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BUS5BID Business Information Systems Design

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BUS5BID Business Information Systems Design

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Course Code: BUS5BID
University: La Trobe University is not sponsored or endorsed by this college or university

Country: Australia


The case highlights toy recalls made in 2007 of toys that were manufactured in China. This is a good example of how the supply chain is an integral part of any organization. After reading the case, do some additional research using the textbook, and the Internet to answer the following questions?
1. Why do firms contract overseas for production of products they sell?
2. What were the primary causes of Mattel’s recall problems?
3. What actions were taken and by whom to deal with the recall problems? Do you think these actions were the right ones? Why or why not?
4. What should Mattel do now? What should China do now?
5. How can accountability be increased and better managed when production is moved overseas to other firms in the supply chain?


Question 1.
Companies contract overseas for the production of products mainly because of the advantages they acquire from the overseas countries. To begin with, we have cheap labor. By outsourcing on cheap labor, firms are able to cut on the costs of their products (Kotabe & Murray, 2018). For example, Apple Corporation, one of the largest electronics and technology company in the world, outsources all of its labor from China primarily due to its low cost. Secondly, availability of cheap and easily available raw materials. In order for firms to ensure their products are designed as cheaply as possible, they may outsource services to countries that have enough raw materials. This also ensures that firms can acquire as much profit as possible from the sales of the products (Kotabe & Murray, 2018). Thirdly, firms can get tax benefits as well as other government policies advantages for outsourcing production from overseas countries. Lastly, companies can benefit from currency fluctuation hence being able to produce their products at a low currency rate. This ensures the firms save on expenses hence increasing their profit margin.
Question 2.
In the case, there were different reasons for the recall of Mattel’s toys. However, the primary causes included problems in design, manufacturing, and product misuse. Beginning with manufacturing problems, we have the excessive usage of lead paint on toys. The lead paint used on the Mattel toys was harmful to the children (Choi & Lin, 2009). Lead is a neurotoxin, and repeated exposure to it can cause brain damage. Therefore, it could affect the developing brains of the children. Secondly, we have the product design. In the toys, there was an increased usage of powerful magnets. Besides, the magnets were not appropriately encased and children could, therefore, swallow them hence dislodging in their intestines (Choi & Lin, 2009). For example, when a child ingests several magnets, the magnets could bind together across the intestinal folds hence perforating the intestines. This would then lead to death or injury. Lastly, we have product misuse. Some features incorporated within the toys were not supposed to be present however the children found creative ways to play with them although that was not anticipated by the designers of the toys.
Question 3.
In early 2007, Mattel’s European retailer noticed the company’s toys had excessive lead paint. After informing Mattel, the company stopped production and began an investigation into the problem (Story & Barboza, 2007). After finding that the recall was necessary, Mattel recalled the toys worldwide. The toys had been manufactured by a Chinese company which had used the excessive lead (Story, 2007). In my opinion, Mattel’s action in recalling the products was right. Mattel was highly criticized for the recall because the company failed twice by outsourcing production of toys from China with potentially dangerous loose magnets and also excessive lead paint. It is clear that Mattel had weak quality control procedures and its lack of due diligence could affect children. However, its step to handle the issue proved the company was responsible.
Question 4.
Mattel has undergone different challenges including the lawsuits. However, there are certain things that Mattel will have to do. One, Mattel should develop strategies to prevent future mistakes and also try as much to rectify its present mistakes. The company should work towards restoring faith in its toy brands due to the distrust caused by the lead paint scandal. Secondly, Mattel should both upgrade its quality control and safety standards. Besides, the company should ensure it outsources its production from suppliers who operate ethically and responsibly. Mattel should also randomly test the toys before selling them so as to ensure they comply with the required standards.
China’s export manufacturing sector was also profoundly affected due to the safety challenges the companies imposed on the products (Peijuan, Ting & Pang, 2009). China should consider doing the following; One, China should establish quality licensing systems for products manufactured for export. Besides, China should certify exporters and punish/blacklist the companies that do not consider following requirements. Lastly, China should consider enforcing inspection units in the Chinese companies hence ensuring customers can inspect the production process.
Question 5.
Outsourcing from overseas faces suspicion due to cheap labor, low production costs, and less enforced health. However, accountability and better production can be managed when the following are considered. One, overseas companies will need to build close relationships with customers and suppliers as well as have flexible manufacturing abilities. In addition, better management of supply chains which means close coordination with the suppliers will be crucial in achieving productivity. Two, frequent communication with overseas suppliers can help build accountability. Reports on production design manufacturing processes and engineering will be easily communicated hence ensuring procedures are followed as per requirements. In conclusion, manufacturers will need to ensure the health and environment standards, as well as high safety standards, are not compromised while trying to be competitive (Pyke & Tang, 2010). 
Choi, Y., & Lin, Y. H. (2009). Consumer response to crisis: Exploring the concept of involvement in Mattel product recalls. Public Relations Review, 35(1), 18-22.
Kotabe, M., & Murray, J. Y. (2018). Global Sourcing Strategy: An Evolution in Global Production and Sourcing Rationalization. In Advances in Global Marketing (pp. 365- 384). Springer, Cham.
Peijuan, C., Ting, L. P., & Pang, A. (2009). Managing a nation’s image during crisis: A study of the Chinese government’s image repair efforts in the “Made in China” controversy. Public Relations Review, 35(3), 213-218.
Pyke, D., & Tang, C. S. (2010). How to mitigate product safety risks proactively? Process,
challenges and opportunities. International Journal of Logistics: Research and Applications, 13(4), 243-256.
Story, L. (2007). Lead paint prompts Mattel to recall 967,000 toys. The New York Times, 2.
Story, L., & Barboza, D. (2007). Mattel recalls 19 million toys sent from China. The New York Times, 15(8).

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