Module 3 – Case
In the Module 3 Case, we will use the Utility Test to inform our understanding of the Mattel case study.
Visit the library, and locate the following article:
Sethi, S., Veral, E., Shapiro, H., & Emelianova, O. (2011). Mattel, Inc.: Global manufacturing principles (GMP) – A life-cycle analysis of a company-based code of conduct in the toy industry. Journal of Business Ethics, 99(4), 483-517. Retrieved from ProQuest.
In a well-written, 4- to 5-page paper, apply the Utility Test to the Mattel case study.
Keys to the Assignment
- Choose an ethical issue raised by the Mattel case study (e.g., you might choose to analyze Mattel’s treatment of employees).
- Apply the Utility Test: http://ethicsops.com/UtilityTest.php
- Besure that you follow each step of the Utility Test (use a separate section heading for discussion of each step of the test):
- Introduce the test.
- Briefly discuss why utility ethics is a valid way of deciding right and wrong.
- Apply the test
Step 1: Identify the alternative actions that are possible and the persons and groups (the stakeholders) who will be affected by these actions.
Step 2: For each of the most promising alternatives, determine the benefits and costs to each person or group affected.
Step 3: Select the action in the current situation that produces the greatest benefits over costs for all affected.
Step 4: Discuss what would happen if the action were a policy for all similar situations.
- Draw a conclusion. If the same action is selected in Steps 3 & 4, then the action is an ethical one. If different actions are selected, decide whether the individual action will produce the greatest good and the least harm, for all affected, over the long term.
- Be sure to use at least two sources from the library to support your discussion and analysis (choose sources that are not included in the Background section of Module 3).
Follow the guidelines in The Student Guide to Writing a High Quality Academic Paper.
You are expected to demonstrate evidence of critical thinking – as defined in the background materials and the grading rubric.
Mattel Company is unarguably one of the largest toy companies in the world with revenues running into the billions (Sethi, Veral, Shapiro, & Emelianova, 2010). Just like all other businesses that are engaged in business, they have an ethical duty to fulfill to their various stakeholders in the way they conduct business.
Mattel had the responsibility of ensuring that their products were safe for all their stakeholders. The company was well-known for its excellent track record on ethical practices, but in 2007, they suffered a major setback when millions of toys were recalled due to various deficiencies that placed the users at risk (Sethi, Veral, Shapiro, & Emelianova, 2010). The paint used on the toys was of a lead-based variety thereby making them hazardous for the children. The company failed in their ethical duty to ensure that every toy they produced was of the highest quality. They did not perform thorough inspections of the products before releasing them to the market. Mattel did not bother about the quality of the goods coming from China as long as the cost of production was kept low.
The shareholders, as well as company executives, aim to generate profits and hence they are happy when the cost of production is kept low. They Chinese companies used the lead-based paint, which is cheaper and readily available, instead of using good quality paint. A question to ask the shareholders and managers: Would you be happy if our company kept earning profits by using sub-standard products to lower the cost of production?
The main idea of utilitarianism is that any action is considered right if the outcome results in the happiness of the biggest number of people in a group or society (“Utilitarianism, Act and Rule | Internet Encyclopedia of Philosophy,” 2017). Utility ethics looks at the outcome of the action and not what happens before. Morality is not based on society values or tradition but rather on the way people feel in the end. It is an excellent way to determining wrong and right since the outcome maximizes the good for a majority of the people and provides a positive results for all stakeholders.
The company should have conducted a thorough oversight and inspection of their factories in China to make sure that they made the products as per the specifications. This new way of doing things would have had different results for the various stakeholders. Mattel could have chosen to produce their products in American factories so as to make quality control easier but outsourcing was a very attractive idea due to the fact that it created bigger profit margins. They would have done the consumer happy but at the cost of failing to compete at a global level. Mattel delegated the responsibility of controlling the paint quality to their Chinese manufacturers meaning that they lost significant oversight powers that they had.
Mattel would have had to make substantial investments in human resources and in conducting the monitoring and inspection of the Chinese factories to ensure quality. It means that they would have used more money than they did thus eating away at their profit margins. It has to be said since the toys with the lead paint were produced under their mandate, they knew about it and decided not to act so as to keep the production costs low. The high-quality toys would have helped to maintain the legacy of Mattel as a company that holds itself in high ethical regard.
The customers, mostly kids, are the lifeblood of the company since the market is the most critical part of any enterprise. They would have received a high-quality toy that would have met their expectations and make them happy. It is vital to note that there are millions of people who purchase Mattel products around the world (“Mattel Responds to Ethical Challenges,” 2017). The health of the children could not have been placed at risk, due to the hazardous lead, if the right paint was used.
The employees of a company are usually happy when their business is showing a positive and ethical image to the public. The recall of sub-par toys caused their image to suffer in the public eye since people considered them to be cutting corners just to make a bigger profit. In the long-term, the employees would be more committed to working for the company if it was not involved in unethical practices.
In this case, the most logical cost of action would have been to behave ethically by taking care of the responsibility to all stakeholders. By applying strict oversight and regulations, it would have cost Mattel a larger amount of money than letting things run as they were. Using original and high-quality paint would have increased the cost of production, thus slashing the profit margins.
However, using high-quality paint would have saved them a lot of money in the millions of recalls they had to make. Consequently, their public image suffered a major hit as people considered them to be a company that engages in unethical practices to cut costs (“Mattel Responds to Ethical Challenges,” 2017). The customers would have enjoyed maximum satisfaction by getting quality for their money hence ensuring a return purchase in future.
The benefits of ensuring that high-quality goods are produced clearly exceed the costs. It is safe to say that Mattel suffered higher costs in repairing their tarnished image and conducting product recalls than if they opted to oversee the process and ensure high-quality paint was used. The outcomes of using high-quality paint are mainly positive than negative.
If businesses made these kinds of decisions, there would be an improvement in ethical practices. It should be a policy for all companies, especially those in manufacturing like Mattel, to ensure that they produce their products in the highest quality possible to ensure consumer safety and brand integrity. The habit of making high quality policy is one that is likely to rub off on the employees too and increase their sense of pride in the company activities (“Utilitarianism, Act and Rule | Internet Encyclopedia of Philosophy,” 2017).
The action of using high-quality paint in the toys and conducting oversight in the Chinese factories is ethically right according to utilitarian economics. The outcome of engaging these measures is mostly positive, and the negative aspect is greatly overshadowed. The majority of the stakeholders would have benefited from the work since it would have resulted in a good public image. It was wrong for Mattel to assume that the Chinese companies would manufacture the toys according to the specified standards. The least they should have done is to inspect the toys before hitting the market to make sure that they passed all the quality tests due to their firm commitment to quality to their customers. Ethical practices are those that produce good results for a majority of people in the long
Mattel Responds to Ethical Challenges. (2017). www.danielsethics.mgt.unm.edu. Retrieved 15 March 2017, from https://danielsethics.mgt.unm.edu/pdf/mattel%20case.pdf
Mattel: Playing with Ethics. (2015). Doing Well by Doing Good. Retrieved 15 March 2017, from https://stakeholder13.wordpress.com/2015/03/31/mattel-playing-with-ethics/
Sethi, S., Veral, E., Shapiro, H., & Emelianova, O. (2010). Mattel, Inc.: Global Manufacturing Principles (GMP) – A Life-Cycle Analysis of a Company-Based Code of Conduct in the Toy Industry. Journal Of Business Ethics, 99(4), 483-517. http://dx.doi.org/10.1007/s10551-010-0673-0
Utilitarianism, Act and Rule | Internet Encyclopedia of Philosophy. (2017). Iep.utm.edu. Retrieved 15 March 2017, from http://www.iep.utm.edu/util-a-r/