CASE 19
Mattel Responds to Ethical Challenges
CASE NOTES FOR INSTRUCTORS
Mattel Inc. is a well-known brand known for iconic toys such as Barbie, Hot Wheels, Cabbage Patch
Kids, and Matchbox Cars. The company is worth billions in annual revenues and, despite having its
ups and downs in recent decades, remains one of the best-known toy brands in the world. However,
like many companies, Mattel has transferred its manufacturing operations overseas in an effort to
However, the company moved to address the situation and has overhauled its supply chain system.
Mattel was the first global consumer products company to implement a standards system,
Independent Monitoring Council (MIMCO), for subcontractors or manufacturers that are
independently monitored. Mattel publicly discloses the results from the monitoring.
An important concept in this case is the nature of the market. With children either spending or
directly influencing $500 billion worth of purchases, marketing techniques have been necessarily
altered. In the past, the most effective way to sell children’s products was through parents. Now the
opposite is true. Children are the focal point for intense advertising pressure seeking to influence
billions of dollars of family spending. Advertisers are aware that children influence the purchase
not just of kids’ products, but of everything in the household, from cars to toothpaste. These “adult”
Case 19: Mattel Responds to Ethical Challenges 131
The case also discussed other problems Mattel has had regarding intellectual property rights and
the Bratz dolls. Carter Bryant, a Mattel employee, designed the Bratz dolls and pitched them to
MGA. A few months after the pitch, Bryant left Mattel to work at MGA, which began producing Bratz
in 2001. Mattel filed a lawsuit against MGA, claiming that Bryant had designed the Bratz dolls while
still employed with Mattel. According to Mattel, the contract Bryant had with the company meant
that the Bratz dolls were the property of Mattel rather than MGA. Although the jury initially deemed
MGA and its CEO liable for what it termed “intentional interference,” the Ninth U.S. Circuit Court of
QUESTIONS AND DISCUSSION
1. Do manufacturers of products for children have special obligations to consumers and society? If so,
what are these responsibilities?
Most students will have no difficulty answering this question. Because children are a special
group of consumers, who manufacturers must assume have limited cognitive abilities compared
to adults, most students will answer that manufacturers of children’s goods do have a special
obligation to ensure safety. Because children’s bodies and brains are not fully developed, and
2. How effective has Mattel been at encouraging ethical and legal conduct by its manufacturers?
What changes and additions would you make to the company’s Global Manufacturing Principles?
The answer is that Mattel has made great progress in improving ethical and legal conduct by its
manufacturers and suppliers. Because of the huge amounts of lost revenues in the wake of the
132 Case 19: Mattel Responds to Ethical Challenges
3. To what extent is Mattel responsible for issues related to its production of toys in China? How
might Mattel have avoided these issues?
This question can be segmented into a legal and an ethical perspective. From a legal
perspective, if Mattel had knowledge of the lead levels, then both the company and those in
charge of monitoring imported toys should be held legally liable for any damages. A company
and safety standards so that this problem will not occur again.
ADDITIONAL RESOURCES