Operations Management Balancing Ethics With Essay

Excerpt from Essay :

1073).

Brocklesby advocates 'Soft OR' approaches such as Multi-Criteria Decision Analysis, Data Envelope Analysis, Cognitive Mapping, Soft Systems Methodology and the Theory of Constraints to allow for "conflicting objectives and multiple subjectivities" (Brocklesby 2007, p.1073). For example, the Theory of Constraints (TOC) deploys the TOC Thinking Processes to map social, material, and personal consequences of collective decisions. A TOC Current Reality Tree, searches for root causes of problems. A representation of TOC 'evaporating clouds' represent conflicting views, rather than assume that a decision leads to a linear and defined result. Future reality trees determine possible future outcomes, but side effects, prerequisites, required actions and constraints must all be considered (Davies et al. l 2005, p.306).

TOC 'trees' that acknowledge a multiplicity of influences impact decisions. They also underline the falseness of the rational actor/profitability model. Every decision has a human element. The question is: what are the organization's priorities? Constraints must be managed, otherwise they will 'manage you.' "The constraints will determine the output of the system whether they are acknowledged and managed or not" (Willett 2009)

Overview: case study

The question of whether ethics should have a role in organizational management is raised in the case study of the Mattel Toy Company. Mattel is the world's largest toymaker, until recently, one of the most trusted names in toys. It manufactures some of the most beloved childhood icons of America, including Barbie, Hot Wheels, and Polly Pocket. However, the company's name was tarnished when Mattel had to issue an expanded product recall, "involving vehicles based on the hit movie Cars that had lead paint on them, as well as Barbie, Polly Pocket, and Batman toys that had small, powerful magnets that could harm children if swallowed" (Palmeri 2007, p.1). All of these products had been manufactured by a subcontracted Chinese firm, with minimal oversight from Mattel.

Description of the aspects of the case under investigation

Mattel is not simply the world's largest toy company -- it is also a toy company known for selling inexpensive toys. To keep costs low, it has made ample use of its ability to outsource labor costs. It has made use of the developing world's cheaper labor, land and capital and passed cost savings onto consumers. The result was wild profitability -- until things started to go wrong. Children's and adolescent's tastes began to change. Instead of must-have low tech toys, children's buying habits shifted to video games, iPods, and the Wii. To remain profitable, Mattel had to drive its costs even lower, to reap a profit for shareholders. According to the rational actor model of profitability, this should be Mattel's main purpose, not the question of the ethics of doing business in China, a country with a shaky record on its human rights and environmental policies.

The problem is that it is almost impossible to police subcontractors in China. Thus one of the 'costs' of doing labor in China is not merely a company's ethics, but also, quite often, quality control. Any company that uses low-cost Chinese suppliers, no matter how they "try to ensure that the companies it does business with operate properly and ethically, even subjecting them to outside audits," it is almost impossible "to keep tabs on all sorts of suppliers around the globe. The company has had at least 15 product recalls in the past five years, from jewelry at its American Girl doll business that contained lead to a Batmobile with dangerously pointy tail wings" (Palmeri 2007, p.1).

The case of Mattel also shows that it is quite rare for a company to 'perfectly' apply an ethical model to real-life circumstances. On one hand, Mattel's recorded use of quality controls did show that it was not merely focusing on profitability alone. "Mattel does more than many companies to make sure its Chinese suppliers operate ethically, including treating their workers fairly. The company relies on the International Center for Corporate Accountability to monitor its plants and publishes the sometimes critical reports on its Web site for review" (Palmeri 2007, p.1). However, "about 65% of Mattel's toys are made in China. The rest come from Thailand, Malaysia, Indonesia, and Mexico," all countries that have had problems with both safety and labor issues (Palmeri 2007, p.1).

To maximize profitability, Mattel ultimately sacrificed its reputation, one of its most important assets as a company that makes products for children, despite its attempt to moderate its focus on the bottom line with quality control. This shows, in line with such theories as the Theory of Constraints, that operating on a purely rational model of profitability does not always result in an endgame 'win': Mattel suffered from the external impact of poor Chinese oversight, a failure of monitoring on behalf of an international watchdog organization, and a major loss of trust on the part of consumers that resulted in lower profits. Cheap labor proved to be very expensive for Mattel.

Interview

In an interview, Mattel's CEO Robert Eckert vowed to implement more stringent quality control tests: "Mattel used to randomly test finished toys, Eckert say it will now test every single batch of toys produced. Safety checks will also get beefed up at the supplier and subcontractor level prior to the finishing of the product" (Palmeri 2007). Eckert avowed the importance of safety at Mattel and the need to keep pace with safety checks for new products. The cost of quality for Mattel, at least in terms of safety, is incalculable, given that parents are entrusting their child to the product.

Comparison and conclusion

A Theory of Constraints suggests that a purely rational approach to cost maximization is impossible, given that ignoring such 'soft' concerns as ethics actually results in a loss of profitability for companies such as Mattel. A company's bottom line is inevitably affected when its reputation for quality is tarnished. Clearly, Mattel cannot exert appropriate quality control over its outsourced operations and its dealings with a company with unethical practices proved its downfall in Christmas of 2007. A company working to reestablish its reputation for trustworthiness should listen to critics such as Dale Neef. Neef, even more so than TOC theorists stresses that putting ethics first, regardless of potential perceived constraints and profits will actually help companies like Mattel more than focusing on either profitability alone, or even a balanced strategy. Outsourcing Mattel's labor to a questionable company required it to sacrifice one of its most prized assets, its reputation, and putting ethics first would actually have opened more parents' pocketbooks to its toys.

Works Cited

Brocklesby, J. 2009. Ethics beyond the model: How social dynamics can interfere with ethical practice in operational research/management science. Omega, 37(6), p.1073.

Davies, J., V.J. Mabin, S.J. Balderstone. 2005, December. The theory of constraints: a methodology apart? -- a comparison with selected OR/MS methodologies.

Omega, 33 (6), pp. 506-524

Neef, Dale. 2005. Supply chain ethics. Ethical Corporation.

July 24, 2009. http://www.ethicalcorp.com/content.asp?ContentID=3629

Palmeri, Christopher. 2007, August. What went wrong at Mattel? Business Week. July 24, 2009.

http://www.businessweek.com/bwdaily/dnflash/content/aug2007/db20070814_154726.htm

Picavet, E. 2009. Opportunities and pitfalls for ethical analysis in operations research and the management sciences. Omega, 37(6), 1121.

Willett, Michael. 2009. Applying the theory of constraints. CIRAS. University of Iowa.

July 24, 2009. http://www.ciras.iastate.edu/library/toc/

Weyzig, F. 2009. Political and economic arguments for…

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