Mattel’s China Experience: a Crisis in Toyland

Introduction

In 1944, the Mattel brand was founded by Ruth and Elliot Handler and Harold “Matt” Matson. They launched Mattel out of a garage workshop in Southern California. The first Mattel products were actually picture frames, but Elliot soon started using the scrap from the picture frames to create dollhouse furniture. Harold Matson eventually sold out to his partner, Ruth and Elliot Handler. The Handler’s, encouraged by the success of the doll furniture and turned the emphasis of the company to toys. By 1955 Mattel was advertising toys through the popular show “Mickey Mouse Club”; this revolutionized the way toys were marketed (Teagarden, 2008).

By 1959 Mattel had introduced Barbie, named after their daughter Barbara’s nickname. Barbie would soon lead Mattel to the forefront of the toy industry and fascinate girls all over the world for decades. The company rolled out the equally iconic product, Hot Wheels, a decade later. Mattel, a true toy industry off-shoring pioneer, began manufacturing toys in offshore locations to take advantage of lower manufacturing costs and to focus corporate resources and attention on building brand (Mattel History, et al, 2011).

In 1960, Mattel became a publicly owned company, stock was listed was listed on the New York and Pacific Coast Stock Exchanges in 1963. By 1965, sales topped $100 million and the company joined the Fortune 500. In the years to come Mattel would enter the ever growing electronics industry, they would also enter several joint ventures and licensing agreements that would earn them more profit (Mattel History, et al, 2011). A host of external factors can influence a firm’s decision of direction and action. Influencing Mattel’s decisions are economic factors, social factors, political factors, technological factors and ecological factors (Pearce & Robinson, (2010).

Synopsis of the Situation

Although Mattel was known as an industry leader in corporate...