Mattel's Strategy after its Recall of Products Made in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Mattel's Strategy after its Recall of Products Made in China
In the summer of 2007, Mattel, the largest toymaker in the US, made several recalls of products that had been made in China. The recalls led not only to a sharp reduction in Mattel's sales but also to public hearings in the US Congress, which significantly affected Mattel's reputation. Like other toymakers, Mattel has been relocating its production abroad, outsourcing the manufacture of parts and components. Indeed, 65% of Mattel's products are made in China. In contrast to its competitors, however, Mattel has understood the importance of quality control in this relocation/outsourcing process. In the 1980s, it reversed its earlier strategy of outsourcing to factories in Asia by owning and operating some plants in Asia for producing its most popular products. The product recalls show that quality control continues to be an issue. This case explores Mattel's strategy for organizing production, the trade-offs between in-house production and outsourcing, and the trade-offs between different production locations.
Authors :: Jiangyong Lu, Tao Zhigang, Yu LinHui, Grace Loo
Swot Analysis of "Mattel's Strategy after its Recall of Products Made in China" written by Jiangyong Lu, Tao Zhigang, Yu LinHui, Grace Loo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mattel's Mattel facing as an external strategic factors. Some of the topics covered in Mattel's Strategy after its Recall of Products Made in China case study are - Strategic Management Strategies, Manufacturing, Product development, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the Mattel's Strategy after its Recall of Products Made in China casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, increasing commodity prices,
geopolitical disruptions, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Mattel's Strategy after its Recall of Products Made in China
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Mattel's Strategy after its Recall of Products Made in China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mattel's Mattel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mattel's Mattel operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Mattel's Strategy after its Recall of Products Made in China can be done for the following purposes –
1. Strategic planning using facts provided in Mattel's Strategy after its Recall of Products Made in China case study
2. Improving business portfolio management of Mattel's Mattel
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Mattel's Mattel
Strengths Mattel's Strategy after its Recall of Products Made in China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mattel's Mattel in Mattel's Strategy after its Recall of Products Made in China Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Mattel's Mattel in the sector have low bargaining power. Mattel's Strategy after its Recall of Products Made in China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mattel's Mattel to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Mattel's Mattel is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Mattel's Mattel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Mattel's Strategy after its Recall of Products Made in China Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Mattel's Mattel has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Mattel's Strategy after its Recall of Products Made in China - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Global Business industry
– Mattel's Strategy after its Recall of Products Made in China firm has clearly differentiated products in the market place. This has enabled Mattel's Mattel to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Mattel's Mattel to invest into research and development (R&D) and innovation.
Organizational Resilience of Mattel's Mattel
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mattel's Mattel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Mattel's Mattel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Mattel's Strategy after its Recall of Products Made in China Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Mattel's Mattel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mattel's Mattel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Mattel's Mattel is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Jiangyong Lu, Tao Zhigang, Yu LinHui, Grace Loo can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Diverse revenue streams
– Mattel's Mattel is present in almost all the verticals within the industry. This has provided firm in Mattel's Strategy after its Recall of Products Made in China case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Mattel's Mattel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mattel's Mattel has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Strong track record of project management
– Mattel's Mattel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Mattel's Mattel has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses Mattel's Strategy after its Recall of Products Made in China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Mattel's Strategy after its Recall of Products Made in China are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Mattel's Strategy after its Recall of Products Made in China, is just above the industry average. Mattel's Mattel needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Mattel's Mattel has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Mattel's Mattel even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Need for greater diversity
– Mattel's Mattel has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Low market penetration in new markets
– Outside its home market of Mattel's Mattel, firm in the HBR case study Mattel's Strategy after its Recall of Products Made in China needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Mattel's Strategy after its Recall of Products Made in China, in the dynamic environment Mattel's Mattel has struggled to respond to the nimble upstart competition. Mattel's Mattel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Mattel's Mattel has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Mattel's Strategy after its Recall of Products Made in China should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Mattel's Mattel is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Mattel's Strategy after its Recall of Products Made in China can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Mattel's Mattel has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Mattel's Mattel is dominated by functional specialists. It is not different from other players in the Global Business segment. Mattel's Mattel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Mattel's Mattel to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Mattel's Mattel products
– To increase the profitability and margins on the products, Mattel's Mattel needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Mattel's Mattel supply chain. Even after few cautionary changes mentioned in the HBR case study - Mattel's Strategy after its Recall of Products Made in China, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Mattel's Mattel vulnerable to further global disruptions in South East Asia.
Opportunities Mattel's Strategy after its Recall of Products Made in China | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Mattel's Strategy after its Recall of Products Made in China are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Mattel's Mattel is facing challenges because of the dominance of functional experts in the organization. Mattel's Strategy after its Recall of Products Made in China case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mattel's Mattel can use these opportunities to build new business models that can help the communities that Mattel's Mattel operates in. Secondly it can use opportunities from government spending in Global Business sector.
Learning at scale
– Online learning technologies has now opened space for Mattel's Mattel to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Mattel's Mattel to increase its market reach. Mattel's Mattel will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Mattel's Mattel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Mattel's Mattel can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Mattel's Mattel to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Mattel's Mattel to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Mattel's Mattel can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mattel's Mattel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Mattel's Mattel has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Mattel's Strategy after its Recall of Products Made in China - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mattel's Mattel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Mattel's Mattel has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mattel's Mattel can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Mattel's Mattel can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Mattel's Strategy after its Recall of Products Made in China External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Mattel's Strategy after its Recall of Products Made in China are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Mattel's Strategy after its Recall of Products Made in China, Mattel's Mattel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Mattel's Mattel in the Global Business sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Stagnating economy with rate increase
– Mattel's Mattel can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High dependence on third party suppliers
– Mattel's Mattel high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Mattel's Mattel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Mattel's Mattel is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Mattel's Mattel will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mattel's Mattel can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Mattel's Strategy after its Recall of Products Made in China .
Regulatory challenges
– Mattel's Mattel needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Environmental challenges
– Mattel's Mattel needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Mattel's Mattel can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Mattel's Mattel.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Mattel's Mattel needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Mattel's Strategy after its Recall of Products Made in China Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Mattel's Strategy after its Recall of Products Made in China needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Mattel's Strategy after its Recall of Products Made in China is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Mattel's Strategy after its Recall of Products Made in China is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Mattel's Strategy after its Recall of Products Made in China is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Mattel's Mattel needs to make to build a sustainable competitive advantage.