Decision-Making and Weighing the Benefits of Low-Cost Production

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Case Write-Up
Decision making and Weighing the Benefits of Low-Cost Production
When Mattel evaluates the decision to contract its manufacturing to offshore firms, it must consider the potential benefits and risks. Cost savings and increased production capacity are vital advantages of contracting with firms in China; however, Mattel's experience with the lead paint recalls in 2007 demonstrates the importance of weighing these benefits against potential drawbacks (Amengual et al.). For example, Mattel must know that it will have less control over product quality and safety standards when contracting out manufacturing (Jiang et al.). Additionally, intellectual property theft is a concern, as local firms may be able to copy Mattel's designs. Mattel should consider implementing additional oversight and monitoring measures when contracting with offshore firms to minimize these risks.
Safety Concerns, Procedures, and Recommendations
Mattel’s safety department conducted risk assessments, verified product safety, and required suppliers to follow strict safety standards. Due to inadequate supplier oversight, product testing and inspection, and company-supplier communication, Mattel could not prevent defective products. Mattel should improve risk assessment, communication, supplier training and certification, and product testing and inspection to avoid harmful effects (Danisman et al.). Mattel should also establish suppli...