Description
The Mattel Toy Story
With a product line of famous toys such as Barbie and Hot Wheels, Mattel Inc. is an American toy company that has been in decline for some time. The case on p. 87 of your textbook is an account of changes Ynon Kreiz, chief executive at Mattel since 2018, plans to implement to grow the company. After reading this case account, write a paper answering the following questions:
Which of the changes at Mattel are emergent, and which are planned?
Where do the changes that Kreiz is making sit on the continuum from shallow to deep change?
What is your assessment of Ynon Kreiz’s changes, given the challenges facing the company?
What image—or images—of change management does Ynon Kreiz illustrate?
Finally, if you would like to gain some insights into Ynon Kreiz’s strategies to grow the company, please watch the video at the bottom of the page.
In your paper, ensure to utilize the textbook and integrate at least three peer-reviewed sources along with their citations and references. Your paper must be APA formatted and include at least 1500 words. Please use the APA 7th Essay Template available in the Supplementary Course Resources>>APA 7th Edition Resources section.
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EXERCISE 5.1
The Mattel Toy Story
LO 5.1
This is an account of the changes that Ynon Kreiz, chief executive at Mattel since 2018, plans
to implement to grow the company, which has been in decline for some time. As you read
this case account, consider the following questions:
Which of the changes at Mattel are emergent, and which are planned?
Where do the changes that Kreiz is making sit on the continuum from shallow to deep
change?
What is your assessment of Ynon Kreiz’s changes, given the challenges facing the company?
What image—or images—of change management does Ynon Kreiz illustrate?
The Context
Founded in 1945, Mattel is an American multinational toy manufacturer based in California.
With $1.4 billion annual revenue and 27,000 employees, it is one of the world’s largest
toymakers. Mattel’s “power brands” are Barbie, Hot Wheels, American Girl, Fisher-Price, and
Thomas & Friends. These were introduced between 1930 and 1986, and Mattel had not
created another hit product for some time. Barbie dates from 1959. Smaller brands were
incorporated in what Mattel called “toy box,” an “everything else” category that included
Polly Pocket dolls, Uno (a card game), and toys linked to the video game Minecraft. Mattel’s
traditional competitive advantage was based on making incremental product improvements
and on manufacturing cost advantage.
Mattel’s most important brand is Barbie, who still generates 20 percent of the company’s
sales despite being 60 years old. Half of Barbie sales are “nonoriginal body” or nonCaucasian, and Barbie dolls in the image of K-pop band BTS have been successful. The
company also now sells gender-neutral dolls with the brand name Creatable World.
The Problem
Revenues at Mattel have been falling, from over $6 billion in 2007 to $4.5 billion in 2018.
Mattel’s stock price fell from $50 in 2014 to $10 at the end of 2018. Revenue growth was
expected to be flat in 2019. Barbie and Hot Wheels continue to sell well, but American Girl
dolls, once famous, are in decline. The company’s falling sales are accompanied by rising
debt. Earlier in the decade, American Girl was selling well, linked to Disney’s Frozen
franchise. But this success took sales away from Barbie. Sales of Monster High merchandise
generated hundreds of millions of dollars, but suddenly collapsed when the brand became
unfashionable. Sales of Hot Wheels have also stalled.
Manufacturing and supply chain management at Mattel had not changed. Along with other
toymakers (apart from Lego), Hasbro closed factories and started outsourcing, but Mattel
made its own products. Hasbro—Mattel’s main competitor—has similar sales and employs
6,000 people; Mattel has 40,000 employees at peak factory output. Hasbro’s gross margins
are 51 percent; Mattel’s are 39 percent.
The Changes
Ynon Kreiz, the company’s fourth chief executive since 2012, joined Mattel in 2018.
Colleagues describe him as “sure and steady, disciplined, and unflappable” (Lashinsky,
2019,Page 167 p. 101). His vision is to transform Mattel from toy maker to high-margin
media company, basing movies on its familiar brands. Toy manufacturers earn only a small
percentage of movie revenues, most of which go to studios and distributors. But movies can
revive old brands and increase sales of merchandise.
One of Kreiz’s first actions as chief executive was to reduce the workforce by 22 percent. To
reduce costs further, he also planned to sell 12 of Mattel’s 13 factories. He also reduced a
three-inch-thick strategy document to one page, identifying three priorities: cut costs, fix
broken brands, and capture the value of the company’s intellectual property. Following
practice in the rest of the sector, Kreiz abandoned the “toy box” concept and grouped
Mattel’s brands into two categories: toy-toy-industry leaders (dolls, vehicles,
infant/preschool) and challengers (games, construction, action figures).
The idea of making movies based on Mattel brands was not new. But movies that were to be
based on Hot Wheels and on the Rock ‘Em Sock ‘Em Robot were never made. In 2016, Sony
started to develop a live-action Barbie comedy, but the star, Amy Schumer, dropped out.
Mattel was not the only toy company to adopt this strategy. Hasbro, for example, has based
movies on Transformers and G.I. Joe and planned to buy the Canadian media production
company Entertainment One.
Kreiz hired an experienced movie producer, Robbie Brenner, who identified Barbie, Hot
Wheels, and American Girl as initial projects, along with Magic 8 Ball—an old “toy box”
product that gives advice and had been almost forgotten. In 2019, Mattel announced eight
film projects with four studios, including Warner Bros and MGM. Paramount will make a liveaction movie starring Tom Hanks based on the astronaut Major Matt Mason, who was
created by Mattel in 1966. In 2019, Mattel announced that Margot Robbie would star in its
Barbie movie, with a script written by the prestige team of Greta Gerwig (Little Women,
2019) and Noah Baumbach (Marriage Story, 2019).
In October 2019, Mattel posted its first positive cash flow in three years. Revenues appeared
to be increasing again. Performance would have been better, but Fisher-Price had to recall
five million “Rock and Play Sleepers” at a cost of $34 million, when the product was alleged
to have caused 30 infant deaths. Rising sales, cost cutting, and improved financial forecasts
lifted the company’s share price. Will Kreiz be successful in rewriting Mattel’s toy story?
Case Sources
Gul, E. 2019. Can Barbie adopt frontier technologies? Mattel’s innovation challenge. The
Startup, July 18. https://medium.com/swlh/can-barbie-adopt-frontier-technologies-mattelsinnovation-challenge-e4b97bc1b15e.
Lashinsky, A. 2019. Rewriting a toy story. Fortune 180(6):98–103.
Mattel. Wikipedia, https://en.wikipedia.org/wiki/Mattel.
Find on YouTube, “Mattel execs on toy film franchises: ‘We create experiences,’” (2019, 26
minutes). Ynon Kreiz explains his turnaround strategy for Mattel. Robbie Brenner describes
her approach to developing movies based on Mattel brands, and Barbie in particular.
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