Corporate Social Responsibility Memo Chief

Corporate Social Responsibility Memo

Chief Executive Officer

Ref.: Corporate Social Responsibility at Mattel

The new global economy has increased not only the amount of information exchanged, but, as a consequence of that, the competitiveness between companies operating on the international market. At the same time, the awareness of consumers and other shareholders has increased as they are more exposed to information as it is propagated through different channels, such as media and the Internet. This was probably one of the basic causes of the growth of corporate social responsibility (CRS) as an essential element of any company's strategy: the increased awareness of a company's actions and their impact on society makes companies keener to address such issues in their business activity. As Porter points out, "CSR has emerged as an inescapable priority for business leaders in every country" (Porter, Kramer 2006).

The new channels of communication have also increased awareness with the Chinese population and consumers. Events such as the Sichuan earthquake were known immediately and in detail around the world and companies who were keen to help. Moreover, they were known to the Chinese population, despite a level of censorship that may be bigger than in other countries. Bottom line: just as in other countries, China has become more sensitive and more likely to embrace CSR values and to be aware of companies having embraced such values.

Porter identifies four main arguments in favor of CSR: moral obligation, sustainability, license to operate and reputation (Porter, Kramer 2006). All of these are connected with the perception of the public opinion of a company's actions. From that perspective, the financial crisis and the governmental bailout has probably made public opinion even more aware of the necessity to monitor the actions of companies and the events going on in the markets. A company that will have a well-developed CSR is likely to be perceived as a better functioning company. In the end, the customers are likely to be more sensitive to the actions of a company and this will influence their purchasing patterns.

The financial crisis also brought about economic recession and, from that perspective, the commitment to CSR necessarily increased. If anything, the consumer has become more interested in CSR during hard times and is willing to pay a premium if he knows part of that money will go to a CSR project. At the same time, on the recipient's side, the economic crisis has increased the number of people living in poverty, thus increasing the number of areas where companies can operate on the social side (Quelch, Jocz 2009).

Mattel has fully embraced the CSR norm and the most obvious expression of this can be found on the company's website, where the motto "play to grow play together play with passion play fair" shows the potential customer from the very beginning the company's commitment to the idea of playing fair. There is a specific part on corporate social responsibility where the company specifies the company mission in terms of sustainability. As such, the company is dedicated to ensuring the thoughtful management of the environment, as well as to assuring the health of employees and customers and other shareholders involved.

Part II

However, despite its commitment to health for all shareholders involved, Mattel was involved in an ethical and moral conflict in 2007, which transformed itself into a PR problem. The company had outsourced some of its production in China and some of the toys from the respective unit were discovered to have a high level of lead, thus jeopardizing the health of those entering in contact with the respective toys. The PR crisis was obvious: here was a company that had advertised its values and specifically mentioned providing and defending health as one of them and, on the other hand, with the purpose of increasing profits, it had produced and commercialized toys that could harm people.

The mistakes that Mattel had made were clear, but the most important of these was the fact that they had not ensured the proper management of the production units in China and, moreover, that it had not ensured a proper quality and testing procedure that could be used to determine the increased lead quantities in some of the products coming out. At the same time, it had not properly associated the outsourcing of production with CSR and had simply been perceived as a company that is willing to go to all length in order to maximize its profits.

However, the actual crisis could also become a good opportunity to show how the company actually cares about its social responsibilities. On one hand, outsourcing had not been done only to increase the company's profits, but it was done so as to be able to benefit the local community, offer jobs to the Chinese people and increase the overall living standards in that country. At the same time, outsourcing to China also meant training and investment in people, making them better adapted to the global working environment and providing them with an increased opportunity to participate more actively on the job market. Finally, outsourcing to China also meant a positive impact on the community. Other then this, the company needs to make sure that it associates its image with CSR by focusing on a certain event that has grasped the attention of the world. Such an event is the Sichuan earthquake

Part III

This part of the memorandum will describe the proposed actions for the CSR program that Mattel. There are two important issues that the company needs to focus on: (1) connecting the ideas presented in the previous paragraphs to the situation in Sichuan and (2) using the appropriate communication strategy in order to ensure that the world finds out about Mattel's action.

(1) as mentioned, the company should attempt to associate the idea of outsourcing with the benefits that such an action brings to China and, in this case, more notably, to the Sichuan area, affected by the earthquake. The first action could be opening a new production unit in the respective region. This would bring jobs to an area that has been economically affected by the earthquake. Creating jobs will also increase the standards of living in the Sichuan region.

On the other hand, the company can play an active role in rebuilding the area by allocating a small part of the profits made in China to the reconstruction process. For this, the company can team up with the Chinese government and identify together the areas and segments where Mattel's involvement can actually make a difference. The financial effort could be directed towards rebuilding some of the houses, perhaps some of the schools, turning the CSR campaign in a campaign that will advertise focusing on education. For this, the company can also cooperate with teachers in order to identify other educational programs where Mattel can invest.