Mattel, a giant toy producing company that has a global presence had to recall more than eighteen million toys (18m) from the markets around the world in the year 2007. Several things were not in order, and if left to the consumers, the toys would have led to serious harm. The problem was that toys manufactured in Chinese plants had lead paint while other toys that had been designed in the United States were modeled along with obsolete technology whereby a detachable magnet that was easily removable posed danger to children who would easily swallow the tiny magnets. The company had to recall the loose magnet toys to replace them with the ones designed using recent technology that utilized fixed magnets.
The chief executive officer of Mattel, Bob Eckert had a challenging time trying to organize the company to deal with the crisis in the best possible way. It is not often that a company spends its resources in producing more than eighteen million toys and then realizing that all of them are faulty and therefore need to be recalled from the market. The nature of the impact is indescribably huge that serious thought has to be invested in any action that is taken in dealing with the recall. At the top of the list are ethical obligations that the company leadership had to put into consideration.
In the wide field of corporate ethics, much of what is dealt with is viewed from a professional and applied angle. The elements have a practical orientation in that the impact is visible in society, and they have a moral touch that calls for the need to mind the harm that may be inflicted on a third part even as the business owners make their ends meet in terms of profits (Badiou 2001, pp.12-16). In the Mattel recall case, the toys had already been distributed to various stores around the world. They had reached the market in their faulty nature and therefore the smaller area of marketing and sales ethics is in play.
The Options at Bob Eckert’s Disposal
The Chief Executive Officer had several options at his disposal as the crisis unfolded. He would have looked the other way and waited for the toys to be rejected by the market. The other option was to bribe those that had identified the problem to ensure that no one talked. This would have made the unsuspecting consumers go forward and buy the faulty toys. Then of course there is the option of organizing for the recalls of the faulty toys. This is the option that the Chief Executive officer took and the results will be examined in this report.
Ethical Obligations in this case based on the existing theoretical framework of business ethics
Mattel as a company does not exist in a vacuum. Numerous parties are part and parcel of the company. The difference between these parties is the degree of involvement. The first part involves the stockholders of the company. These are the people whose capital runs the company.
They are also referred to as shareholders. Ideally, they are the ones who make the decisions that determine the direction that the company moves. But in today’s business world, responsibility is highly delegated and much of the serious decision-making is left in the hands of the Chief Executive Officer. This is why Bob Eckert understood that it was his responsibility to move with speed and do what he thought was best for the company. The stockholders are instrumental in their capacity as the capital owners in that in the absence of their capital, the company does not exist.
Leaving the above aside, the employees of Mattel as a company are another important constituency. They dedicate long hours towards the wellbeing of the company and to them; the company is their second home. The sacrifices they make as demonstrated by the stretched working hours in times of pressure show the level of attachment that exists between the company and the employees. It is the dynamic nature of the company’s employees that keeps the company moving forward in a highly competitive business environment. It is important to note that this is not exclusively concerned with Mattel but the whole business world.
It is more relevant to Mattel because the nature of the commodities that the company deals in relies on employees’ enterprise and creativity. The point is that the toy designs have to be interesting to the children and safe at the same time and this is not going to be the work of the stockholders. It is the employees who do the designing in most cases.
The last constituency but not any less significant are the consumers. In some cases, this constituency has been declared the most significant element in any business given that even with the capital from the stockholders, if the consumers of the commodities funded by stockholders and produced by employees are not present, the company is as good as not being in the market. Their vital position has made the modern business world move an extra mile in ensuring that their needs are met and their voices are heard.
What Theories played out and what was Bob’s Dilemma?
All the constituent parties covered above play a part in the business. The business ethics theories that guide business discussions are the stockholder theory which argues that the sources of the capital that runs the company are the most important and the stakeholder theory that argues that all stakeholders are supposed to be taken care of if a company is to succeed. Then there is the social contract theory that takes the position that consumer and employee interests are to be satisfied in business without necessarily breaking existing law. This is the nature of the ethical world in business (Bradie 1994, pp.18-21).
Bob Eckert knew that the owners of the company had invested massive resources in the production of the faulty toys. What was he to do to ensure that they did not lose out in the whole crisis? Was recalling the toys not plunging the business into massive waste and thus hurting the stockholders? What about the consumers whose children were swallowing magnets due to the non-fixed magnets in the toys produced under outdated technology? Was the company not morally obliged to save these children? Market ethics dictate that consumers be protected at all costs even as sellers search for profits (O’Neill 1998, pp.21).
How about the workers who had spent long hours in factories painting the toys and fixing the magnets? Was their work not going to waste because of the recalls? These are the ethical concerns that Eckert faced when viewed from a theoretical point.
The Option Taken By Eckert: The Ethics of Balance (Stakeholder Theory and Social Contract Theory)
As noted elsewhere in this report, Eckert had the option of doing nothing at all when the problem surfaced. The consequence of this would have been the loss of confidence on the part of consumers in Mattel products. This would have led to the eventual demise of the company from the business world. Also, the toys that would have reached consumers who were still ignorant of the faults would have inflicted untold harm to their children. The other option of bribing those who had identified the problem, as well as those who would have taken the company to task for selling its faulty commodities, would have led to serious harm to consumers.
Corruption is rampant in the systems around the world and bribery may or may not have worked. Under this option, the faulty toys would have been discovered in the long run and consumers would have run away anyway. Some businesspersons believe that there is no such thing as business ethics, and this would have been such a nice option for them (Maxwell 2003, pp.11-15). The last option that Eckert had was the recall, and this is what he did.
The ethical considerations here were the harm the faulty toys would have done to the company name if left in the market and the harm the toys would have done to the children using the toys. The ordinary eye sees consumer interest as the driving force but company interest was first in this case. The blurred line between company interest and consumer safety concerns can lead to wrong conclusions (Duska 2007, pp.35-36). The fusion of company survival concerns and consumer safety issues gives a two theory framework as guidance for Eckert’s actions.
First, under the stakeholder theory, Eckert wanted to ensure that the toys were recalled as a way of protecting the company by showing consumers that the company wants the best for them and therefore when there is a mistake in the commodities that have reached the market, the company is willing to go the extra mile and recall them despite the huge cost of both production and recall. Then there is the evident concern that consumers are to be protected at all costs.
Thus recalling the toys were meant to ensure that the children making use of the toys were not hurt in any way. The other party in the stakeholder theory is the employees who are factored in through company interest. If the company dies, the employees lose their jobs. Thus recalling the toys meant that consumer confidence is retained and company life assured. This directly meant that the employees’ jobs were secured.
My Team’s Advice to Eckert in avoiding a similar crisis in the future: Organizational Ethics
My team’s advice to Eckert would involve the following proper quality control systems. The background to the problem is clear that one set of toys were affected by lead paint applied in Chinese plants. The second set had been produced under earlier technology that had been rendered obsolete by developments in the field. This means that the design problem that was due to scientific or design developments was not to be blamed on anyone. On the other hand, the paint problem means that some people who were in charge of ensuring that the quality of the products (toys) was up to market standards did not carry out their duties as required. Had they done so, the paint problem would have been detected long before the toys were on the market.
It is on these grounds that I and my team would advise Eckert to put in place a well-trained quality monitoring or control team. The emphasis is that the company has a moral obligation to the millions of children around the world who would get hurt by faulty toys. The extension of the argument is that faulty toys in the market will hurt consumers who will shift to other toys and therefore make the company lose business. This would hurt stockholders and the employees of Mattel. This piece of advice is taken into account will make the company avoid a repeat of the crisis.
Bob Eckert had a moral dilemma during the toy recall by Mattel. But the steps he took in handling the recall were the best in the circumstances. This is because the best theories in business ethics that include stakeholders’ concerns and the social contract can be seen in his actions. There is evidence that he was concerned that the company was going to lose customers by selling them faulty toys. There is also evidence that he had concerns over millions of children in the world being harmed by faulty toys.
Badiou, A., 2001. Ethics: An Essay on the Understanding of Evil. London: Verso Publishers.
Bradie, M., 1994. The Secret Chain: Evolution and Ethics. New York: State University of New York Press.
Duska, R., 2007. Contemporary Reflections on Business Ethics. Boston: Springer Publishers.
Maxwell, J. C., 2003. There Is No Such Thing As Business Ethics. New York: Warner Books.
O’Neill, J., 1998. The Market: Ethics, Knowledge and Politics. London: Routledge.