Corporate Social Approaches and Activities of Mantel Incorporation - Case Study Example

RUNNING HEAD: Corporate Social Approaches of Mattel Inc. Corporate Social Approaches and Activities of Mantel Incorporation Name: Instructor: Module name: Organization name: Date: Introduction: This paper converses topics connected to corporate social responsibility. Corporate social responsibility (CSR) is a conception whereby organizations think about the significances of the general public by taking responsibility for the impact of their business processes on clients, brokers, human resources, shareholders, communities and other stakeholders, as well as the environment. This commitment is seen to extend further than the constitutional requirement to act in accordance with legislation and witnesses organizations willingly captivating additional steps to advance the quality of life for workers and their families as well as for the neighbouring community and society in general. The different corporate social approaches include: community-based development, whereby corporations work with local communities to enhance themselves; philanthropy approaches, which envelops financial bequests and relieve given to local groups as well as poor communities; the approach of integrating the CSR policy straightforwardly into the business plan of an organization; the approach of creating shared value, which bases on the suggestion that corporate achievement and social welfare are mutually dependent. Enchanting conscientiousness for its effects on communities has an implication that you have to put your ‘house’ (corporation) in order first, which ultimately accounts for the organization actions. Social accounting, a perception that illustrates the communication of societal and environmental impacts of an organization's trade and industry accomplishments to particular significance factions within communities and to society in general, is accordingly an essential element of corporate social responsibility. According to Crowther (2000, p. 20) social accounting; …..an approach to reporting a firm’s activities which stresses the need for the identification of socially relevant behavior, the determination of those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques. There are numerous guiding principles for social accounting, auditing and reporting, for instance, ISO 14000 environmental management standard, Social Accountability International's SA8000 standard, Global Reporting Initiative's Sustainability Reporting Guidelines and United Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR). Currently a lot of organizations generate outwardly audited annual reports that cover sustainable improvement and corporate social responsibility matters; however the reports differ far and wide in layout, style, and appraisal technique (Wheeler, D. & Sillanpää 1997). Some benefits of applying corporate social approaches in an organization include; it acts as an aid to staffing and maintenance, this is due to the fact that some human resources tend to inquire about corporate social approaches guidelines, and having an ample strategy can present an advantage; it counteracts risks for instance corruption scandals that can adversely affect the business processes; engages in building client fidelity based on distinguishing ethical values, hence establishing the company’s products with a uniqueness in the market to counter competition; and it provides a step ahead for operating license provision from the government, since it convinces the government and the society that the company is taking matters such as health and safety and the environment solemnly as concerned and responsible corporate nationals regarding to employment standards and effects on the surroundings. The tradition of CSR is an area under discussion to a great extent contest and criticism. It supporters point out that there is a physically powerful business concern for CSR, given that conglomerates gain in numerous ways by working with a viewpoint broader and longer than their individual immediate, quick-fix returns. On the other hand its opponents argue that CSR sidetracks from the elementary economic role of businesses; others fall out that it is nothing more than apparent casement-dressing; still a score of them acknowledge that it is an effort to forestall the role of government as a supervisory body over powerful international business corporations. What's more is that the corporation pays out a colossal amount of money to construct a first-class image to the communal. It is viewed at, as an action to promote their corporation and not in authenticity to beyond doubt take the corporations errands and try and help the environment. In other features that is what a corporation is; a corporation stays alive exclusively to produce revenue and must set-out as far as spending a colossal amount of money to better its image. In order to entirely explain how a corporation does this I will centre on Mattel Inc., analyse the corporate social report of the company, identify and highlight the key issues being considered by the company with regards to the company and its stakeholders, and critically assess two of these issues to show how this is dealt with in the social report. Lastly focussing on the two areas of concern, evaluate the extent to which the company has been externally criticised over the relevant issues and the responses they have made, paying particular attention throughout to the use of voluntary codes of conduct and internal performance standards. Back ground of Mattel Inc. With a vision of; “The World’s Premier Toy Brands –Today and Tomorrow” Mattel Inc. headquartered in El Segundo, California, United States, is the global champion in the design, production and marketing of children’s toys, yet it begun as a garage workshop sixty-five years ago. The trade name Mattel is an amalgamation of the letters from the founders second and first name, this is “Mat” from Matson, Harold and “el” from Elliot, Handler. At first, picture frames and dollhouse furnishings were the company’s solitary merchandises. As time went on, Handler’s wife came up with a proposal that would perpetually revolutionize the company. She recommended a 3D doll, named “Barbie” subsequent to their daughter’s pet name. At present the 3D doll is the foremost product line for the company and accounts for over fifty percent of its entire sales. In 1960, the company went public and was almost immediately ranked in Fortune’s list of the five hundred leading America industrial companies. The company launched its foremost global sales office in Switzerland by 1964. In 1968, Hot Wheels was established and became the second biggest sale since Barbie. In the middle of 1970’s it endeavored venturing into electronic games, however the company almost immediately botched for the reason that its competitors penetrated the market at a low-prices. In 1999, Mattel Inc. amalgamated with The Learning Company, which manufactures interactive software for computer games. The concept behind this was to develop it into a family products company. This concept in next to no time was unsuccessful and a year later, the merger between the two companies was broken. A merger that was victorious however was that of the Pleasant Company, which is the manufacturer of the famous American Girl collection and other merchandise that include series of historical dolls. Just last year, the Mattel Inc. was acknowledged by Fortune magazine for the second consecutive year as “one of the best hundred company’s to work for”, and in the top 10 of the “100 Best Corporate Citizens,” is ranked one of the “World’s Most Ethical Companies”. It at present sells merchandises which include; a number of toy brands for instance Barbie, Fisher Price, Hot Wheels, Cabbage patch kids, American Girl, and Tyco, in over one hundred and fifty countries globally. These products are sold primarily through retailers except the American Girl brand, which is sold directly to consumers through their retail stores, catalogues and online. Mattel Company provides work for approximately 29,000 human resources working in 43 countries globally in areas that include; manufacturing and tooling, logistic centers and corporate offices. In view of the fact that Mattel, Inc. trades products in more than 150 countries, the company has to advertise their products in those countries and for that reason it actively involves in international marketing. Likewise it’s very active in the importation of stereoscopes from Mexico and China to be utilized in the View-Master merchandises for the reason that there is no United States manufacture of these pieces. The company also, participates within offshore business, for instance, it off-shored it’s die-cast manufacture to subcontractors in China and was very cost-effective until the 2007 recalls of toys for the reason that they contained elevated lead paint concentrations. Mattel Inc. is also drawn in several joint ventures. Seven years back, Indiatimes.com merged with the company to produce as well as sell the biggest on-line toy hoard in India. The toy store carries Mattel brands of Barbie, Hot Wheels, Fisher Price and many more. Mattel’s organization structure comprises of the Board of Directors and higher-ranking management staffs. The Board is presided over by the Chief Executive Officer, and consists of eleven autonomous members, each one chosen for his/her proficiency in managing the category of multifarious issues an international organization countenances. The Board is accountable for directing the company in an approach that champions sustainable benefit for stockholders. This includes ascertaining that the corporation continues to augment its status for delivering innovative products and acting as a dependable leader in the business sector. It controls 5 committees; Audit, Executive, Finance, Compensation, Social Responsibility and Governance. Being a component of its obligations, the Governance and Social Responsibility Committee administers the Mattel’s philanthropic actions and social responsibility issues, as well as the company’s Global Citizenship Reports. Mattel Inc. Corporate Social Report Analysis: Mattel’s Inc. Corporate Responsibility mission is; “Play responsibility”. This digested implies to perform optimal with integrity in all the company processes to bring to the world safe toys that grown-ups trust and children love, and commitments to positively impact their people, their products and our world by playing responsibly. Mattel’s Inc. play values which include; play to grow, play with passion, play fair, and play together, resonate through the company’s Corporate Responsibility objectives as shown in the Table 1, below; Mattel ’s corporate play values Application to corporate responsibility 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. 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. Source: Mattel Inc. 2009, “Playing Responsibly”, Global Citizenship Report, p. 6. Table 1: Illustration of how Mattel’s corporate play values resonate through their corporate responsibility objectives The corporate social approaches applied by Mantel’s Inc. include; philanthropy and community development, which broadens throughout the earth with programs that motivate, educate and generate happiness for children in need. Through philanthropy Mattel’s Inc. holds with high esteem, children: by touching their lives in significant traditions; communities: through programs that enhance the lives of children; partners: through strategic collaborations; volunteers: by sharing their passion; and the Mattel Inc. as a whole: by fulfilling their mission with integrity. The company searches to provide to children and produce happiness all the way through product hand-outs, scholarship and the gift of time from enthusiastic employee volunteers. This is a very significant corporate social responsibility that Mattel inc. plays, for the reason that there are globally many children who live in extreme situations that they can not afford much opportunity for unadulterated, joyful play. Over the past years the company has donated toys worthy billions of dollars to thousands of children’s programs, group homes, children’s hospitals and other nonprofits organizations that directly benefit children in need. Likewise it also supplements the lives of its human resources by identifying diverse volunteer occasions and sustaining their individual charities through the matching gifts program. Still on the philanthropy the company runs the Mattel Children’s Foundation, time-honored in 1978 to perk up the lives of children in need. It functions as a detach charitable organization integrated as a nonprofit public benefit corporation financed from top to bottom through cash donations from the company and calculated like a percentage of Mattel’s pre-tax corporate profits. On the other hand the volunteering programs, the Foundation arranges and puts into practice have presented the company’s human resources globally with prospects to bestow back to their neighboring populations. This has made them to realize that the skills and talents of individuals can have a profoundly beneficial impact on communities and above all it has motivated the Mattel employees to engage in community service and philanthropy. The company’s international settings support impoverished societies and associations in the immediate environs, for instance hospices, schools and orphanages. For instance the community outreach in America, as a donation to Buffalo's "Success by Six" initiatives, Fisher-Price employee volunteers have established sixteen playgrounds with handicapped-accessible features. Another approach of corporate social responsibility that Mattel applies is the approach of creating shared value, which bases on the suggestion that corporate achievement and social welfare are mutually dependent. Mattel Inc. commits to curtailing impact on surroundings and caring for health and wellbeing of the employees and the communities in which it operates. Because of this obligation, the company; integrates ecological, health and protection principles in it’s processes in turn to minimize hazards, lessen impacts in addition to labor to an episode-open workplace; secondly it continually improves its ecological, health and protection performance throughout the product life cycle in turn to eliminate pollution to the environment; thirdly it engages in dialogue with its employees, customers and the public to address their ecological, health and protection concerns relating to its processes and products; and fourthly it assess ecological, health and protection performance with regularly scheduled audits of its operations. Mattel’s Inc. pollution prevention agenda follows the “reduce, reuse, recycle” approach of prioritizing the reduction of waste, followed by reusing waste materials in the process or recycling unavoidable waste into other products. Mattel Inc. allows exchange of ideas and communication with its stakeholders, this in one way or the other helps the company to recognize measures to develop their practices, as well as to respond to up-and-coming issues. These stakeholders comprise: stockholders, human resources, clients, vendors, NGO’s, media channels, business sector organizations, professional societies, government representatives, the societies in which the different Mantel’s Inc. productions industries run and others. The company interacts with the key stakeholder groups through different channels, including in-person meetings, correspondences, workshops and others. For the last few years, the Mattel’s Inc. stakeholder engagement efforts have largely focused on two issues, this is, quality and safety. Away from apprehensions on the subject of selling to brood, the company is building a somber dedication to trade ethics. For instance, the company established a code of conduct called Global Manufacturing Principles. These principles necessitated all business partners to consign to ethical standards that relay to safety, remunerations, and observance to Mattel’s Inc. local laws. However, in recent times Mattel was caught up in a product quality and safety heated discussion. Notably three years back, Mattel recalled in 4,200,000 toys because of its quality and safety defects, for instance portions of the paint1 on a miniature quantity of their toys checked affirmative for lead in concentrations higher than the pertinent values. Example of the recalled products (the Fisher-Price toy) is as shown in Figure 1 below 1. The close up views on the Fig. 1 illustrates the yellow paint consisting of the pretentious region. Source: Mattel Inc. 2009, “Playing Responsibly”, Global Citizenship Report, p. 16. Fig.1: Example of product that was returned due to presence of lead in higher levels. Another safety defects concerned a recall of 18.2 million toys involved tiny magnets2 that can fall off toys and be lethal if swallowed. Figure 2 represents the total lead paint3 and design flaw toys recalled between August and September of 2007. Source: Casey, N., Zamiska, N. & Pasztor, A., “Mattel Seeks to Placate China With Apology”, The Wall Street Journal, 22 September 2007. Fig. 2: Mattel’s Inc. world-wide recalls from Chinese between Aug. to Sept. 2007 2. Cases of magnets include for instance the 2005 incident whereby Kenny Sweet, a Redmond, Wash., toddler, swallowed a magnet and died, and a similar magnet problem whereby toys in Mattel’s Polly Pocket brand caused 3 children to suffer intestinal perforations that required surgery. 3. Lead poisoning in kids is able to inflict intelligence insufficiencies, interpretation and knowledge disabilities, damaged audible ranges, reduced attention spans, and hyperactivity. (U.S Environmental Protection Agency) Figure 2 shows that the recalls were for extreme concentrations of lead and for magnets that could turn out to be loose, and also all of the recalled toys had been made in China where the company manufactures 76% (Mattel Inc. 2009). The recalls were as a consequence of concerns raised by innumerable elevated side view safety tribulations with Chinese imports, as well as unhealthy food and tooth pastes. The recalls ignited authoritative condemnation of the company and its Chinese supply chain, even though in excess of eighty-five percent of the toys were as a result of devise flaws, not the result of inappropriate manufacturing. The impacts that tagged on following the recalls included; Mattel Inc. undergoing a reduction of almost 30 million United States dollars, in its pre-tax operating profit; the greatest of all impacts is that it lost trust from its stakeholders, a very significant function in corporate social responsibility. To achieve trust, organizations are accountable for their production roots and end results which go together with their ethical operations and health and safety draw on (Carroll & Buchholtz 2006). Right from its customers, the parent’s of the children were stressed with the issue of safety to their children; it purely represented a psychological torture. This is due to the fact that one never knew the Mattel product to be recalled next, what lethal content it contained and what harm it had already inflicted on their children. This never left the children out as their toys that bared any Mattel trademark were shelved for safety concerns. Other stake holder’s affected were the off-shore business partners in China where the recalled products originated from, in that the some sub-contracting factories were closed hence employees were rendered jobless, to an extent of one of the sub-contracted factories committing suicide. China as the host country for the Mattel’s off-shored business also shared its own woe of the impacts, as it affected China exports. Within the acme echelons of China's government, distress has been mounting regarding the considerable damage that has been done to the "Made in China" label. Almost no wealthy individual in the global society wants to be associated with any product that has been labeled "Made in China". This is affecting international markets for China products. The case exhibits a very devastating demerit of off-shoring business processes. It also shows how ineffective management of supply chain can be a painful wound to the respective company and how proper use of inspection and testing can save the company image. It also presents the chance to scrutinize response to a crisis state of affairs, and the rapport between a company and government. To be concise the Mattel’s product safety concern demoralizes the corporate social responsibility issue in 3 points of view: quality control, not standing-in ahead of complaints, and disclosure of information. The stakeholder management techniques being employed by the Mattel Inc. is a formal stakeholder engagement role in their corporate affairs department. These stakeholder management techniques include; coordination of in-house contacts to the company human resources globally; engagement by means of peripheral stakeholders on the subject of concerns of concentration and searching to enhance reciprocally delightful clarifications when appropriate; monitoring and evaluation of up-and-coming legislation and guidelines, and representing the company to governmental organization’s globally; expressing community exposure on corporate responsibility subjects as well as leveling side views and grounding of this and analogous information; in addition to directing the company’s charitable activities, together with the Mattel Children’s Foundation. Company criticisms: Following the safety concern and product quality skirmishes Mattel Inc. responded by establishment of; supplier certification requirements, whereby all vendors are obliged to procure paints and other surface coating materials from Mattel certified suppliers, which are only certified after gratifying Mattel’s standards for production, testing and recordkeeping. Subsequent to certification, Mattel from time to time audits certified suppliers. Within extraordinary occasions as an essential outside layer cannot be supplied by a licensed partner, further analysis is necessitated and supervision measures are relevant. On the positive side this leaves no stone unturned with issues concerning extreme concentrations of lead, but on the other side of the coin it encourages monopoly to these paint companies that Mattel prefers. This further encourages prejudice in the managers who handle quality assurance as they will have a tendency of awarding tenders only to these companies that they deem fit. Another establishment was analysis requirements, whereby the company augmented prerequisites for examining lead in paint and outside varnishes. Previous to it is use on Mattel products, every consignment of paint, as well as paints from licensed suppliers, must be tested for conformity with lead standards. Samples of paint are tested during manufacture and completed toys are also examined all through the preliminary production process and every so often throughout production subsequently. In this regard the sampling regularity, together with the raw material and in-process testing, guarantees an extremely high degree of assurance in the compliance of their toys. On the other side the required testing obliterates the toy for future use, and for this reason the company is incapable to analyze every single product, thus still posing more quality and safety issues. Therefore, Mattel should know that they have the social responsibility to examine the quality of their toys; or else, their corporate image will be dented. Furthermore, the well-groomed managers should recognize that trust from clients is exceptionally imperative in this highly competitive and unpredictable market. Three years back, Mattel Inc. instituted a new organization within their company, with a target of acquiring numerous global citizenship related enterprises mutually as an incorporated corporate responsibility group. The Corporate Responsibility organization is led by a Senior Vice President who is responsible to the chief executive officer and acts as an associate of the executive committee. As an autonomous body from other functions, Corporate Responsibility is better located to guarantee appropriate implementation of policies and practices, as well as to identify, increase and present oversight to accurate concerns in a well-timed approach. The new-fangled association includes the subsequent purposes: Global Product Integrity, Global Sustainability, Corporate Affairs, and Corporate Responsibility Audit, which is a new occupation zeroed on authenticating acquiescence with the corporate responsibility principles. The corporate responsibility organization structure and their respective functions are as in Figure 3. Fig. 3: Structure and Responsibilities of Mattel’s Corporate Organization. A part from the responses to combat the two issues of recalling toys other factors evident from the analysis of these establishments include; the increase in recognition of moral consumerism over the past years, in that as population increases, so does the strain on limited non-renewable resources necessary to rally rising consumer demand (Bhattacharya et al 2008, p.34). Consumers have now become aware of the environmental and social implications of their usual consumer decisions and are for that reason starting to make purchasing choices related to their environmental and ethical concerns. So in the act to remain in line of soaring profits Mattel Inc. has decided to beef up its corporate social approaches, in order not to loose its esteemed clients. As Mattel conglomerate chases intensification through globalization, it has come across new challenges that compel limits to its expansion and prospective profits. Government set of laws, taxes, environmental limitations and anecdotal principles of what comprises employment opportunities are tribulations that can cost the company wads of money. Several organizations sight ethical concerns as merely an expensive impediment, while some companies could be utilizing corporate social approaches as a premeditated tactic to achieve community support for their existence in global markets, helping them prolong a spirited lead by using their social contributions to provide an involuntary level of publicity. Perhaps this is another clue for Mattel intensifying its corporate social approaches. Perhaps the responsibility among Mattel’s corporate and other stakeholders have labored together to strain the company for a transformation. Shareholders and investors, through socially responsible investing might have exerted pressure on Mattel Inc. to behave responsibly. NGO’s may also have taken a leading role, of influencing the power of the media and the Internet to increase their scrutiny and collective activism around Mattel corporate behavior. Thus feeling the thrust and fear of loosing its image Mattel decided to intensify its corporate social approaches. Other pressures could be due to the increase of ethics training inside the company, some of it required by government bylaws might have been another compellation attributed with varying the behavior and culture of Mattel Inc. The objective of such training is to help employees make ethical decisions when the answers are unclear. Another compellation could have come from the task of autonomous intermediaries, particularly the government; in guarantying that Mattel Inc. is prohibited from destruction of the broader social good, as well as community and the environment. A number of critics think that Mattel’s corporate social responsibility approaches are carried out by the company to distract the global community from ethical issues created by their core operations. They argue that the corporations established the corporate social responsibility approaches for the business advantages they enjoy from beginning to end raising their status with the society or with governments. They advocate that the approaches subsist exclusively to take full advantage of profits but not to progress the welfare of the general public as a whole. Another concern is when the Mattel Inc. alleges to advance corporate social responsibility and be dedicated to sustainable development at the same time simultaneously engaging in detrimental business practices for instance using Bisphenol-A (BPA) in manufacture of children food utensils, which is characteristically found in polycarbonate plastic, a costly material that is largely utilized for its non-breakable properties in explicit safety-related applications, such as bike helmets and eye glasses, the use of this material in food utensils is dangerous (Matten et al 2003, p. 109). More lately, as corporate social responsibility has turned out to be conventional, the company has carped up its approaches related to its employees, environmental and quality and safety issues. Critics apprehensive with Mattel’s corporate double standards and disingenuousness by and large recommend that enhanced governmental and international parameters and enforcement, more willingly than deliberated measures, are indispensable to make certain that Mattel Inc. performs in a socially responsible conduct. Many others, put it out that the company’s corporate social responsibility ought to be give the impression of being a corporate moral responsibility, and thus maximizing the reach of corporate moral responsibility by centering more on direct effects of the Mattel Inc. as viewed through a systems perspective to recognize stakeholders. Conclusion: Truth to be said, it is a fact that corporate social approaches can considerably advance long-term commercial effectiveness for the reason that it decreases risks and incompetence’s at the same time contributing to a multitude of potential advantages for instance improved brand reputation and employee commitment, but on the other hand it should be applied with maximum integrity and dignity in order not to comprise its noble intentions. References: Bhattacharya, C.B., Sen, S. & Korschun, D. 2008, "Using Corporate Social Responsibility to Win the War for Talent," MIT Sloan Management Review, vol. 49, no. 2, pp. 37-44 Carroll, A. & Buchholtz A. 2006, Business and Society: Ethics and Stakeholder Management, 6th ed. Thomson/South-Western, Mason, OH. Crowther, D. 2000, “Social and Environmental Accounting", Financial Times, Prentice Hall, London, p. 20. Mattel Inc. 2009, “Playing Responsibly”, Global Citizenship Report, p. 16-20 Matten, D., Crane, A. & Chapple, W. 2003, "Behind the mask: Revealing the true face of corporate citizenship". Journal Business Ethics, Vol.45, No.1, p. 109. Wheeler, D. & Sillanpää, M. 1997, The Stakeholder Corporation: a blueprint for maximizing stakeholder value. Pitman, London. Wood, D. 1991, “Corporate Social Performance Revisited”, Academy of Management Review, Vol. 16, No. 4. Available from: . [28 April 2010]. Read More