Please read the article named

"Leadership Development at 3M:
New Process, NewTechniques, New Growth" which can be searched on the Internet

and answer the 2 questions:

1. The lessons that you have learnt

2. The implications for the leaders

Step 1: Create a new Java project called Lab5.5.

Step 2: Now create a new class called aDLLNode.
class aDLLNode {
aDLLNode prev;   
char data;   
aDLLNode next;

aDLLNode(char mydata) { // Constructor
data = mydata;
next = null;   
prev = null;   
}
};

Step 3: In the main() function of the driver class (Lab5.5), instantiate an object of type aDLLNode and print the content of its class
public static void main(String[] args) { System.out.println("-----------------------------------------");   
System.out.println("--------Create a new DLLNode-------");   
aDLLNode myDLLNode = new aDLLNode('A');   
System.out.println(myDLLNode.data);
System.out.println(myDLLNode.next);
System.out.println(myDLLNode.prev);
}
The above is an example of dynamically allocating an object of type “aDLLNode”. Once the object is created, we can use the “dot” notation to access and display its properties.

Step 4: Compile and run the program to make sure the above steps are working properly.

Step 5: Now create a new class called doubleLinkedList
class doubleLinkedList {
aDLLNode head, tail; //keep track of head, tail nodes
int size;
doubleLinkedList() { // Constructor
head = tail = null;
size = 0;
}
//-----------------------------------------------------
public void insert_at_beginning(char value) {

System.out.println("Attempting to Insert " + value + " at beginning ");
aDLLNode newNode = new aDLLNode(value); // create aNew node
if (size == 0) {
head = tail = newNode;
} else {
newNode.next = head;
head.prev = newNode;
head = newNode;
}
size++;
}

//-----------------------------------------------------
// Delete the first node with the value
// Five cases must be resolved:
// 1) The linked list is empty (head and tail = null)
// 2) The Linked list has one node and it is being deleted (head = tail)
// 3) The node pointed to by the Head is being deleted.
// 4) The node pointed to by the Tail is being deleted.
// 5) Some node in the middle (not the head or tail) is being deleted.
public void delete(char deleteValue) {
System.out.println("Attempting to Delete: " + deleteValue);
if (isEmpty()) { // Case 1
System.out.println("Linked List is empty, nothing to delete");
} else {
if (head == tail) { // Case 2, only one node (head and tail pointing to it)
if (head.data == deleteValue) {
head = tail = null;
size--;
}
} else {
if (head.data == deleteValue) { // Case 3, Head is being deleted.
head = head.next;
size--;
} else {
// Case 4 and 5, find the node to be deleted middle or end
boolean found = false;
aDLLNode deletePtr = head; // create a refe
if (deletePtr.data == deleteValue) {
found = true;
if (tail == deletePtr) { // Case 4
deletePtr.prev.next = deletePtr.next;
tail = deletePtr.prev;
} else { // Case 5
deletePtr.prev.next = deletePtr.next;
deletePtr.next.prev = deletePtr.prev;
}
deletePtr = null; // make deletePtr availabe to garbage collection
size--;
} else {
deletePtr = deletePtr.next;
}
}
if (found == false) {
System.out.println("Not able to find/delete " + deleteValue + " in the Doubly Linked List");
}
}
}
}
}
//-----------------------------------------------------
public boolean isEmpty() {
if (head == null) {
return (true);
} else {
return (false);
}
}
//-----------------------------------------------------
public void print_from_beginning() {
aDLLNode ptr;
ptr = head;
System.out.print("Printing: Head--> ");
while (ptr != null) {
System.out.print(ptr.data + " --> ");
ptr = ptr.next;
}
System.out.println("NULL / <--Tail " + "(Size = " + size + ")");
}
//-----------------------------------------------------
public int getSize() {
return (size);
}
//-----------------------------------------------------
public void freeAll() {
System.out.println("Freeing Doubly Linked List........ ");
aDLLNode freePtr = head;
while (head != null) {
head = head.next;
// the next two lines are unnecessary, but are included for
// illustration of how memory is freed up
//
freePtr = null; // make the node available for garbage collector
freePtr = head; // now let the freePtr to the new head
}
head = null;
size = 0;
}
}

Step 6: Compile and run the program to make sure the above steps are still working properly. The result should be still the same as Step 4.

Step 7: Now add the following code after the code in step 3 (in the main() function). The code below instantiates a doubly linked list
called “myDLL”, and then proceeds to call it’s method insert_at_beginning() several times.
doubleLinkedList myDLL = new doubleLinkedList();
System.out.println("-----------------------------------------");
System.out.println("--------Testing Insert_at_Begining-------");
myDLL.insert_at_beginning('A');
myDLL.insert_at_beginning('b');
myDLL.insert_at_beginning('C');
myDLL.insert_at_beginning('d');
myDLL.print_from_beginning();

Step 8: Compile and run the program.

Step 9: Now, let try running the insert_after() method of the doubleLinkedList class. Copy the following code and add it to the bottom of your main() function.
System.out.println("-----------------------------------------");
System.out.println("-----------Testing Insert_After----------");
myDLL.insert_after('8', 'C');
myDLL.print_from_beginning();
myDLL.insert_after('9', 'D');
myDLL.print_from_beginning();

Step 10: Compile and run the program.

Step 11: Now, let try running the delete() method of the doubleLinkedList class. Copy the following code and add it to the bottom of your main() function.
System.out.println("-----------------------------------------");
System.out.println("--------------Testing Delete-------------");
myDLL.print_from_beginning();
myDLL.delete('d');
myDLL.print_from_beginning();
myDLL.delete('A');
myDLL.print_from_beginning();
myDLL.delete('7');
myDLL.print_from_beginning();
myDLL.freeAll();
myDLL.delete('8');
myDLL.print_from_beginning();
myDLL.insert_at_beginning('8');
myDLL.insert_at_beginning('9');
myDLL.print_from_beginning();
myDLL.delete('8');
myDLL.print_from_beginning();

Step 12: Compile and run the program.

What to submit
The final source code after step 12.

For the following case study address the questions in details (no bullets)

1- What is the nature of the product quality problem faced by Mattel?

2- What organizational practices of Mattel contributed to the problem?

3 What can Mattel do to enhance product quality?

4- Which toys should be recalled? What should the recall strategy be?

MATTEL AND THE TOY RECALLS (A)1

Jay Leno aptly reflected the mood of U.S. consumers during the summer of 2007. Many Chinese-made goods, such as pet food, toothpaste, seafood, and tires, had been recalled in recent weeks. These recalls began lo severely erode the confidence of U.S. consumers in Chinese-made goods. On July 30, 2007, the senior executive team of Mattel, under the leadership of Bob Eckert, CEO, received reports that the surface paint on the Sarge Cars made in China contained lead in excess of U.S. federal regulations .2 It was certainly not good news for Mattel, which was about to recall 967,000 Chinese-made children's character toys, such as Dora, Elmo, and Big Bird, because of excess lead in the paint. Not surprisingly, the decision ahead was not only about whether to recall the Sarge Cars and other toys that might be unsafe, but also how to deal with the recall situation .

TOY INDUSTRY - OVERVIEW

The global toy market was estimated to be a $71 billion business in 2007 -an increase of about six per cent over the previous year .3 About 36 per cent of the global market was concentrated in North America (about $24 billion), but annual sales in this region were growing at a slower pace -about one per cent. European markets accounted for about 30 per cent of the global toy sales and were growing at about five per cent each year. ln contrast, the markets in Asia grew at 12 per cent in 2006, and were expected to grow by 25 per cent in 2007.4 A large part of this growth was expected to occur in China and India, whose burgeoning middle-classes were thriving on the double-digit economic growth in their countries.

The toy industry in the United States had a large nu mber of players . About 880 companies operated in the dolls, toys, and games manufacturing industry in 2002. This figure was about 10 per cent less than the 1 ,019 companies that operated in 1997. Approximately 70 per cent of the toy companies employed less than 20 persons.5 The industry was dominated by a few key players such as Mattel, Hasbro, RC2, JAAKS Pacific, Marvel, and Lego. The industry leaders were Mattel and Hasbro, whose combined sales in 2006 were about US$8 .7 billion . The sales of many other major players were under a billion dollars. Exhibit 1 contains key financial data of some major U.S. toy makers.

Big retailers like Wal -Mart and Target had become major players in the U.S. toy market. They not only sold the products of other toy companies such as Mallet, Hasbro, and Lego, but also sourced toys directly from China. These toys were often sold u nder their own brand names . For example, Wal -Mart sold toys under its Kid-Connection brand while Target sold toys under its PlayWonder brand.6 It was estimated that Wal -Mart accounted for about 25 per cent of the toy sales in the United States.7 As a result of the entry of big-box retailers in the toy industry, specialty toy retailers such as Toys'R'Us had steadily lost market share.8 The top five retailers sold about 60 per cent of all the toys sold in the United States.9

Toy markets i n the United States were categorized into multiple segments, such as Action Figures & Accessories, Arts & Crafts, Building Sets, Dolls, Games/Puzzles, f nfant/Preschool Toys, Youth Electronics, Outdoor & Sports Toys, and Plush Vehicles. Of these, the infant/preschool toy segment was the largest, followed by outdoor and sport toys, and dolls. These segments had largely remained stagnant over the years. As a result of kids getting old younger (KOOY), the only segment with noticeable growth was youth electronics. By contrast, video games tha.t were outside the traditional toy industry ha.d been experiencing remarkable growth. For segment-wise sales of toys in the United States, see Exhibit 2.

While the major markets for toys existed in the United States and Europe, production was concentrated in Asia, primarily China.. About 60 per cent of the toys sold in the world were made in China.. More than I 0,500 toy makers operated in China. 10 These companies typically had contacts with large Western toy companies. The toy companies in China formed a complex web of supply chains, with contractors themselves sub-contracting production of components.,and often, entire products to various companies .

TOY PRODUCTION IN CHINA

Over the years, U.S. toy companies shifted their production overseas and focused their domestic operations on product design, marketi ng, research and development, and other high-value activities . As a result, employment i.n the domestic toy industry declined from 42,300 workers in 1993 to 17,400 workers in 2005, while toy imports increa.sed.11 Approximately l 0 per cent of the demand for toys in the U .S. market was met by domestic production , while the rest was met through imports, primarily from China (see Exhibit 3).12

Chinese toy imports accounted for a full 86 per cent of toy imports to the United States in 2006, up dramatically from 41 per cent in 1992. The rise of China came at the expense of other toy exporting countries, whose combined share of toy imports to the United States plummeted from 59 per cent to 14 per cent during the same period. For instance, Japan remained a strong exporter of toys to the United States until a substantial drop around 2001. Despite its prox·imity to the United States, Mexico had not been able to sustain the up-tick it experienced in 2002. Further, Taiwan and Hong Kong toy exports had both been in decline for over a decade.

China's rising share of U.S. toy imports, and more generally, China 's position in the global toy industry, can be attributed to the lower cost business environment in China. China had attracted tremendous foreign direct investment and outsourcing of manufacturing operations . While analysts have often pointed to the phenomenal economic growth in China, they have also noted the resultant pressure on the physical, technical, and human resource infrastructures .13 These pressures. some analysts argue, have resulted in the Chi.nese manufacturers compromising on the product safety.

According to American regulators, tainted pet food imported from China was responsible for deaths of, or injuries to, about 4,000 cats and dogs. As a result, regulators initiated the biggest pet food recall in U.S. history. This was followed by worldwide recalls of Chinese toothpaste laced with anti-freeze called diethylene glycol, which was found to be responsible for nearly 200 deaths in Haiti and Panama. Shortly thereafter, Chinese-made tires were linked to two deaths in an accident in the United States and were recalled. The tires lacked a safety feature that prevented tire treads from splitting and falling apart.14 The spate of recalls of Chinese-made goods began to erode consumer confidence in products made in China .

TOY SAFETY

The safety of consumer goods in the United States is managed by four federal agencies: (i) the Food and Drug Administration (FDA) has jurisdiction over foods, drugs and cosmetics, (ii) the Department of Transportation oversees the safety of cars, trucks, motorcycles, and their accessories, such as tires and car seats, (iii) the Department of Treasury has jurisdiction over alcohol, tobacco and firearms, and (iv) the U.S. Consumer Product Safety Commission (CPSC) has jurisdiction over about 15,000 types of consumer products, from microwave ovens to cribs to lawn mowers .15

The safety of toys and other children's products falls within the jurisdiction of CPSC, which was created in 1972 by Congress in the Consumer Product Safety Act to "protect the public against unreasonable risks of injuries and deaths associated with consumer products ."In 2007, the CPSC had an operating budget of $66 million and a staff of 393 full-time equivalent employees . Its strategic goals for the year were to reduce deaths and injuries by fire hazards , carbon monoxide poisoning hazard, and hazards from children 's products .16 According to CPSC, 22 toy-related deaths and an estimated 220,500 toy-related injuries occurred in 2006.17 Based on its analysis, CPSC identified the Top Five Hidden Home Hazards. These hazards were listed 011 the CPSC website to make consumers aware of the hazards and avoid injuries due to them . In 2007, CPSC listed the following as the top hazards: magnets, recalled products , tip-overs, windows and covering, pool and spa drains.

The CPSC collects information about product safety issues from sources such as hospitals. doctors, newspaper reports, industry reports, consumer complaints, investigations conducted by its staff, and reports from companies. When a company becomes aware of hazards associated with the products it sold, it is required by law to immediately inform the CPSC. Based on the infomiation it received , CPSC worked in coordination with the companies involved to recall the hazardous products from the market. Exhibit 4 presents the number of toy recalls made by CPSC since 1988. Not surprisingly, the majority of recalls in recent years involved toys made in China. See Exhibit S for a list of the toys recalled in the United States since the beginning of 2007 . All the toys recalled, with one exception, were made in China. Seven of the recalls were a result of excess lead in the surface paint of the toys.

Lead in children's products poses a serious hazard because exposure to lead can affect almost every organ and system in the human body. Children exposed to h igh levels of lead can suffer from damage such as IQ deficits, attention deficit hyperactivity disorder, motor skills, and reaction time. Considering the damages that lead can cause to humans, particularly child ren, the U.S. government Limited the permissible amount of lead in products. Under the Consumer Safety Product Act 1972, lead in products accessible to children should not be greater than 600 parts per million (ppm).The standards for permissible lead in other products va1y depending on the usage and amount of lead in the product that is accessible.

Although lead use is banned or restricted in many developed countries, the same is not true for developing countries. In developed countries, the only source of lead exposure to children is from paint. In contrast, lead exposure in developing countries occurs due to lead gasoline, ceramics, mining, batteries, and even medication and cosmetics. Manufacturers use paint with a high percentage of lead because it is highly resistant to corrosion, extremely malleable, and has poor electrical conductivity. In addition, paint with higher lead is heavy and bright, making products such asjewelry more appealing to consumers.

While excess lead in toys and other children's products is an issue of concern, CPSC has identified another major hazard associated with small magnets in toys. Due to the availability of powerful rare-earth magnets at cheap prices. the manufacturers began to use them in many toys, such as building blocks and jewelry. On some of these products, the magnets came loose. If a child swallowed more than one magnet, they could attach to each other and cause intestinal perforations and blockage, which can be fatal. In April 2006, CPSC and Rose Art Industries recalled 3.8 million Magnetix magnetic building sets following the death of a 20-month-old boy after he swallowed magnets that twisted his small intestine and created a blockage. In addition, several other children required surgery and intensive care to remove the magnets they swallowed .18

Following the recall of Magnetix building sets, Rose Art Industries redesigned its building sets to cover the magnets and reinforced these with resins so that the magnets could not be detached from the building set. Further, they changed the age suita bility of their product to six years or older and provided new warnings about the dangers associated with ingesting magnets .19 The recall of Magnetix was followed by another five recalls of toys that contained small magnets that detached . One of those recalls involved 2.4 million Polly Pocket play sets (an additional 2 million sets were sold worldwide), which was prompted by 170 reports of magnets coming loose and three children who swallowed the magnets requiring surgical care.20 The Polly Pocket play sets, recalled on November 21, 2006, were made by Mattel and sold between May 2003 and September 2006.

MATTEL - THE N0.1 TOY MAKER IN THE WORLD

With a vision to provide "the world 's premier toy brands -today and tomorrow," Mattel "designs, manufactures, and markets a broad variety of toy products worldwide through sales to its customers and directly to consumers."2 1 Mattel's position as a leader in the global toy industry was so formidable that Mattel 's international business division, with gross sales of $ 2.7 billion in 2006, would be the industry 's third largest company, if it was a separate company, and Mattel 's U.S. business with $3.4 billion would still be No.1.22

Mattel was an industry leader not only by its sales, but also through its pioneering efforts to be a good corporate citizen . In 1996, Mattel initiated its Global Manufacturi ng Principles, which aimed to ensure responsible management practices used in Mattel's fuctories as well as by its vendors. Mattel's factories were audited by the lntemational Center for Corporate Accountability , an independent body, and its results made publicly available by Mattel. Mattel engaged in philanthropic activities through Mattel Children's Foundation in 37 countries. It was named one of the top J OO Best Corporate Citizens by CRO Magazine i n 2006. More saliently, Mattel's corporate governance received the highest global rating of I 0 by Governance Metrics International (GMJ), which placed the company among the top one per cent of more than 3,400 global companies.

The journey of Mattel, however, began modestly in 1944, when Harold Matson and Elliot Handler began to make toys out of a converted garage in California. They named the company Mattel, using letters from their last and first names. Matson sold his share to Elliot Handler and his wife, Ruth Handler, who incorporated the company in 1948. Mattel's first products were picture frames and doll house fumiture.23 Jts first big product was a mass-produced, and thus, inexpensive music box, which established Mattel firmly in the toy business . The introduction of Barbie in 1959,and Ken two years later, propelled company growth . The products introduced later, such as Hot Wheels, went further to establish Mattel's position as an industry leader. Mattel went pu blic in 1960.

Mattel 's products were organized in three different business groups:(i) Mattel Girls & Boys Brands, which includes brands like Barnie dolls and ac.cessories, Polly Pocket, Hot Wheels, Matchbox, Batman, CARS, and Superman. (ii) Fisher-Price Brands, consisting of brands such as Fisher-Price, Little People, Sesame Street, Dora the Explorer, Go-Diego-Go!, Winnie the Pooh, and Power Wheels. (iii) American Girl Brands , with brands such as Just Like You and Bitty Baby. In the United States alone, the sales of these three groups in 2006 were: Mattel Girls & Boys Brands -$1.57 billion, Fisher-Price Brands -$1.47 billion, and American Girl Brands -$0.44 billion. About 45 per cent of Mattel 's sales were accounted for by three major buyers: Wal-Mart, Toys'R'Us, and Target. In addition to its principal competitors, such as Hasbro and RC2, Mattel also competed with a large num ber of smaller companies that made toys, v ideo games, and consumer electronics, and pu blished children's books.

Jn the 1990s, Mattel made a num ber of significant acquisitions, including Fisher -Price (1993, leader in pre­ school segment), Kransco (1994, made battery-powered ride-on vehicles), Tyco (1997, made Tickle Me Elmo and Matchbox cars), Pleasant Company (1998, mail-order firm that made American Girl-brand books, dolls,and clothing), and Bluebird Toys (1998, made toys such as Polly Pocket and The Tiny Disney Collection). Mattel 's acquisition of The Learning Company, a leading educational software maker, in 1999 at a cost of $3.6 billion proved to be troublesome. The company lost money and was later sold. Mattel also made a hostile bid to acquire Hasbro, the second-largest toy company. This bid, made in 1996, failed to materialize .

The toy industry is different from other industries on two major counts. First, toy sales are seasonal. Most sales occurred during the third and last qua11er of the year, which coincide with the traditional holiday period. Second, there is a lot of uncertainty around new product success. It was difficult, almost impossible, to predict whether a particular toy would be liked by children . Not surprisingly, many companies in the toy industry made millions with one succ.essful toy and also went bankrupt with one big failure.

Over a long period, Mattel had managed the pecul iarities of the toy industries well with a num ber of innovative and often revolutionary ideas. Traditionally, the retailers promoted toys during the holiday season and toy manufacturers had little, if any, role to play. In 1955, Mattel tied up with ABC Television and sponsored a 15-minute segment of Walt Disney 's Mickey Mouse Club for one full year. At that time, Mattel 's revenues were only $5 million, but it paid $500,000 for the sponsorship. The sponsorship quickly established a continuous connection for Mattel with the kids and gave it an opportunity to influence the buying habits of its consumers. Not surprisingly, this move changed the nature of marketing in the toy industry. Also, for Mattel, it paved the way for further partnerships with entertainment companies to produce character toys.

Mattel entered into licensing agreements to make toys based on the characters owned by companies such as Disney, Warner Brothers, Viacom (Nickelodeon), Origin Products, and Sesame Workshop. These agreements gave the company access to characters such as Winnie the Pooh, Disney Princesses, CARS, Dora the Explorer, Go-Diego-Go!, Sponge Bob SquarePants, Polly Pocket, Batman, Superman, and Elmo. Jn 2005, Mattel partnered with Scholastic Entenainment to produce educational learning systems. Not only did l\llattel license characters, but also Iicensed some of its core brands to other non-toy companies to design and develop an array of products sporting the core brand names . These deals included Barbie eyewear for little girls (with REM Eyewear), Hot Wheels apparel and accessories (with lnnovo Group), Barbie video games (with Activision), and CD Players, teaming laptops, and MP3 players .

Recently , Mattel was trying to reduce its reliance o.n its big customers, such as Wal-Mart, Target, and Toys'R'Us, through internet and catalogue sales.24 Traditionally, toy companies relied on point-of-sale (POS) data to forecast demand for toys. With its Hot Wheels brand, Mattel realized that variety was the key driver of the sales and introduced a rolli ng mix strategy. This strategy involved changing the physical 72-car assortment mix by seven to eight per cent every two weeks. This changed the nature of its practices and instead of relying on POS data, Mattel only needed to design the varieties and supply an assortment pack to the retailer .25

Mattel designed and developed toys in its corporate headquarters . ln 2006, Mattel spent US$174 million on in-house product design and development. 111 contrast, the company spent US$261 million on royalties and US$65 J million on advertising. Mattel manufactured products in its own factories as well as through third­ party manufacturers. Also, it marketed the products purchased from unrelated companies that designed, developed, and manufactured those products .

Offshoring the Toy Production

Mattel 's principal manufacturing facitities were located in China, Indonesia, Thailand, Malaysia , and Mexico. It closed its last toy factory in the U.S., originally part of its fisher-Price divisions, in 2002 .26 Mattel produced its core brands, such as Barbie and Hot Wheels, in company-owned facilities , but used third-party manufacturers to produce its non-core brands. It used third-party manufacturers in a number of countries, including the United States, Mexico, Brazil, India, New Zealand, and Australia. This manufacturing mix minimized Mattel's risk and gave it focus and flexibility. The core brands were a staple business, while the non-core brands tended to be those products that were expected to have a short market life. The non-core brands were typically associated with popular movie characters and had a life of one year.21 The development of new toys was done at Mattel 's corporate headquarters. Outsourcing for the manufacturing of non-core brand toys followed a strict multi-step process . The design teams created a bid package containing the new product's blueprint and engineering specifications. It often contained a physical model. After the selection of a vendor, the company established the vendor's production infrastructure. At this point, Mattel assumed responsibility for the cost of tooling. The vendor then produced 50 units as "First Shots"to verify if any tool modifications were required.This was followed by one or more "Engineering Pilot," depending on the toy's complexity, and the "Final Engineering Pilot." After this, a "Production Pilot'' of 1,000 units was run using the entire assembly line to run the product. Finally, the"Production Start''phase began only when the new toy met design compliance .28

Mattel and its vendors manufactured about 800 million products each year. Approximately half of the toys Mattel sold were made in its own plants, a higher proportion than other large toy makers . Also, Mattel made a larger percentage of its toys outside China than other large toy companies. Mattel 's manufacturing and offshoring strategy was developed over a period of five decades. The company made its first Barbie doll in Asia in 1959. Since then , Mattel managed the risks of offshored operations by employing a mix of company-owned and vendor-owned manufacturing facilities all over Asia .

In China alone, Mattel had contracts with approximately 37 principal vendors who made toys for the company.29 The principal vendors further used smaller companies for the full or pa11ial production of toys. As a result, the supply chains in China were long and complex. According to some estimates , about 3,000 Chinese companies made Mattel products .30 However, Mattel had direct contact only with the principal vendors.

A RECALL UNDERWAY

In June 2007, a French direct importer of Mattel 's products , Auchan, performed pre-shipment tests with the help of Intertek, an independent laboratory. These tests revealed that Mattel's toys, made by vendor Lee Der Industrial Company, contained lead above permissible limits. lntertek sent the test results, on June 8, 2007, to Mattel employees in China. Consequently, Mattel employees contacted Lee Der instructing it to correct the problem and provide another sample for testing. Another test by Intertek on June 29, for Auchan, on the same toy produced by Lee Der had passed the test.

On June 27, 2007, Mattel 's call center in the United States received a report from a consumer, who informed them that a home test kit found excessive lead in Mattel 's toys. These were also manufactured by Lee Der. Following this, Mattel tested five samples of Lee Der toys and found on July 6 that three of them contained excess lead. As the testing was underway, Auchan informed Mattel on July 3 about lead violations in another toy made by Lee Der. As soon as the test results were out, Mattel employees in China notified Lee Der and stopped accepting products made by Lee Der. Further tests on the toy samples collected from Lee Der were conducted on July 9 in Mattel's own laboratories, which revealed that nine of the 23 samples of Lee Der toys contained excess lead :in surface paint.

Mattel 's employees in China notified the senior management team at corporate headquarters on July 12 about the issues with Lee Der products . Following this, Mattel management ordered an immediate suspension of all shipments of products made by Lee Der. Further investigatio11s by Mattel revealed that the nonconformi ng lead levels were because of a yellow pigment in paint used on portions of toys manufactured by Lee Der.31

Lee Der Industrial Company was located in Foshan City of Guangdong Province, where thousands of small toy factories existed. The company was founded by two Chinese entrepreneurs, Cheng Shu-hung and Xie Yuguang. Mattel first used Lee Der for making a small batch of educational toys in 1993. By July 2007, Lee Der employed approximately 2,500 people and made toys almost exclusively for Mattel. With annual sales of about $25 million, Lee Der was about to open a new $5 million plant.32

Lee Der had purchased its paint from Dongxing New Energy Co.since 2003. The owner of Dongxing was a good friend of Cheng Shu-bung. In April 2007, D011gxing ran out of yellow pigment and sourced about 330 pounds of it for $1,250 from Dongguan Zhongxin Toner Powder Factory . Then, Dongxing supplied the paint to Lee Der, which used it in Mattel 's toys. Initial reports suggested that Dongguan Zhongxin Toner Powder Factory was fake and that its owners were not traceable.33

An essential component of Mattel 's contracts with its vendors is that the products made by vendors comply with applicable safety standards . Mattel had systems that required the vendors to either purchase paint from a list of eight certified vendors in China or test for compliance each batch of the pai nt purchased from a non-certified vendor . Mattel also conducted audits of certified paint suppliers and vendors to ensure that Mattel 's requirements were being followed.The frequency of audits depended on Mattel 's prior experience with the suppliers and vendors.

Following its investigations, Mattel filed an initial report with the CPSC on July 20 and followed it up with another on July 26, indicating that it would like to is·sue a recall of all the products manufacnired by Lee Der between April 19, 2007 (the date when Lee Der took delivery of the lead-tainted paint from its supplier), and July 6, 2007, the date when Mattel stopped accepting products from Lee Der.34 Work on this recall was underway and Mattel and the CPSC were scheduled to announce the recall on August 2, 2007. See Exhibit 6 for the press release announcing the recall expected to be issued by the CPSC. Mattel had already informed big retailers such as Wal-Mart and Toys 'R'Us of the impending recall. The retailers pulled the toys off their shelves and flagged the cash registers so that customers could not buy the toys from the stores.35

ANOTHER INSTANCE OF LEAD AND FURTHER REPORTS OF LOOSE MAGNETS

While Mattel was prepari ng to announce its recall, on July 30, 2007, it found that paint on Sarge cars contained excess lead. The Sarge cars were made for Mattel by Early Light Industrial Company, Ltd. of Hong Kong, which made them in its manufacturing facility located in Pinghu, China.36 Early Light had supplied toys to Mattel for 20 years.37 Only further investigation would be able to clarify where exactly in the supply chain the problem originated, and why . Initial reports indicated that approximately 250,000 Sarge cars made between May 2007 and August 2007 may have been affected with lead paint.

After the November 2006 recall of eight different Polly Pocket play sets made in China for the problem of magnets coming loose, Mattel reinforced the magnets. by locking them in the toys rather than gluing them. Nonetheless, in recent months, Mattel had received a few hundred reports of magnets coming loose from a number of play sets sold before Novem ber 2006. The play sets affected with magnet problems were: (i) fifty additional models of Polly Pocket play sets (about five million of these play sets were sold between March 2003 and November 2006), (ii) Batman and One Piece action figures (about 350,000 toys sold between June 2006 and June 2007), (iii) Barbie and Tamier play sets (about 683,000 toys sold between May 2006 - July, 2007), and (iv) Doggie Day Care play sets (about one million sold between July 2004 and July 2007).

Recalls are a nightmare to companies for several reasons. First, the recalls pose major logistics challenges as the company needs to establish a set-up to handle the recalls . Second, the company has to deal with regulators who tend to push the company to ensure that not only a recall is issued, but the products in consumers' hands are actually returned to the company. Third, recalls are often viewed as an admission of guilt and open the company to consumer litigations. Finally, recalls damage the reputation of the company and result in increased costs, lost sales, and stock price erosion.

Mattel and Fisher Price were not new to recalls. In their long history, they had recalled products in the past (see Exhibit 7). Nevertheless, the current situation seemed entirely new, complex, and challenging. It was not clear if and which products needed to be recalled . As importantly, how could the company minimize the negative consequences that were germane to any product recall? Finally, how could the company ensure such recalls did not recur?

# 7: How to Fix the Great American Growth Machine

What seems to be Alan Greenspan's thesis toward achieving sustained economic growth?

Imagine that a version of the World Economic Forum was held in Davos four centuries ago. From across the globe, the great and the good of 1618 gather in the Alpine village: Chinese scholars in their silk robes, British adventurers in their doublets and jerkins, Turkish civil servants in their turbans and caftans. They have come together to discuss the great question of who will dominate the centuries ahead.

The Chinese point to their superb civil service and mighty navy. A Turk boasts that the Ottoman Empire is expanding westward and will soon hold Europe in the palm of its hand. A plucky Briton argues that his tiny country has broken with the corrupt, ossified continent and is developing dynamic new institutions, including a powerful parliament and a new sort of organization, the chartered corporation, which can trade all over the world. Yet in the entire discussion one region goes unmentioned: North America.

Four hundred years ago, North America was little more than an empty space on the map -- an afterthought in educated minds and a sideshow in European great-power politics. The entire continent produced less wealth than the smallest German principality.

Today, the United States has the most powerful economy in the world: With less than 5% of the world's population, it still accounts for almost a quarter of global GDP. America has the world's highest standard of living apart from a handful of countries with small populations, such as Qatar and Norway. It also dominates the industries that are inventing the future -- intelligent robots, driverless cars, life-extending drugs. The fact that 15 of the world's top 20 universities are based in the U.S., according to the QS World University Ranking, suggests that it is well-placed to dominate the ideas economy.

The rise of the U.S. to economic greatness is an extraordinary story. But it is a story with a sting in the tail. Productivity growth in the U.S. has all but stalled in recent years. The number of new companies being created has reached a modern low. Geographical mobility has been in decline for three decades. Economists worry that America's potential rate of growth -- the pace at which annual output can expand without pushing up inflation -- is also falling.

Why did America become the world's greatest economy? Why has it lost its momentum in recent years? And what light can history throw on the question of whether the U.S. can be as successful in the future as it was in the past?

The key to America's success lies in its unique toleration for "creative destruction," the destabilizing force described by the economist Joseph Schumpeter in 1942. Creative destruction reallocates society's resources from less productive pursuits to more productive ones -- from spinning jennies to factories, for example, or from horse-and-buggies to motorcars.

A range of things, from geography to political culture, have contributed to this enduring preference for change over stability. Consider the sheer size of the U.S., which has allowed it to suck in millions of immigrants and construct continent-spanning companies. It has also allowed the country to shift relatively easily from one industry to another. In Britain, railroads had to make strange loops to avoid ancient settlements. In America, they could carve a straight line from "Nowhere-in-Particular to Nowhere at All," as the Times of London put it in 1874. The U.S. has sometimes paid a heavy price, both aesthetically and economically, for rapid development, but unlike its European peers, it has avoided chronic stagnation.

There is also the fact that the U.S. was the first country to be born in the modern world of growth and perpetual change. The War of Independence began a year before the publication of the greatest work of free-market economics ever written, Adam Smith's "The Wealth of Nations" (1776). For most of recorded history, people had inhabited a society that was static and predictable. Smith advanced a vision of society in which the market transformed the pursuit of individual self-interest into the creation of universal progress. Many European countries took generations to come to terms with this insight (some still haven't). America was born dynamic.

But size and newness are not enough on their own, or else Brazil would be an economic colossus. The U.S. possessed two secret ingredients that turned it into a growth machine.

The first is its entrepreneurial culture. Americans admire business people in the same way that the English admire gentlemen and the French admire intellectuals. Americans are more inclined to found companies than the people of other countries and are also better at turning small companies into giant ones. The U.S. was the first country to make it easy to create companies without going cap in hand to local bureaucrats who had a right to tell them what to do.

This spirit of entrepreneurship was built into the country's DNA. The U.S. was founded by settlers who wanted to escape from the restrictions of Europe's ancient regime: Puritans who wanted to escape from the grip of established churches, younger sons who wanted to escape from the consequences of primogeniture, adventurers who wanted to escape from closed societies.

A striking proportion of America's entrepreneurial heroes have been immigrants or the children of immigrants. Alexander Graham Bell and Andrew Carnegie were born in Scotland. Andy Grove and Sergey Brin were born, respectively, in Hungary and the Soviet Union.

The U.S. has also benefited enormously from its founding political structure. The Constitution, written in 1787 and ratified in 1788, did its best to constrain the ability of politicians to interfere in the economy. It limits the reach of the federal government by guaranteeing the rights of citizens, not least the right to property, and by dividing power among its branches and with the states. Though governmental powers to tax and regulate have grown enormously over the past century, they remain a world apart from the state control that has long prevailed among America's chief rivals.

The most remarkable period of creative destruction in U.S. history was the era from 1865 to 1900, when government confined itself to providing a stable environment for growth. Titans such as Carnegie and John D. Rockefeller built the world's biggest and most efficient companies. Railway barons knitted a continent together into the world's biggest single market.

Though this great revolution was sometimes brutal, it laid the foundations of an era of mass prosperity. Carnegie and Rockefeller reduced the price of steel and oil by almost 90%. R.H. Macy sold "goods suitable for the millionaire at prices in reach of the millions." Henry Ford trumpeted the Model-T as "a car for the common man." Their efforts gave Americans a richer diet than their European contemporaries and earlier access to innovations such as electric lights, telephones and cars.

As for the travails of today's economy, much of it has to do with a retreat from the dynamism of the past. The Economist recently found that more than three-quarters of America's major economic sectors have seen a decline in competition, with the top handful of firms taking an increasing market share. In 1980, according to the Census Bureau, one in eight companies had been founded in the past year; in 2015 (the last year for good data), the ratio had fallen to fewer than one in 12.

The financial crisis of 2007-2008 showed creative destruction at its worst. The combination of fear and herd behavior led people to overreact to bad news and to plunge economies into self-reinforcing cycles of decline. Nor did the federal government's heavy-handed regulatory response to the crisis help matters.

Fiscal policy has also hurt the economy. The growth of entitlements such as Social Security and Medicare has crowded out the funding of long-term investment in the private sector and in crucial infrastructure such as roads and airports. Millions of baby boomers are retiring and starting to receive benefits while still quite capable of being productive. In 1965, entitlement spending amounted to 5% of GDP. Today it stands at 14% and is projected to increase still more as the baby boomers retire.

The relative economic stagnation of the past decade has had serious political consequences, breeding discontent and dysfunction in both parties. While President Donald Trump imposes growth-restricting tariffs and bullies errant companies, Democrats embrace ever more interventionist plans to make companies embrace "social purposes."

The threats now facing the U.S. are bigger than in the past. For the first time in its history, the country confronts, in China, an economic power that is even more populous than itself. But America still has a chance to solve its problems, not least because it continues to have a unique genius for business.

The most important item on an agenda for reform is to address the fragility in the American financial system exposed by the financial crisis. Financial institutions play a vital role in allocating society's savings to fund new ideas and new businesses. Consider how venture capitalists have funded Silicon Valley startups, persuading investors to take long-term risks in return for a stake in a potential breakthrough company.

But too many recent financial innovations have been problematic, not least because they are so sophisticated that even senior bankers don't fully understand them. They have increased risk by encouraging financiers to package and sell questionable products, such as subprime mortgages. They have also encouraged financiers to become rent-seekers, more interested in serving their own interests than those of the economy as a whole.

In the wake of the crisis, the federal government passed the monstrously complicated Dodd-Frank Act, which tried to reduce risk in the financial system through regulation. A better approach would have been to focus on the amount of capital that banks are required to hold in order to operate. In the run-up to the crisis, banks on average kept about 8 to 10% of their assets as equity capital. If regulators had forced them to keep 25%, or better still 30%, it would have radically reduced the probability of contagious defaults -- the root of all financial crises. Today, despite Dodd Frank, they've only increased it to a little over 11%.

Such a move would greatly increase overall confidence in the financial system. It would allow lawmakers and regulators to repeal the bank-related provisions in the Dodd-Frank leviathan with a clear conscience because any bank losses would be absorbed by shareholders rather than by taxpayers. It would also allow them to focus their energies where they are best employed, in stamping out fraud.

The usual objection to increasing capital requirements is that it would suppress banks' earnings and therefore their ability to lend. But a look at history says otherwise. From 1870 to 2017, with rare exceptions, the net income of commercial banks as a percentage of their equity capital fluctuated within a narrow range of 5% to 10% a year, regardless of the size of their capital buffers. This suggests that a gradual rise in banks' mandated amount of capital would not damage their rate of return or their ability to lend.

A second crucial reform would be to get entitlement spending under control. Putting the system on a more sustainable footing could be done by raising the retirement age by a couple of years, indexing it to life expectancy so that the problem doesn't keep cropping up -- and more importantly, in the longer term, shifting from a system of defined benefits to one of defined contributions, as Sweden accomplished in the 1990s.

Such reforms would assure long-term solvency, release more savings for productive investment and bring down the federal budget deficit. Nor would the reforms impose great suffering on America's retiring baby boomers. The retirement age was fixed in 1935, when the system was set up, at a time when life expectancy was much shorter.

America's problems, in short, are problems of poor policy-making rather than of senescent technology or a lack of entrepreneurial drive. This does not mean that they are insignificant. Unless the U.S. changes course, its economy will continue to flag, holding out the unhappy prospect of a self-reinforcing cycle of low growth and populist rage.

Some economists think that the U.S. is mired in a swamp of low growth. We prefer to think that it is trapped in an iron cage of its own making. Out-of-control entitlements and ill-considered regulations are condemning the economy to perform well below its potential. Swamps by their nature are very difficult to escape. Cages can be opened, provided that you have the right keys -- and are willing to turn them.

QBO

What steps need to be followed to add a new product or service?

What steps need to be followed to record a new sales receipt?

What steps need to be followed to record a new invoice?

What steps need to be followed to record a new payment from a customer?

What steps need to be followed to record a new deposit to the bank?

What steps need to be followed to record a new product and adding a new service?

What is the differences between adding a new product and a sales receipt and a sales invoice?

Consider the following independent situations, all of which apply to audits of entities for the year ending 31 December 20X7:

(i) Slipway Limited, a listed company, has been experiencing declining sales over the last 2 years. Cost cutting has proved difficult due to the high level of imported machinery used in Slipway’s operations and consequently margins have been falling. While the bankers are presently happy to continue providing Slipway with loan facilities, they do expect to see improved results in the next financial report. Articles about Slipway’s expected financial results appearing in recent press reports all had quite a pessimistic tone.

(ii) Discount Foods Limited is a large supermarket chain with offices in all capital cities around Australia. Until 30 June 20X7 data processing relating to payroll transactions will be carried out in each capital city by an independent computer service bureau. \

(iii) Getaway Pty. Limited is a long established firm which has been operating a boutique hotel in the Blue Mountains for over 20 years. During this time, it has adopted a conservative business strategy that has seen it produce adequate, though slightly unimpressive, results. A new CEO has been appointed to run the firm from 1 September 20X7. He has already released his plans for renovating the hotel, despite not officially serving as CEO yet. You have also heard him discuss the implementation of a new marketing strategy to boost occupancy rates.

(iv) Angora Pty. Limited is a small primary producer specializing in the production of angora wool. Angora’s recent display at a trade show has seen orders flood in from overseas buyers. The accountant, Michael, has done his best to satisfy the orders as quickly as possible while maintaining the appropriate (foreign currency) accounting records. However, from some of the questions he has been asking you, you suspect he is out of his depth.

(v) Kings Pty. Limited has been manufacturing uniforms for the Australian market for the last 40 years. The government’s recent tariff reduction policy has placed Kings in direct competition with cheaper uniforms manufactured overseas. In a bid to retain market share, Kings has been selling part of its school uniform range at less than cost. However, overall profit figures remain buoyant.

Required: For each of the above independent situations describe the overall impact on audit risk and identify the specific component(s) of audit risk affected.

Offer #1 From Barbara: $350,000

1/2 as equity for 15% of the company

1/2 as a loan

Offer #2 From Lori: $350,000

All the dollars for 10 Equity

$2 royalty for each can of product sold

1.) Analyze/assess quantitative (numbers #) to help make the investment decision in order to better understand how each offer would generally (I know you do not have the full financial information yet) impact the financial statements of the organization initially and over time,

• Offer #1 from Barbara
  • list one (1) impact and one (1) account for the Income Statement AND one (1) impact and one (1) account for the Balance Sheet
• Offer #1 from Lori
  • list one (1) impact and one (1) account for the Income Statement AND one (1) impact and one (1) account for the Balance Sheet

Example - an impact to the Income Statement could be increased sales, which will impact the revenue account. An impact to the Balance Sheet could be increased cash, which would impact the cash account. (Do not Reuse either of these examples)

2.) Consider qualitative information about investors and recommend which offer to accept (I know you do not have the full financial information yet).

Barbara Corcoran's credits include straight D's in high school and college and 20 jobs by the time she turned 23. It was her next job that would make her one of the most successful entrepreneurs in the country: She borrowed $1,000 and quit her job as a waitress to start a tiny real estate company in New York City. Over the next 25 years Barbara would transform that $1,000 loan into a $5 billion real estate business, building the largest and best-known brand in the business.

Lori Greiner started with one idea and turned it into a multi-million-dollar international brand. She is regarded as one of the most prolific inventors of retail products, having created over 500 products, and currently holds over 120 U.S. and international patents. Lori can tell instantly if a product is a "hero or a zero," and this is clearly shown through her many thriving investments and a 90% success rate on her new items launched. She's also well known for her impeccable negotiating skills and her uncanny ability to know and identify emerging brands and invest in them.

• Which offer are you recommending - Lori or Barbara?
• Why? Provide at least one (1) reason why you are recommending this offer.

Founding fathers and international mergers of Big Four audit firms.

In 1990 Deloitte Touche Tohmatsu was created following a number of earlier mergers. In 2003 the names of Touche and Tohmatsu were dropped, leaving Deloitte as the firm’s full name. Deloitte was established by three founders: William Welch Deloitte, George Touche and Admiral Nobuzo Tohmatsu.

In 1845, at the age of 25, W.W. Deloitte opened his own office opposite the Bankruptcy Court in Basinghall Street, London. At that time three Companies Acts created joint-stock companies, laying the foundation for modern company structures. Deloitte made his name with the industry of the day – the railways – and in 1849 the Great Western Railway appointed Deloitte the first independent auditor in that industry. He discovered frauds on the Great North Railway, invented a system for railway accounts that protected investors from mismanagement of funds, and was to become the grand old man of the profession. As president of the newly created Institute of Chartered Accountants, Deloitte found a site for its headquarters in 1888. In 1893 he opened offices in the USA.

Financial disasters in the new and booming investment trust business in the England gave George Touche his business opportunity. His reputation for flair, integrity, and expertise brought him a huge amount of work setting these trusts on the straight and narrow. A similar flair for saving doomed businesses from disaster and restructuring them led to the formation of George A. Touche & Co. in 1899. In 1900, along with John Niven, the son of his original Edinburgh accounting mentor, Touche set up the firm of Touche, Niven & Co. in New York. Offices spread across the USA and Canada and were soon attracting clients like R.H. Macy, a large US nationwide department store. In the UK, General Electric Company was an important client and still is. Meanwhile Touche himself took his reputation for probity and ran for public election in England and became MP for North Islington, England in 1910, and was knighted in 1917. He died in 1935.

After Tohmatsu qualified as a certified public accountant at the age of 57 in 1952, he became a partner in a foreign-affiliated accounting firm and a director of a private corporation. In 1967, he became president of the Japanese Institute of Certified Public Accountants. In the 1960s, the Japanese government wanted to see national audit corporations established, and Tohmatsu asked Iwao Tomita, a former student and a graduate of the Wharton School in Chicago, to respond to that challenge. In May of 1968, Tohmatsu & Co. (formerly Tohmatsu Awoki & Co.) was incorporated.

Question: What events and circumstances contributed to the growth and international scope of Deloitte’s operations?

Financial Accounting Journal Entry Cumulative Study Guide  

Find out all the journal entries for the transactions listed below.

1.The company issued shares of common stock in exchange for cash

2. Purchased office supplies on credit.

3. Purchased office equipment paying part in cash and signed a 30-day, note payable for the remiander.

4. Performed services and received cash from customer.

5 Paid cash in cash for the current month's rent.

6 Paid cash on account for office supplies purchased prior.

7 Received a bill for advertising for the current month. Payment will be made next month.

8 Hired a new employee who will begin working next month at a salary paid per month.

9 Billed customer for services performed.

10 Received cash in advance for work to be done next month.

11 Paid cash for a one-year insurance policy

12 Received cash from customer in partial payment for billing on account in transaction 9.

13 Performed but not billed customers for services performed

14 Purchase of a three-month insurance policy for cash.

15 Accrued interest on a long-term Note Payable. Monthly interest is accrued at an annual rate of 6%.

16 The company purchased a new copier at the beginning of the month for cash. The copier will depreciate per year. Depreciation Adjusting Entry is:

17 The company accepted a deposit of cash for work to be done over a six-month period.

18 The Supplies account has a balance of $1,005 An inventory of supplies at the end of March shows supplies with a cost of $275 on hand.

19 Salaries owed to employees at the end of the March total $3,400. The salaries will be paid on April 3.

20 Closing Entry for Year End

21 Purchased desks on account, terms 1/10, n/30.

22 Purchased desks for cash

23 Received credit for the return of 2 desks purchased that were defective.

24 Sold 12 desks on account terms 2/10, n/30.

25 Sold 12 Desks for cash

26 Paid cash for freight purchsed in 21 Stockholders’ Equity Retained Earnings

27 Paid cash for frieght sold in 25

28 Issued a credit to School for the return of 1 desk which is in usable condition and will be returned to stock.

29 Made Payment in full for purchased desks without discount

30 Made Payment in full for purchased desks with discount

31 Received payment in full for desks sold without discount

32 Received payment in full for desks sold with discount

33 Recording estimated uncollectibles;

34 Write-off of an uncollectible account:

35 Collection of an account after write-off:

Match the correct term that best describes the situations/sentences below.

Terms:

Sentences:

1. Sally’s Fruit store sells all types of fruit and is open from 9 am to 11 pm. Sally Single puts in a full day there.   #____

2. Farah became the first female CEO of Concepts Inc. #___

3. Monty reviewed all of the audited statements of the accounting firm. He took his responsibilities seriously, and acted in good faith, putting the interests of the company first. #___

4. Ben Fuller and Thomas Claudio have leased a studio to open up a dance school. They hope to attract students for the lessons they plan to sell. #_____

5. ABC Inc. is owned by many different shareholders as its shares on sold on the stock exchang #_____

6. The firm of Jane, Bing and Mary LLP recently rented space in a new building. #_____

7. Joe Fayed has decided to invest in the firm of Dottie, Glass and Eame. He will contribute $100,000 and he hopes that the new venture the firm is going into will be successful. He will not be offering any advice, nor take part in the management of the firm. #_____

8. Jill and Jenny were equal partners. Their ice-cream store didn’t do well and the bank loan went into default. The bank collected the entire amount from Jill. #_____

1. Sharon’s Flower shop Inc. went bankrupt. The only shareholder was Sharon. Sharon’s assets were not used to pay any creditors. #_____

10. Minh entered into an agreement with Felice to authorize Felice to sell Minh’s art paintings on his behalf. #_____

11. Jennifer was often seen in Fred’s Books, helping the owner. She often gave advice or answered the phone. When deliveries were made, Jennifer was often asked to sign. #_____

12. Bill thought that his model for running a convenience store was good. He thought others would be interested in opening similar such stores, using his know-how and trademark. #_____

13. If Zeus wanted to take his company public, he would need to do a number of things including filing one of these. #_____

14. Joe can show that he did everything reasonable in the circumstances to prevent the offence from occurring. #_____