MGMT 6270: Mattel Turnaround Performance Improvement Initiatives

This report provides a comprehensive analysis of Mattel's turnaround strategy, focusing on the challenges faced by the company in the rapidly evolving toy industry. It examines the recommendations made for CEO Ynon Kreiz, including the development of products for tween children with integrated software and video games, the exploration of alternative distribution channels like online selling and small retail shops, and the relocation of manufacturing facilities to Mexico. The report also assesses the situation, complications, and resolutions related to Mattel's performance, emphasizing the need for cost control, gaining movie rights, and adapting to changing consumer preferences. It highlights the importance of customer satisfaction, overall quality, and market reputation as key performance metrics for improvement. The report also suggests that Mattel should collaborate with competitors like Hasbro or Disney. The ultimate goal is to increase sales, revenue, and brand reputation in order to better compete with other toy industries.

Running head: AN ANALYSIS OF MATTEL
AN ANALYSIS OF MATTEL
Name of the Student
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Recommendation Summary
With the rapidly changing environment in the toy industry, one recommendation that
Mattel should follow is to pay attention to the development of products that are aimed for
tween children (10-12yrs). They should make toys that integrate the usage of computer
software with a particular focus on the development of video games as the children of this
age wants to explore new things (Gobira & Mozelli 2018). These products are not reliable on
license agreement; therefore, it will reduce the cost. Mattel has a weak distribution channel;
consequently, they should look for an alternate distribution channel like a small retail shop
and new website design or online selling. The retail store will help the company in the future
with the development of a strong brand presence. The online purchasing will help Mattel to
be less dependent on the distribution channel and will increase the sale as online shopping
has become very common. Thirdly Mattel should refocus on the relocation of their
manufacturing facilities, especially in Mexico. This relocation will be advantageous on four
levels. Firstly the relocation will reduce the time taken for shipping, thereby allowing
increased production. This will further reduce the cost (Shahbaz et al., 2018). The relocation
will secondly help to prevent the product from counterfeiting, which was a critical problem
with the Chinese manufacturing industry. Finally, trade relations will be normalised than
before with better regulation. Therefore, dynamic capabilities should be involved to develop
as well as to adapt to the shifting nature of the consumer behaviour in abroad and elsewhere.
Situation
As the preference of the consumers is shifting while purchasing toys, therefore there
is a pressure on Mattel and other toy shops to redefine their existence in the toy industry.
More consumers now choose to buy from online sites as a result of which the popularity of
Mattel has declined with new shops that are available online. Despite its strategic acquisition,

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Mattel still faces a lot of threats both internally as well as externally. The cost of Mattel
products has increased rapidly than its sales revenues have. They are unable to beat Hasbro as
the latter is known for making figures of superheroes. Mattel has also been exposed to
fluctuations in the price of oil (Pierce & Schott 2016). With an increase in oil price, Mattel’s
margins will be narrowed. The company needs to focus on its cost control to increase the sale
of volume products. Mattel’s rights on movies are also quite less than that of its competitors
such as Hasbro. They need to gain the movie rights for the production of action figures
(Plunkett, 2019). Mattel has a good market share but has been incapable of expanding their
strategy to focus on other areas of the toy business. However, Mattel has now made
announcements regarding its presence in high-action feature films. They are also
transforming Mattel into an IP driven toy industry. They have also taken a step towards better
leverage that will manage the extensive portfolio instead of an individual franchise. However,
it is still uncertain how these steps will influence the viewers, cost, and brand loyalty.
Complication
Though Mattel’s capital enhancements have arguably increased and added value to
their products and services and have helped them in maintaining competition in the industry
their inadequate distribution channel has left the company vulnerable to the demands of
specific retailers. Some of their products are also contingent regarding the availability of
licensing agreements. They have a poor catalogue for tween as well as teen products. It had
suffered significant losses in the year of 2017 (Mattel 2019). Changes and new trends
regarding the popular culture, movies, technology, media as well as fashion may adversely
affect the toy industry. They are also unable to advertise their products successfully as a
result of which the customers are unable to connect with them. Another complication that is
faced by Mattel’s products is that it is highly seasonal and therefore the sales depend
primarily on the short holiday season. Consequently, any event that takes place during the

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peak season of the business can have a direct impact on the sales of the company (Katjiruru,
2016).
Furthermore the strategies that are undertaken by the company requires market
surveillance. Mattel is recently involved in the increasing series of initiatives towards cost
savings. However, there is no assurance whether Mattel will be able to anticipate its cost
savings by referring to its previous cost-saving programs. The cost savings that are expected
as well as the anticipated expenditure is not free from risks, assumptions as well as
uncertainties (Mattel, 2019). Mattel’s indebtedness could create adverse problems to raise
their additional capital for their funding operations; it will further limit the company to react
to new changes that are taking place in the market and expose it to the risk of the interest rate.
Resolutions
It is recommended that Mattel should collaborate with Hasbro or Disney or Kreiz, the
CEO of the Mattel company should devise effective measures such as firstly using alternative
methods for distribution channels. Kreiz should acquire companies or the products that will
complement the existing lines as well as a target market. Secondly, the company can relocate
their products that have been discussed in the previous section. Kreiz can also work towards
developing new as well as specialised stores and make room for the growth of the
international market. They should make investments in the web retailing market opportunities
as people now are more comfortable in using online shopping. Lastly, the CEO and his team
can come up with new advertising strategies on the Internet as well as on the television.
These resolutions will help Kreiz and his team to increase the sale of their products as well as
increase their revenue. It will further enhance the reputation of the company and will help
them to compete with other toy industry like Hasbro and Disney that are moving ahead in the
race. The team should come up with new advanced toys that would suit the preference of the

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tween and teenage children. They should now venture into the world of video games that are
quite popular among adolescents (Leavy, 2017). Therefore, customer happiness, overall
quality, as well as reputation in the marketplace, are the performance metrics that should be
followed by Mattel to improve their current situation in the market.

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