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 - – increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, wage bills are increasing, increasing energy prices, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%,
increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, 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.
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.
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.
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 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.
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.
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.
Superior customer experience
– The customer experience strategy of Mattel's Mattel in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
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.
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 -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Mattel's Strategy after its Recall of Products Made in China HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Mattel's Mattel has relatively successful track record of launching new products.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Mattel's Mattel needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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.
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.
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 bargaining power of channel partners
– Because of the regulatory requirements, Jiangyong Lu, Tao Zhigang, Yu LinHui, Grace Loo suggests that, Mattel's Mattel is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
Manufacturing automation
– Mattel's Mattel can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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.
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 -
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.
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.
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 .
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.
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.
Technology acceleration in Forth Industrial Revolution
– Mattel's Mattel has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Mattel's Mattel needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mattel's Mattel in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
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.
