The conflict between Mattel and its manufacturers
Cause of conflict
According to McShane & Travaglione in 2003, Conflict is a process in which one party perceives that its interests are being opposed or negatively affected by another. (McShane & Travaglione, 2003) It suggested that conflict is all because of interests or benefits between two or more parties. As it is indicated from Mattel’s case, it seems that both Mattel and the Chinese manufacturers’ interests have been negatively affected by their counterparties in this incident, intentionally or unintentionally.
Mattel’s viewpoint
By the time Mattel’s quality problems came to light, the scene was already set for intense media interest, and Mattel’s scale and the dominance of its brand meant that it was bound to come under scrutiny. Hence the recall action is a form of Crisis Response Strategies, which are described by Allen and Caillouet (1994) and Benoit (1992), Coombs (1995). The strategy here is mortification. Mattel attempts to win forgiveness of the public and to create acceptance for the crisis. Three sub- strategies are: (1) remediation, which is reflected by the fact that Mattel willingly offered some form of compensation or help to victims, such as money, goods, aids, etc., (2) repentance, which involves asking for forgiveness by apologizing for the crisis, (3) rectification involves taking action to prevent a recurrence of the crisis in the future.
Objectively, most of evidences suggest that Chinese manufacturer has violated their obligation stated in their contract regarding their use of raw material, especially for the two vicious companies— Early Light Industrial Co. and Lee Der Industrial Co. These two companies failed to comply with their contracts to put safe raw material (paint) into production and directly cause the first and second recall (Steve New Dana Brown, 2008).
No matter whether the Chinese suppliers are the real reason or the scapegoat for the defect product, the primary objectives of Mattel crisis management strategies is to maintain an organization’s image, which is directly related to how publics perceive the organization (Pearson & Mitroff, 1993; Sturges, 1994). The move was a precautionary measure. The nuances of this argument, however, were effectively swamped in the public debate about the recalls, which – while mentioning the design issue – focused obsessively on the issue of China, and the concept of inspection.
Manufacturers’ viewpoint
Within the top levels of China’s government, concern is growing that significant damage has been done to the “Made in China” label.
Mattel’s toy recall has had adverse effects on the aspects such as: children’s health; people perception on “made in China” product; Toy Industry & Government; reputation of China. People’s perception on “Made in China” product articles describe the influence of the toy recall on consumer perceptions regarding Chinese made products, such as toys, sea food, pet food, toothpaste, etc. Stories about the toy recall depicted people showing fear and worry about Chinese-made products were coded as negative. As a professor at Baruch College, part of the City University of New York told The New York Times:”If Mattel, with all of its emphasis on quality and testing, found such a widespread problem, what do you think is happening in the rest of the toy industry and even in the low-end electronics industry?”
In conclusion, while Mattel’s damage control quick response to the business fiasco were given lots of credit by the public and succeeded in reviving its image, the Chinese contractor’s reputation were suffered and even the credibility of Chinese manufacturers at large were compromised.
Conflict unfolding (process of the conflict)
As Bies and Sitkin (1993) emphasize, attention needs to be directed to the process of conflict. They argue that whether a situation evolves into a conflict depends on the process of conceptualization of the situation by the participating parties. There are three ways a party can influence or manipulate the perception of another. The key benefits of these explanations are to diffuse negative and enhance positive reactions, as well as avoiding status degradation of the participant.
The success of Toy-maker-company like Mattel relies heavily on its cost cutting from outsourcing. Its access to under-developed countries manufacturers is one of the company’s core strategies. As a matter of fact for Mattel, large range of products is made around the world, but most (about 65% by value) of its production – along with the rest of the global toy industry – takes place in China (Judy Warner, 2007 Case given). Hence, it is clear that Mattel could not afford to lose their contract and long term relationship with Chinese manufacturers.
Mattel used all three accounts, namely Mitigating accounts, Exonerating accounts and reframing accounts (Bies & Sitkin, 1993), as their endeavor to minimize the severity of conflict and to revive their relationship with Chinese manufacturers:
Mitigating accounts attempt to minimize responsibility and aims to influence the harmed party to act in a conciliatory manner in conflict resolution. This is reflected in Mr. Debrowski, Mr. Eckert and the Mattel Company’s appologies to Chinese Manufacturer, consumer and General Administration of Quality Supervision, Inspection and Quarantine. Also, Mattel attempted to minimize the conflict by claiming that the defect product has nothing to do with manufacturing, but rather stemmed from Mattel’s “design flaw”.
Exonerating accounts aim to place the actions into a broader normative framework to suppress anger and disapproval. The party in confrontation appeals for the other parties to acceptable honest mistake or their inability to achieve what was intended. Mattel exonerates Early Light Industrial Co. for it followed procedures but their subcontractor Hong Li Da chose to use cheaper, unapproved paint from an unknown party. Mattel’s exempting its contractor is an attempt to influence Chinese manufacturers’ perception of conflict.
Reframing accounts try to alter perceptions of the consequences; this is regarded as “attention switching” which is the creation of alternate ways of understanding, through minimizing the perceived undesirability or by comparing with less favorable outcomes than those presented. After this incident, Mattel claimed that “the company recalled more product worldwide than it is necessary just to ensure the defect product is minimized”. They also offered many additional lab tests to scrutinize its product, set up more stringent policy for material searching. In essence, rather than focusing on discussing liability with its contractors, Mattel tried to smooth their tense relationship by leading the contractors toward group work type of damage control.
Mattel’s resolution
Mattel has deployed three different approaches since the incident broke out, according to the five approaches in Thomas and Kilmann (1974). They are Avoiding, Compromising and Accommodating. They are showed in figure1 below.
Figure 1 clearly shows how Mattel’s attitude changes since the beginning of this incident. At the earlier stages, Mattel was overwhelmed with the consequence of the life-threatening issues, they were engaged in their crisis response strategies which involve: recalling product, providing information on website regarding defect product, setting up emergency hotline number and so on. They ignore the conflict with their counterparty—Chinese manufacturers. At this stage they focused on short term benefit which is based on contingency and requires the management and being reactive to current conditions (Thomas, 1992), life-threatening lead painted product and loose magnet.
With the passage of time, Mattel realized that their success depends heavily on the cooperation with Chinese manufacturers. And they were in desperate need to revive their relationship. Thus they switch to compromising and collaboration, trying to establish trust and respect between them and regenerate environment of open information exchange and optimal decision making.
...(download the rest of the essay above)