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 - – challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, wage bills are increasing, increasing government debt because of Covid-19 spendings, there is backlash against globalization, talent flight as more people leaving formal jobs,
central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
Operational resilience
– The operational resilience strategy in the Mattel's Strategy after its Recall of Products Made in China Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
Innovation driven organization
– Mattel's Mattel is one of the most innovative firm in sector. Manager in Mattel's Strategy after its Recall of Products Made in China Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
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.
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.
Successful track record of launching new products
– Mattel's Mattel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mattel's Mattel has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
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.
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 -
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.
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.
Slow to strategic competitive environment developments
– As Mattel's Strategy after its Recall of Products Made in China HBR case study mentions - Mattel's Mattel takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Mattel's Mattel has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Skills based hiring
– The stress on hiring functional specialists at Mattel's Mattel has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers 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.
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.
No frontier risks strategy
– After analyzing the HBR case study Mattel's Strategy after its Recall of Products Made in China, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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 -
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.
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.
Building a culture of innovation
– managers at Mattel's Mattel can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Mattel's Mattel can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Mattel's Mattel can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Mattel's Mattel in the consumer business. Now Mattel's Mattel can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Mattel's Mattel to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
Creating value in data economy
– The success of analytics program of Mattel's Mattel has opened avenues for new revenue streams for the organization in the industry. This can help Mattel's Mattel to build a more holistic ecosystem as suggested in the Mattel's Strategy after its Recall of Products Made in China case study. Mattel's Mattel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mattel's Mattel in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mattel's Mattel can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Mattel's Strategy after its Recall of Products Made in China, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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 -
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 .
Consumer confidence and its impact on Mattel's Mattel demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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.
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.
Increasing wage structure of Mattel's Mattel
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Mattel's Mattel.
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.
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.
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.
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 .
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Mattel's Mattel business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mattel's Mattel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
