COM 657 7-2 Short Paper: Global Brand Crisis

            In 2007, renowned toy manufacturer Mattel, which had hitherto enjoyed a practically irreproachable reputation, faced a public relations crisis of massive proportions (Coombs & Holladay, 2010). Four separate (and consecutive) recalls affected approximately 21 million toys made in China as a result of lead paint usage and design flaws. Coombs and Holladay point out that even though the gross number of toys recalled represented only half of a percent of Mattel’s total output, the number was still enough to lead to congressional hearings and consumer lawsuits, all of which resulted in a nose dive in Mattel’s stock (Chapter 23). While Mattel’s stock ultimately rebounded—despite some bumps—enjoying best-performance status with S&P 500 at the end of 2017 (Levisohn, 2017), its Chinese partners did not fare nearly so well. Not only were there approximately 1.5 million layoffs, but four company managers were also criminally charged, another committed suicide, and the head of food and drug administration responsible for certifying lead-free paint was executed (Coombs & Holladay, 2010).

As can be seen from the contrast above, there was a significant difference in the results of the crisis regionally and internationally; it follows, therefore, that the regional crisis response differed from the global response. Coombs and Holladay’s research suggests that Mattel took drastically different approaches to the two markets.

Mattel successfully used a number of crisis response strategies to address their home market. To begin with, it was able to leverage its past safety history (no significant safety issues had affected them in the two decades prior (Coombs & Holladay, 2010)) in the form of bolstering strategy. Additionally, Mattel went on the offensive by claiming victim status with their now-famous line, “we’re parents, too.” In one stroke, Mattel also became the victim of egregious Chinese business practices in furtherance of their bolstering strategy while simultaneously scapegoating the same Chinese businesses in the use of denial crisis response strategy.

Another crisis response strategy that worked in Mattel’s favor was implemented in the pre-crisis stage (Coombs & Holladay, 2010): Mattel used commendations from six high profile government, non-profit and industry leaders to bolster its image and reputation. Mattel failed to make clear, however, that at least four of these six had strong ties to Mattel. Mattel successfully built strong relationships with industry leaders in the pre-crisis stage in order to leverage them at times of crisis.

The results of this very successful response are evident in Mattel’s stock prices, which rebound within the year.

The crisis response strategies used in China were markedly different. Mattel used classic SCCT denial strategy to distance itself from the Chinese vendors who had used unapproved materials and who had implemented deleterious product designs, turning the vendors into scapegoats (Coombs & Holladay, 2010). These strategies successfully bypassed the underlying foundation for these vendor practices: that the cost of adhering to Mattel’s standards drove the profit margin to an unsustainable level, prompting the cutting of corners to raise said margins, which is a classic reason for the outsourcing of manufacturing to China. Mattel also did not accept any responsibility for failing to ensure that their standards were implemented, though it certainly is possible that had these recalls occurred a few years later, public outrage would have made the maintaining of this arms-length relationship impossible: the 2013 Joe Fresh building collapse in Bangladesh (TheStar.com, 2013) and Apple’s Foxcomm safety crisis in China (Bilton, 2014) both swung public opinion to the side of global corporate responsibility and rigorous oversight.

Assuming, then, that Mattel’s absolving itself of all responsibility to oversee its own vendors’ and contractors’ business practices would not have been a viable crisis response strategy (extrapolating from the aforementioned experiences of Joe Fresh and FoxComm), there are a number of strategies Mattel could have used in the Chinese market.

First, in an extension of the patriarchal family model it already employed (Coombs & Holladay, 2010), Mattel could have thrown itself on its own metaphorical sword and used mortification strategy to take responsibility for its contractors’ (its children’s) actions, apologized sincerely, and worked with the Chinese government to develop a plan to mitigate the safety concerns and address the underlying reasons for the cutting of corners. With the weight of Mattel behind him and collaboration between Mattel and the Chinese government, it is possible that the head of food and drug administration would not have been executed. Mattel could still have claimed victim status to buy public sympathy, but then could have combined that with rebuilding strategy in the acceptance of responsibility and in the transparent development of an action plan. This combination would have achieved public favor and, quite possibly, have saved the livelihood of millions of Chinese workers.

Mattel failed, in a very real and responsibility-laden manner, to consider the cultural implications of its actions. In those U.S. states where the death penalty is still in place, the only crime that is punishable by execution is murder (Death Penalty Information Center, n.d.). It is possible, therefore, Mattel may well have neglected to inform itself of criminal punishment practices in China—this in no way condones Mattel’s actions, nor does it absolve Mattel from responsibility and culpability in the deaths that may well have resulted from its crisis response strategies in China. A key responsibility of global citizenship is the consideration of cultural implications, and Mattel failed in this responsibility. At the same time, it is notable, perhaps, that at no point did the Chinese government issue an apology… to anyone (Carando, 2007).

Mattel did not suffer any lasting damage to its reputation nor to its profit margins, and did in fact implement rigorous safety standards and better oversight of its contractors (after severing ties and implicating previous vendors), and also put product training sessions into place (CNN, 2007). China continued to be affected by quality and safety crises, of which the aforementioned Joe Fresh and FoxComm crises were two; Mattel did eventually apologize to China (Carando, 2007), falling a bit short of total mortification strategy (Coombs & Holladay, 2010), but still allowing China to save face, an important cultural concern. Mattel continues to manufacture its products in China (Carando, 2007).

 

References

Bilton, R. (2014, December 18). Apple ‘failing to protect Chinese factory workers’. BBC. Retrieved from https://www.bbc.com/news/business-30532463

Carando, G. (2007, October 18). Mattel toy recall [Web log post]. Retrieved from http://psucomm473.blogspot.com/2007/10/mattel-toy-recall.html

Coombs, W. T., & Holladay, S. J. (Eds.). (2010). The handbook of crisis communication. Malden, MA: Wiley-Blackwell

CNN. (2007, November 15). Mattel CEO: ‘Rigorous standards’ after massive toy recall. CNN. Retrieved from http://www.cnn.com/2007/US/08/14/recall/index.html

Death Penalty Information Center. (n.d.). Crimes punishable by the death penalty. Retrieved from https://deathpenaltyinfo.org/crimes-punishable-death-penalty

Levisohn, B. (2017, October 20). The hot stock: is Mattel waiting for a turnaround…or a takeover? Barron’s. Retrieved from https://www.barrons.com/articles/mattel-buy-it-for-the-takeover-or-the-turnaround-1509392721

TheStar.com. (2013, April 25). Bangladesh building collapse kills more than 230; Joe Fresh clothing, other brands made at site. The Star [Toronto]. Retrieved from https://www.thestar.com/news/world/2013/04/25/bangladesh_building_collapse_toll_nears_200_joe_fresh_clothing_other_brands_made_at_site.html