Company History -

Highlights

1945

Mattel is born.

Ruth and Elliot Handler and Harold "Matt" Matson launch a new company named Mattel, out of a garage workshop in Southern California. The first Mattel products are picture frames, but Elliot soon develops a side business in dollhouse furniture made from picture frame scraps. Harold Matson soon sells out to his partner, and, encouraged by the success of the doll furniture, the Handlers turn the company’s emphasis to toys.

1959

Barbie® doll makes her debut.

Inspired by her daughter’s fascination with cutout paper dolls, Ruth Handler suggests making a three-dimensional doll through which little girls could play out their dreams. She names the doll “Barbie,” after her own daughter Barbara’s nickname. Barbie soon leads Mattel to the forefront of the toy industry and fascinates generations of young girls.

1960

Mattel becomes a

publicly ownedcompany.

After becoming publicly owned in 1960, Mattel will have its common stock listed on the New York and Pacific Coast Stock Exchanges in 1963. By 1965, sales top $100 million and the company joins the Fortune 500.

1961

Ken® doll Joins

Barbie® doll

Mattel introduces the Ken doll, Barbie’s one and only boyfriend. Named for the Handlers’ son, Ken has brown hair and his own fashionable wardrobe. Barbie and Ken are joined by friends Midge® doll (1963) and Skipper® (1965).

1968

Mattel rolls out the Hot

Wheels® diecast

vehicles.

The number one name in die-cast vehicles roars into the toy world. Distinguished by their customized and modified designs, the first Hot Wheels cars are outrageous hot-rods with candy-colored paint jobs. More than 41 million kids grow up with the brand over the years, with many enthusiasts continuing to be loyal collectors as adults. The largest private Hot Wheels® collection to date is valued at more than $1 million.

1968

Mattel embarks on its “World of theYoung” acquisition strategy.

Mattel purchases the first of several companies as part of its "World of the Young" acquisition strategy. Monogram Models is first, and over the next decade follow Metaframe, a pet products company; Turco, a manufacturer of playground equipment; Ringling Brothers and Barnum & Bailey Circus; Circus World, a theme park; Western Publishing Company; and Radnitz/Mattel Productions, a motion picture production company

1988

Mattel revives its association With the Walt Disney Company.

The new alliance between Mattel and Disney begins with the introduction of a line of infant and preschool toys based on famous characters like Mickey Mouse. Later, Disney expands the agreement to include the manufacturing and marketing of toys based on popular contemporary Disney movies such as Toy Story, the top-grossing animated film ever. Mattel now has an agreement to produce infant and preschool toys, dolls, games, and puzzles based on classic Disney characters: Mickey Mouse, Winnie the Pooh, and the Disney Princesses.

1993

Fisher-Price® joins the Mattel family

Mattel’s core brand strategy is further strengthened in 1993 by a merger with Fisher-Price, the world’s number one brand in infant and preschool toys. Based in East Aurora, New York, Fisher-Price was founded in 1930 and is recognized for designing and manufacturing high-quality, imaginative toys for children from infancy to age five, as well as innovative products that help parents care for children, such as highchairs, strollers, bouncer seats, and nursery monitors.

1996

Nickelodeon Licensing Agreement

Mattel obtains a master toy license covering rights for all programming on Nickelodeon, the television network most watched by kids. By making toys based on the Nickelodeon characters, Mattel puts fictional heroes in the arms of children.

VISION AND

MISSION STATEMENTS

VISION

Mattel’s vision is “creating the future of play.”

MISSIONMattel's mission is to positively impact our people, our products and our planet by playing responsibly. This commitment resonates in our actions and through our company values each and every day, as we:

Play Fair by continually encouraging the Mattel organization to align decision-making with the company's values.

Play Together by working with employees, partners, vendors and regulators to bring the world safe toys that grown-ups trust and children love.

Play to Grow by committing to a sustainable future through efforts to work smarter and reduce our impact on the environment.

Play with Passion by volunteering in our communities and helping underserved children experience the joy of play.

MATTEL’S LEADERS

HIP

Bryan Stockton has been Chief Executive Officer and a director of Mattel, Inc. since January 2012.

David Allmark has been Executive Vice President Global Brands Team – Fisher-Price since February 2011.

Ellen Brothers has been Executive Vice President of Mattel and President, American Girl since July 2000.

Thomas Debrowski has been Executive Vice President, Worldwide Operations since November 2000.

Kevin Farr has been Chief Financial Officer since February 2000.

Alan Kaye has been Executive Vice President, Chief Human Resources Officer since February 2011.

Tim Kilpin has been Executive Vice President Global Brands Team – Boys & Girls El Segundo since February 2011.

Lisa Klein has been Senior Vice President of Corporate Responsibility at Mattel since August 2011.

Geoff Massingberd has been Executive Vice President, International since February 2011.

Robert Normile has been Executive Vice President, Chief Legal Officer and Secretary since February 2011.

Jean-Christophe Pean has been Executive Vice President, North America since February 2012.

PRODUCTS

Mattel rocked the world with the introduction of

Barbie the Teen-Age-Fashion Model at New

York Toy Fair on March 9, 1959, and in 2009 she is

celebrating her 50th anniversary.

From a fairy to fashionista, princess to a

President, Barbie has inspired several

generations of girls to dream, discover and

explore a world without limits - all without ever

leaving home.

Hot Wheels® cars roared into the toy world in 1968. More than 30 years later, the brand is hotter than ever--and now encompasses high-end collectibles, NASCAR, and Formula One models for adults, as well as high-performance cars, track sets, and play sets for kids of all ages.

As the world's most trusted name in quality toys, Fisher Price® has been enriching childhood for generations. Form sensory-stimulating infant toys, to preschool toys that engage active imaginations, to baby gear that blends safety, comfort and convenience, Fisher-Price products help parents get their families off to the best possible start.

American Girl offers friends and stories that inspire and excite girls ages 3-12. The Historical Characters, Girl of the Year, Just Like You™ dolls,

Bitty Baby®, and Bitty Twins® all explore girlhood in unique, entertaining, and age-

appropriate ways. Girls can experience even more by visiting American Girl Place, reading

books filled with adventure and advice, enjoying movies that brings the stories to life and playing

online at Fun for Girls.

EXTERNAL

ASSESSMENT

STATE OF THE INDUSTRYSales of traditional toys and games have been flat since 1996 while video game sales have been growing. In 2005, toy and game sales dropped 4% to $21.3 billion while video game sales increased 6% to $10.5 billion. One significant reason for this market shift is childhood age compression. Kids today are growing up more quickly than in the past and are outgrowing toys as a faster rate. This phenomenon is illustrated in the graph below which highlights the decline in per capita spending for traditional toys among 9-13 year olds, the Tween market. Since Tween purchasing power has increased over the years, it’s obvious that they’re choosing to spend their money in other categories.

Political factors that affect the toy manufacturing and retailing industry consists of the regulations set by the U.S. Consumer Product Safety Commission (CPSC). This commission board aims to reduce toy related injuries and death of children in the United States. It tests toys and children products for excess harmful materials that were used in the production that could potentially affect a child’s health and well-being. If potential hazards are found by the CPSC, then by law in the United States, the company will have to recall all products sold and seize production.

However, the regulation between the United States and China are dramatically different. The minimal regulations in China have caused massive recalls of all Chinese-made products. The lenient policies in China have created a hard to track supply chain in the manufacturing process. However, if Mattel is not able to have Chinese-made toys comply with United States standards, then they will lose 100% of their domestic market share, partnership, and licensing agreements; as well lose their creditability of their products which will result in a decline of consumer confidence.

Economic factors that affect the toy manufacturing and industry consist of the phenomenal economic growth in China that attracted foreign investors to begin offshore production in China. As the country enters the Industrial age, it supplied cheap labor and low government regulation on production. Financially it provided a high ROI, which for investors, began closing down domestic production plants. However, a decline on product quality has appeared in the manufactured products which would be hard for Mattel to differentiate from its competitors. Within 12 years of offshore production. This can cause a decrease in US to Yuan exchange rage as well as increasing affluence in the employees who will begin to demand for higher wages as investors increase in the market.

Sociocultural factors consist of the company image viewed by domestic citizens that have the possibility of improving or decrease the company’s corporate responsibilities. In 2007, Mattel laid off 24,900 employees in the United States which the results were not specified. As a company moves to offshore production and leaving the domestic market, it sends a message that it does not care for its employee’s well-being. Company values begin to decline as their remaining employees do not believe in the company any more. An opportunity for Mattel is to open quality control centers and retail outlets to differentiate its product from competitors. This can be done by repositioning its current employee base to other parts of the company. As they feel that their future is cared for, company values will begin to increase. However, restructuring the organizational structure will be required.

Technological factors that affect the industry consist of proper implementation of Supply Chain Management (SCM) and Customer Relations Management (CRM) technologies to help improve production efficiencies. Since China’s supply chain is vast and hard to track, SCM technology will assist Mattel in tracking where every shipment is coming from. They will be able to identify uncertified resources and stop the production as required. It will help bring Mattel closer to its Chinese suppliers by understanding their needs and teaching them Mattel’s company values. Implementation of SCM can also imply that if manufactures fail to abide from the rules, then they will face strict consequences such as the termination of their contract. CRM provides Mattel to keep a good relationship with their major distributors such as Wal-Mart and Target. As their production and distribution network begin to develop, they can also look towards growing sectors of video games.

COMPETITOR OVERVIEW

According to financial industry reports, Mattel’s direct competitors are considered to be Hasbro, Leapfrog, Jakks Pacific, and Radica Games.

Financial Performance - Mattel and Direct Competitors

Offering Comparison

INTERNAL ASSESSMENT

CORE COMPETENCIES

FINANCIAL PERFORMANCE

ANALYSIS AND EVALUATION

SWOT ANALYSIS - STRENGTHS

Strong and reputable Brand Name (brand name stands up to its awards and recognitions)

Strong customer base (Proven by the continuous patronage of customers despite of product recalls)

Excellent variety of products for both boys and girls (Product lines include Barbie, Hot Wheels, Fisher-Price and American Girl)

Mattel has been in the fore front of the toy industry for 60 years Strong online privacy policy (The company ensures the privacy of

both its customers and suppliers. Information is reviewed before being released to the press.)

Controls fate of Barbie’s main competitor, Bratz. (Product releases of Bratz usually happen after the release of latest Barbie products)

Has excellent Global Manufacturing Principles Market share leadership (Mattel has been consistently #1 in stock

growth rate with its competitors.)

Global Leader and Presence Sustainability (Mattel has been recognized as the top toy manufacturer for the last 60 years)

SWOT ANALYSIS - WEAKNESSES

Battered brand image over recent series of recalls Losing control of their products and company image

due to the outsourcing of their manufacturing to third party overseas manufacturers

They have little pricing power due to heavy reliance on Wal-Mart and Target

Keeping children’s interest when they are growing into the tween demographic.

Questionable Product Safety record (due to product recalls)

SWOT ANALYSIS - OPPORTUNITIES Online and Video Game Market (Mattel could start releasing online

and video games as an addition to their products.) Social Media (Mattel could use social networking sites such as

Facebook and Twitter for product promotion.) Create new alliances with other companies to help market product Changing focus from traditional toys (Barbie/Hot Wheels) to electronic

toys Moving production from China back to the United States or a more

sustainable country Acquisitions (Mattel could acquire companies who offer children

entertainment aside from toys to increase revenue and market share.) Emerging markets and expansion abroad Innovation (Development of new toys to offer children)

SWOT ANALYSIS - THREATS Decreasing demand for toys (see Industry Analysis) Economic recession (The living standards of people dependent on wages and salaries

are affected by recession. These families usually purchase toys from Mattel.) Raising oil prices (Fluctuations in oil prices affect input costs for making plastic – based

toys as well as distribution costs for transporting products from factories in Asia to other parts of the world.)

Children are outgrowing toys at an earlier age Continuous improvement of Hasbro Inc. and its other competitors Cheaper technological devices Economic slowdown (Effects of economic slowdown, although not necessarily negative,

affects the purchasing power of the consumers.) Exchange rate fluctuations (Currency exchange rate fluctuations may impact Mattel’s

results of operations and cash flows. Inventory purchase transactions denominated in the Euro, British pound sterling, Mexican peso, and Venezuelan bolivar fuerte are the primary transactions that cause foreign currency transaction exposure for Mattel.)

Imitation

EXTERNAL FACTOR EVALUATION

Key External Factors Weight

Rating

Weighted Score

TOTAL 1.0   2.77

INTERNAL FACTOR EVALUATION

Key Internal Factors Weight

Rating Weighted Score

TOTAL 1   2.71

EFE & IFE ANALYSIS

Total weighted score of 2.77 indicates that the business has

more than average ability to respond to external factors.

Total weighted scores significantly above 2.71 indicate a strong

internal position.

COMPETITIVE PROFILE MATRIX

 

Critical Success Factors

Weight Rating

Score Rating

Score

Rating

Score

TOTAL 1   2.90   2.5   2.15

Mattel’s score of 2.90 represents that it is competing fiercely with its competitors. From the eleven factors that we believe affects the success of Mattel; we put emphasis on Product Quality, Market Share and Customer Loyalty.

SPACE MATRIX

Analysis: (1, -1.5)

Mattel is an organization that is

competing fairly well in an unstable industry. The company should pursue competitive

strategies.

GRAND STRATEGY MATRIX

Mattel is in an excellent strategic position. This firm can continue to concentrate on current

markets using the strategies market penetration and product development.

TALLY SHEET  SPACE GRAND SWOT

Forward Integration    Backward

Integration       Horizontal Integration      

Market Penetration  

Market Development      

Product Development      

QUANTITATIVE STRATEGIC PLANNING MATRIX

  Product Development

Market Penetration

Weight AS TAS Weight AS TAS

TOTAL ATTRACTIVENESS

SCORE

    2.72     3.43

Upon assessing the internal and external critical success factors using QSPM, this

suggests that both Market Penetration and Product Development are relatively attractive

to be used by Mattel.

RECOMMENDATION & STRATEGY IMPLEMENTATION

By leveraging their existing competencies while acquiring new capabilities through internal development and partnerships, Mattel should be able to develop relevant products and services that positively reposition them in kids’ worlds. From an offering perspective, they should pursue a development strategy which includes the following six subsystems, listed in order from easiest to most difficult to implement:

Traditional Toy/Game Enhancement High-Tech Toy Development

Imaginative Exploration Content Creation and Community Mobile Networked Entertainment

Physical Activity Immersion

TRADITIONAL TOY / GAME ENHANCEMENT

CONTENT CREATION AND COMMUNITY

PHYSICAL ACTIVITY IMMERSION

EVALUATION AND CONTROL

Specific evaluation items associated with this strategic plan include the following:

Video games are a lucrative market, but Mattel shouldn’t plan to compete with powerful incumbents like EA, Sony, or Microsoft, given their dominance in the field. Instead, Mattel must look for opportunities that allow them to tie physical objects to virtual content, thereby leveraging one of their core competencies.

Mattel does not have extensive talent or experience in fields like mobile technology, networking, web development, software programming, etc. In order to become a market leader in more tech-focused play entertainment, Mattel must either partner with skilled firms or acquire skilled firms as well as hiring talent to build these competencies.

Mattel is currently perceived as being a “toy brand for kids.” As such, they may want to consider creating a sub-brand which allows them to develop more sophisticated or edgy entertainment without adversely affecting the Mattel name. (Kids might also consider the product more seriously if the Mattel name isn’t prominent.)

  Mattel must look for innovation opportunities beyond

product development (refer to Doblin’s 10 Types of Innovation) to build a more defensible position in the industry.

Powerful incumbents exist in the video game space in the form of EA, Sony, and Microsoft. Therefore, they must distinguish their offerings from them rather than compete directly. (It should also be noted that compelling low tech experiences can be just as engaging as those incorporating advanced technology.)

Mattel has had difficulty leveraging previous non-toy related acquisitions. They should investigate the cause for this and try to proactively prevent such issues in the future.

It is unclear what the optimal balance of externally generated content vs. internally generated (organic) content should be. This is an area requiring further consideration.

This strategic plan doesn’t focus specifically on improving processes. However, operational aspects of the business (e.g. manufacturing, outsourcing, supplier relationships, etc.) should be explored for optimization.

The price of oil continues to rise with industry experts claiming there’s no end in sight. As such, contingency plans should be established to combat this uncertainty. In addition, potential substitute materials should be explored.

CONCLUSION

Although Mattel is currently being challenged by a shift in children’s lifestyle trends and the growth of increasingly more sophisticated play technology, there is hope.

By leveraging their existing competencies while acquiring new capabilities through internal development and partnerships, they should be able to successfully develop relevant products and services for the Tween market, as well as for children of other ages.