The Business Ethics Report 2022

Executive Summary
In the business, it is important for the organizations to gain the confidence and trust of their main
stakeholders; especially, when goes for global operation, for this purpose they adopt the business
ethics, global codes of conduct, corporate citizenship, and corporate social responsibility to improve
corporate behavior. Mattel, Inc. is a leader in toys and family products worldwide that faced the problem
of toys recalls due to the toy safety related issues. Product recalls are generally considered normal
practice in a business environment. Since the company is designing, producing and marketing the
products mainly for children in the global environment, so there is always chance of conflict due
to concerns about social rights of children. This report discusses the recalls issues of the toys,
Mattel’s response upon the issues with respect to ethical theories, the Mattel’s response to
stakeholders, children’s toys concern safety issues, and at the end lesson for the Mattel from the
event of toys recalls.
The business ethics are related to the applied ethics branches of ethics. This report will discuss
Virtue ethics, the Utility theory, the rights theory, and the Justice theory of ethics. In the case of
Mattel, it did not act in an ethical manner as its action were against the principles of Virtue
ethics, and Utility ethics theories: it delayed to take action of toys recalls upon the exploration of
defect in toys; on the other way, the action of shifting the production of toys to China to reduce
the cost, brings the consequences of low product quality that contribute towards the potential
danger to children, share price decline, and worries in the life of its customers not happiness. On
the other hand, Mattel failed to adopt the strategies that could adhere its counterparts to the
Mattel’s adopted policy of high standards, and its best efforts to produce the safest product, that
came it under the controversy of unsafe toys. It was due to the negligence of one segment of
stakeholder of the organization and other segments suffered from it. Mattel also missed the
complete compliance of the all standard and allow industry, companies, and almost the children
exposed. Instead, taking proper action it delayed it by engaging in expending a huge amount of
exertion on upholding its repute by use of media to blame the Chinese manufacturers and suppliers,
but actually the issue of loose magnet in the toys purely related to the Mattel’s internal design flaw.
This delay in the action upon the harmful product might demonstrate the Mattel's anterior
towards business interests by dominating the interest of its customers and product quality.
To prevent the issues concern to the children toys safety Retailers, Parents of the children, the
Government, Standard setting agencies and Toy industry have huge obligation and
responsibility. The U.S. Government has laid down various laws and regulation to ensure the
safety of toys, it completely disallows the use of lead paint on toys exported to the country,
emphasize the more inspections of the toys that are imported.

Table of Content
Page No
1.0. Introduction
2.0. The Matte, Inc. and the Toys Safety Controversy
3.0. The Controversy in terms of Business Ethical Theories
3.1. The Virtue ethics
3.2. The utility theory
3.3. The rights theory
3.4. The Justice theory
4.0. Stakeholder Management & Business Ethics
5.0. Mattel’s Response on issues
6.0. The Safety of Children's Toys
6.1. Government Regulators
6.2. Consumers Advocate
6.3. The Toy Industry
6.4. Children’s Product Retailers
6.5. Standard Setting Organizations
7.0. The lessons for Mattel, Inc from Business Ethical Dilemma
8.0. Conclusion
9.0. Recommendations
10.0. References

1.0. Introduction
What are important for the organizations to sustain in the business? The stakeholders! It is
crucial for the organizations to derive confidence and trust of their main stakeholders. Business
organizations adopt different strategies to create a convinced relationship, for this purpose and
for guidelines they follow the business ethics, global codes of conduct, corporate citizenship, and
corporate social responsibility to improve corporate behavior. This report is around the Mattel,
Inc. that is a giant in toys and family products worldwide that designing, producing and
marketing the products mainly for children in the global environment. This report will discuss
the toys recall issues of the toys due to the safety concerns. This report will demonstrate the
Mattel’s response upon the issue with respect to ethical theories; the Mattel’s response to
stakeholders; children’s toys concern safety issues and important steps to make sure the toy
safety; and at the end lesson for the Mattel from the event of toys recalls.
This report will show the response of the Mattel according to the above ethical and stakeholder
management concepts, this report will show that either it has respond according to socially
responsible manner or not. This report will discuss the issue with respect to the Virtue ethics: the
decision maker should “take the steps in a right way at the right time in the right place to do the
right thing”; Utility ethics are tightly concerned with the effects or consequences of an action, a
positive or negative effect on the other; the Rights theory of ethics is grounded in moral
principle, it is related to the norms, and it does not regard the consequences of an action; and
according to the Justice theory of ethics, the human should be treated fairly.
The responsibility to take care the interest of all stakeholders, including shareholders, employees,
investors, suppliers, customers, society, etc. is called stakeholder management. In business the
stakeholder management is crucial for success and the organization should regard the contracts
and agreements concern to stakeholders according to ethical standards. It is the role of the
management to adopt the strategies those could inspire the stakeholders to put their all exertions
for the production of quality products. The organizations those failing to treat their stakeholders
properly are damned to failure. this report will discuss the important role of different segments of
the society, as to improve the toys and other product, retailers, parents of the children, the
Government, standard setting agencies and toy industry have huge obligation and responsibility.
At the end this report will show the significant lesson for the Mattel from the toy recall event.

2.0. The Matte, Inc. and the Toys Safety Controversy
Mattel, Inc. is considered as a leader in toys and family products worldwide. Mattel, Inc. has
designed and manufactured various famous brands such as Disney, Tyco, Cabbage Patch Kids,
Barbie doll, Fisher-Price, Hot Wheels, Matchbox, board games, etc. The company started in
1945 with the business of picture frames, but soon the company switched to the toy business.
The company has offices all over the world, and its headquartered is situated in El Segundo,
California. Its annual revenue is nearly $5.9 billion.
Product recalls are normal practice in the business environment, especially in some industries,
Mattel Inc. has been more than 14 safety recalls since 2007 but the recalls of the toys at the
season of Christmas in 2007 were different from normal due to its time and circumstance of its
occurrence. That Christmas was the occasion, that Mattel Inc. must remember to learn a lesson;
there were two unlike recalls for two unlike reasons, the first was due to the lead paint and the
second was due to the loose magnets; during that recalls Mattel had faced the bitter response of
the media and general public. The issue has come out when a European retailer disclosed that
toys by Mattel contain lead paint. Investigation revealed that about 10 million toys made in
China were involved. Mattel, On August 2, 2007, declared a recall of lead paint affected toys. In
September 2007, Mattel announced another recall due to the issue of loose magnets used in the
toys that could cause the choking hazards in babies in this case Mattel recalled more than 21
million toys despite the lawsuits.