manufacturing overseas to China. Having multiple offices and operation sites makes it difficult to keep an eye on day-to-day operations. According to the Financial Times Press article “Trouble in Toyland: New Challenges for Mattel–and ‘Made in China’,” one of the main issues in the lead paint crisis at Mattel was that the Chinese contractors had subcontracted the painting of the toys to another company that used inferior and unauthorized products. A lot of companies get caught in similar traps.

3. Take Responsibility

Be the bigger person and take the blame- public finger pointing isn’t going to get you anywhere. In the Reuters article “Mattel Sued Over Toy Recall,” it was reported that Mattel’s CEO stated that the company was increasing the aggressiveness of toy testing methods, which would likely result in additional recalls as a precautionary measure.

4. Tighter Regulations and Inspections

In the Wall Street Journal article, “Mattel Settles Suit Over Lead in China-Made Toys,” author John Kell writes:

“Toy makers were hurt by a number of product recalls in 2007, leading to millions of dollars in costs for testing, legal expenses, advertising and product returns. Mattel recalled millions of toys that year, including those produced under licenses for characters including Elmo, Big Bird, Barbie and Polly Pocket. The issue later led to mandatory federal toy-safety standards, which included testing and tough new regulations for lead and chemicals in products intended for children under 12.”

5. Take Action and Communicate

During a crisis, such as the one experienced by Mattel, a lot of business leaders say that changes are going to be made and policies will be followed more consistently- but do they actually follow up on their word once the storm has passed? Don’t say something just to look good in front of the public, they will know if you mean it or not. I recommend giving weekly updates and using the power of social media to communicate to consumers about the progress your company makes as it works toward a solution. If 100 products have been tested, let the public know. There are enough resources available to you today to control the media and communicate your commitment to your consumers. It’s never more important than in a time of crisis to communicate and reassure the public that things will be alright.

Question:

Of the 5 lessons identified in this article, which one do you believe is the most important one for businesses to follow? (Select just one). Explain your answer and be specific.

Answer 1

I think that the lesson 5 which is "Take Action and Communicate" is the most important one for the businesses to follow.Taking action within the specified time duration is very crucial for the business as otherwise if it's something related to any new opportunity then not taking action on it, will pass on the first mover advantage to someone else. Businesses should work upon the changes and if they say about any changes to be made then they should actually follow up on that word. Also, communication is very effective tool for the success of a business, so I find communication equally important for businesses as taking action. Public/People should be aware of new products or may be any change in technology which different businesses are working upon. So here communication plays a very important role, as it's absence can hinder the growth of businessses.