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Introduction....................................................................................1
Purpose of the Case Study.............................................................2
Overall Synopsis of the Case.........................................................2
Teaching Components....................................................................3
4.1 Assignments and Activities.....................................................3
4.2 Relevant Theories....................................................................3
Situational Crisis Communication Theory (SCCT).........3
Issues Management Principles.........................................4
4.3 Mattel Teaching Points: SCCT...............................................5
Application of Theory.....................................................5
Discussion Question........................................................5
4.4 Mattel Teaching Points: Issues Management.........................6
Application of Theory.....................................................6
Discussion Questions.......................................................6
1. INTRODUCTION:
Quality control and product safety are key challenges for companies that
manufacture in third-world countries. In the event of a safety or quality control crisis,
corporations must respond quickly and efficiently using clear crisis communication and
image repair strategies. By studying the Mattel recall case, we see how a multinational
corporation restored its reputation amongst multiple stakeholders; it also implemented
policies and processes to divert or lessen future crises. The lessons learned from Mattel
demonstrate the importance of transparent communication practices and may guide
companies facing similar communication challenges.
The teaching notes will firstly introduce the purpose of the Mattel case study,
followed by a brief synopsis. Students will next learn relevant theories and principles
from which to understand Mattel's corporate communication response, particularly
strategic crisis communication theory (SCCT) and issues management principles.
Students will then compare Mattel's communication response to the industry best practice
principles as outlined by Page and suggest a revised, more suitable and effective course
of action.
4. TEACHING COMPONENTS:
4.1 Assignments, Activities and Study Materials:
Students will read the case before class. They will browse Mattel's website,
paying particular attention to the recall page (http://service.mattel.com/us/recall.asp) and
the Investors and Media pages (http://www.shareholder.com/mattel/default.cfm). They
should review Mattel's history, financial information, corporate governance documents
and social responsibility pages. For additional information, students should visit toy
industry websites such as Toy Industry Association (www.toy-tia.org) or consumer action
group sites like Healthy Toys (www.healthtoys.org). Students should carefully read the
news releases in the case appendix.
4.2 Relevant Theories:
Students must understand the key theories informing Mattel's crisis and response
strategies.
Situational Crisis Communication Theory (SCCT):
SCCT posits that each unique crisis requires a unique response tailored to the events
and characteristics at hand. It is based on convergent research from Coombs, Benoit,
Benson and Hearit that aims to minimize or deflect all possible negative outcomes such
as lost sales or low stock prices.1
In order to determine the best strategy, corporate communicators must assess the
reputational threat of the crisis. This is a two-step process. The first step is to determine
the nature of the crisis. There are three types:
Type 1. Victim Cluster (mild reputational threat, the company is an innocent victim)
a. Natural disasters
b. Rumors
c. Workplace violence
d. Product tampering
Type 2: Accidental Cluster (moderate reputational threat, the company is responsible
for the crisis, but the actions leading up to it were unintentional)
a. Challenges from stakeholders
b. Mega-environmental-damage from an accident
c. Technical breakdown accidents
d. Technical breakdown recalls
Type 3. Preventable Cluster (severe reputational threat, company knew it was placing
stakeholders at risk and violated laws)
a. Human breakdown accidents
b. Human breakdown recalls
customers. In the future, Mattel can improve by allocating more resources to the
implementation of creative rebuilding tactics.
4.4 Mattel Teaching Points: Issues Management:
Application of Theory: For Mattel, maintaining tight quality control in its overseas
factories remains a crucial issue that, if not properly addressed, could damage the bottom
line, its reputation, and children's health and safety. Environmental scanning would
clearly identify this as a current issue for two reasons: recalls have existed as a toy
company shortcoming for decades; as companies move manufacturing abroad, the media,
lobbyists and consumer groups have focused increasing attention on quality control. In
fact, 60 percent of the recalls in 2007 were of products manufactured in China.8
Discussion Questions:
Has this issue been building over a long period of time?
Product safety and quality control is not a new issue. Mattel has had 36 recalls
since 1998; one was the high profile Power Wheels recall. Lead paint contamination has
attracted much attention over the years, with some watchdogs dedicated almost entirely
to it.i In addition, the U.S. government, private corporations, consumer groups and
consumer themselves have for years been concerned about low quality, cheap goods
coming out of China. The melamine pet food and toothpaste contamination crises in
spring 2007 heightened concern over food and drugs manufactured in China,9 while back
in 2004 dozens of Chinese babies died from consuming fake baby formula manufactured
by Chinese companies.10
To avoid repeat recalls, how should Mattel handle outsourcing issues? How should it
manage Chinese suppliers and contractors?
Experts claim it is practically impossible to monitor every supplier or test every
layer of paint that goes onto a toy. But Mattel must still ensure that it is doing everything
within its power. For example, Mattel can allocate more monetary and human resources
to the safety inspection process: it can build more testing sites, hire more staff to conduct
more frequent tests, and hire more third-party organizations to conduct tests. Secondly, in
order to improve communication between suppliers, manufacturers and home base,
Mattel should assign teams of American communications representatives to its Chinese
factories. Their main responsibilities should include meeting regularly with supplier
heads, conducting surprise audits, and ensuring that American directives are carried out.
These representatives should speak the local language and have prior work experience in
China. Third, Mattel should lobby for federal legislation that would subject importers to
tighter standards and inspections conducted by a third-party organization like the CPSC.
i www.esainc.com, www.madeinusaforchristmas.com
6
Secondly, Mattel should not neglect its shopkeepers and retailers. These publics can
stem the spread of misinformation during a recall. For example, parents have direct faceto-face contact with shopkeepers and are likely to ask them about toy safety. Shopkeepers
and retailers should be equipped to provide comprehensive, accurate answers. Mattel
should better communicate with these key publics and address any needs or
troubleshooting difficulties they encounter during a recall.
4. Manage for Tomorrow
There are many ways for Mattel to actively plan for tomorrow. For one, Mattel should
anticipate future crises by scanning domestic and international consumer watch groups
and industry websites. Mattel should understand both its domestic and international
markets and be ready to circumvent any product-safety related issues that are brewing.
Mattel should ensure that each country receives products held to the same safety
standards; sub-standard products should not be dumped on developing markets. It should
generate goodwill with its international customers, but understand the cultural nuances
necessary to do this properly. For example, Mattel's apology to Chinese consumers
backfired because it failed to anticipate that the Chinese government, in order to save
face internationally, would exaggerate and frame the apology in its own favor.
Additionally, Mattel should ensure that every single one of its factories worldwide
implements the new three-step safety check process. A recent Canadian study found that,
compared to China, toy factories in other developing countries actually have higher recall
rates in proportion to production capacity.12 Thirdly, another finding states that design
flaws are more common, and therefore more dangerous, than lead paint. Paul Beamish, a
professor at Richard Ivey School of Business who worked on the study, noted that,
"design quality improvement requires the investment of additional resources... design
quality is usually compromised when a new fad item is rushed to the market." Mattel
could capitalize early by investing more resources into its design department.
5. Conduct Public Relations as if the Whole Company Depends on It
Mattel's public relations functions are headed up by a vice president of
communications and further divided into corporate communications, investor relations,
consumer relations and brand public relations. An in-house communications team
consisting of 10 people oversaw all communication during the recalls. To maximize
productivity and brainpower, the team consulted experts from WS (web services), AOR
and smaller, localized public relations agencies operating in international markets. Upper
management played an important, visible role, with CEO Robert Eckert appearing on
television, on the website, and giving media interviews.
6. A Company's True Character is Expressed by Its People
Mattel's "people" includes its management, employees, retailers and suppliers; their
actions in good times and bad should express the company's character and corporate
culture. Eckert expressed Mattel's emphasis on family when he spoke to parents from his
perspective as a father. Toy retailers like Target and Wal-mart actually have the most
direct contact with customers and can help convey Mattel's character during a crisis--they
should be a part of any communication strategy. Suppliers, when they cut corners and use
contaminated materials, expose a company's failure to uphold the same character
standards and commitments in its third-world factories. Mattel should extend its
8
corporate culture to its suppliers, demanding the same standards both at home and
overseas.
7. Remain Calm, Patient and Good-Humored
By prematurely placing disproportionate blame on Chinese manufactures, Mattel
appeared defensive and paranoid. In reality, by exposing its flaws and coming clean early
on, Mattel may fare better than its competitors. When the panic shifts to the industry as a
whole, and to other toymakers, Mattel's own public scrutiny will be alleviated.
6. Closing Discussion Questions:
1. Did Mattel learn from past mistakes, for example how it handled the Power
Wheels recall? Considering its history, was Mattel's 2007 communications plan
for a quality control/product safety crisis adequate?
2. Toy manufacturers must balance the needs of investors with the needs of
consumers. How should Mattel negotiate these sometimes conflicting demands?
What role does corporate communication play in the balancing process?
3. How can Mattel redirect negative media attention to ensure the recall crisis turns
into a competitive advantage?
4. Two-way symmetrical communication strategies can improve a company's contact
with consumers. How can similar strategies facilitate better cross-cultural
communication in an international arena? Or better internal communication?
What tactics might be most effective?
5. Proposed federal product safety legislation will have a direct affect on Mattel in
the future. Considering issues management principles, reputational rebuilding
strategies and the needs of multiple stakeholders, what role should toymakers play
in shaping legislation?
6. Did Mattel's communication program during the recall reflect a company-wide
commitment to the importance of corporate communications as a management
function?
7. Suppose that in 2008 a Mattel manufacturer operating in China is found to be
using lead paint. How should Mattel respond from a corporate crisis
communication standpoint?
1 Heath, R. L., & Coombs, W. T. (2006). Todays public relations: An introduction. Thousand
Oaks, CA: Sage, Chapter 8
2 Matera, F., and Artigue, R. (2000), Public Relations Campaigns and Techniques. Needham Heights, MA:
Allyn & Bacon, pg 165-168
3 Matera, F., and Artigue, R. (2000), Public Relations Campaigns and Techniques. Needham Heights, MA:
Allyn & Bacon, pg 169-170
4 Cutlip, S. M., Center, A. H., & Broom, G. M. (2006). Effective Public Relations (9th ed.). Upper Saddle River,
NJ: Prentice-Hall, pg 328
5 Heath, R. L., & Coombs, W. T. (2006). Todays public relations: An introduction. Thousand
Oaks, CA: Sage, Chapter 8
6 Ibid.
7 Media Statement, September 21, 2007, http://www.shareholder.com/mattel/downloads/09-21-07%20China
%20Meeting%20Media%20Statement.pdf, accessed November 29, 2007
8 "The Stories Behind the Mattel Recall," CSR Asia Weekly, Vol.3 Week 32, August 8, 2007, http://www.csrasia.com/upload/csrasiaweeklyvol3week32.pdf
9 Barboza, David, "Fake Goods and Unsafe Foods Threaten Chinese Exports," International Herald Tribune,
May 18, 2007, http://www.iht.com/articles/2007/05/18/business/trade.php
10 "China 'Fake Milk' Scandal Deepens," BBC.com, April 22, 2004, http://news.bbc.co.uk/2/hi/asiapacific/3648583.stm
12 "New Survey Lets China Off the Hook for Recalls: Most Other Countries Manufacturing Toys Have Far
Worse Problems, Study Finds," Bulldog Reporter, November 16, 2007,
http://www.bulldogreporter.com/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A
%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=D5EDB899DB55459F90748BD212E
76E0A