The Barbie Story Mattel vs Greenpeace Case study Reference no 711-048-1 This case was written by Subhankar Dutta, Amity Research Centers Headquarters, Bangalore. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2011, Amity Research Centers Headquarters, Bangalore. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner. Distributed by The Case Centre North America Rest of the world www.thecasecentre.org t +1 781 239 5884 t +44 (0)1234 750903 case centre All rights reserved f +1 781 239 5885 f +44 (0)1234 751125 e [email protected] e [email protected] 711-048-1 The Barbie Story: Mattel vs. Greenpeace Author: Mr. Subhankar Dutta Abstract: Mattel, the world’s largest toy company by revenue, was engaged in a controversy with environmental organisation Greenpeace for the manufacturing process of Barbie dolls (Barbie). Universally the most popular toy, Barbie, was invented and marketed by Mattel worldwide and its commendable sales performance earned a brand name for itself. However, Greenpeace accused Mattel for illegally using the timber, woods from Indonesian rainforests for packaging and wrapping purposes of Barbie dolls thereby alleging that such activities could severely affect the environmental sustainability in the region. The environment protection group further pointed out that because of the severe deforestation in the Indonesian rainforests, the lives of many endangered species like tigers, orangutans was at stake. Therefore, Greenpeace organised an environmental campaign against Mattel, pointing out a stern message against Mattel’s Barbie. Apart from that, Greenpeace accused Indonesian paper firm Asia Pulp and Paper (APP) for sourcing the packaging paper illegally to many companies in the world at the cost of Indonesian rainforests. Countering the Greenpeace’s accusation, APP remarked that its products met all the legal necessities for all countries, including Indonesia. Moreover, the company stated that it planned to attain 100% sustainable plantation of pulp wood by 2015. On the other hand, Mattel also released an official statement, indicating its agenda for maintaining sustainable environment and revealed further that the company was in dialogue with Greenpeace regarding the issue. So, it remained to be seen whether the future of Barbie was at risk due to the environmental implications. Pedagogical Objectives The case study helps to understand and analyse: The Global Toy Industry Mattel’s Business Initiatives Dilemma between Manufacturing of Barbie Dolls and the Protection of Indonesian Rainforests. Case Study “One thing remains constant: our commitment to creating safe, high quality and innovative toys in a responsible and ethical manner.”1 – Robert A. Eckert2 Mattel, the leader in international toy market, was in news due to the allegation made by Greenpeace3 on environmental sustainability issues related with Barbie dolls’ (Barbie) packaging process. Barbie, the most famous toy in the world, was produced by Mattel and it generated tremendous popularity among the 1 “Playing Responsibility. Mattel. 2009 Global Citizenship Report”, http://www.socialfunds.com/shared/reports/1257221473_Mattel_2009_Citizenship_Report.pdf 2 Chairman and Chief Executive Officer of Mattel. 3 Greenpeace is a non-governmental environmental organisation with offices in over 40 countries and with an international coordinating body in Amsterdam, Netherlands. It focuses work on worldwide issues such as global warming, deforestation, overfishing, commercial whaling and anti-nuclear issues. “© 2011, Amity Research Centers HQ, Bangalore. All rights reserved.” 2 711-048-1 children throughout the world. Sensing the pulse of the market, Mattel manufactured different types of Barbie thereby promoting itself as one of the major branded toy manufacturers in the world. However, Greenpeace alleged Mattel regarding the content used in the packaging process of Barbie. In its accusation Greenpeace pointed out that Barbie’s packaging products like timbers, woods were mainly sourced from Indonesian rainforests. As a result, Indonesian rainforests faced rapid deforestation and caused significant global climate change.4 Greenpeace also conducted a forensic test with the packaging products of Barbie and the result of the test confirmed its claim regarding Mattel’s sourcing of products from Indonesian rainforests.5 As a part of their sustainable environment policy, Greenpeace began to campaign against Mattel’s packaging process for Barbie. Therefore, the environment activists of Greenpeace released a banner at the Mattel’s headquarter in El Segundo, declaring a strict message against Barbie.6 Moreover, Greenpeace accused the Indonesian paper firm Asia Pulp and Paper7 (APP) for destroying the Indonesian rainforests.8 However, APP rejected Greenpeace’s allegation, releasing an audit which claimed that all the accusations made by Greenpeace were invalid and baseless.9 On the other hand, Mattel released one official statement, claiming that it engaged in a dialogue with Greenpeace on multifarious issues related with paper sources for its manufacturing process.10 Therefore, it remained to be observed whether the future of Barbie was in jeopardy because of the environmental implications. Global Toy Market: An Overview Toy, one of the most common and popular universal products, possessed a vast market throughout the world. It was believed that the concept of toy was originated at the beginning of human civilization. The experts disclosed that nearly 2600 BC in ancient Sumer11, some objects (believed as toys) were found which were prepared like human and animal forms.12 Later, approximately 500 BC, the historical document revealed that yo-yos, a special type of toy made from wood, metal or painted terra-cotta, were found in ancient Greece.13 However, the experts believed that yo-yos were originally made in China at an earlier date.14 Moreover, the kite, a famous plaything, was found in China as a toy near about 1000 BC.15 Gradually, the toy market expanded throughout the world and the quality had also increased with the help of modern technologies and advanced scientific applications. International toy market, one of the booming industries in the world, recorded a surge in the sales of toys by 4.7% in 2010, amounting to $83.3 billion.16 (Exhibit I). The growth was reflected mainly due to the impeccable sales performances by the Asian countries, registering 9.2%, almost double the average total growth.17 In this respect the experts highlighted that the sales performance in the United States recorded the highest of approximately $22 billion.18 The other major countries which topped the list in accordance with their sales performance were Japan, China, 4 Vijayaraghavan Akhila, “Mattel CSR: Is it Over for Barbie?”, http://www.triplepundit.com/2011/06/mattel-csr-barbie/ 5 Taylor Michael, “Greenpeace accuses Barbie of destroying Indonesia”, http://www.reuters.com/article/2011/06/08/us-mattel-protest-indonesia-idUSTRE7571BZ20110608, June 8th 2011 6 ibid. 7 Asia Pulp and Paper (APP) is one of the largest pulp and paper companies in the world. It can produce about 2 million tons of pulp and more than 5 million tons of paper and packaging materials per year. 8 “Greenpeace accuses Barbie of destroying Indonesia”, op.cit. 9 ibid. 10 ibid. 11 Sumer was a civilization and historical region in southern Mesopotamia, modern Iraq during the Chalcolithic and Early Bronze Age. 12 “History of toys”, http://www.britannica.com/EBchecked/topic/601284/toy/274906/History-of-toys 13 ibid. 14 ibid. 15 ibid. 16 “World Toy Sales In 2010 Were $83.3 Billion, An Increase Of Nearly 5 Percent Over 2009”, http://www.npd.com/press/releases/press_110620.html 17 ibid. 18 ibid. 3 711-048-1 United Kingdom and France.19 In this regard the experts highlighted that these five countries accounted over 50% sales in international toy market.20 The sales performance of BRIC countries (Brazil, Russia, India and China) recorded a growth of 13% as well.21 In this regard the experts highlighted the sales performance of some of the major global toy manufacturers in 2010 (Exhibit II). Exhibit I International Toy Sales in 2006-10 (In $ Billion) Source: “Global and China Toy Industry Survey Report, 2011”, http://www.sino-report.com/b/wenti/wanju/20110418/192.html Exhibit II The Sales Performance of Some Top International Toy Manufacturers in 2010 Company Sales Estimated by Actual Sales Increase in Experts for 2010 Attained in 2010 Percentage Mattel $903.7 million $951.9 million 8% Hasbro $644.4 million $672.4 million 8% Lego N.A. 16 billion Kroner 37.3% Compiled by the author from various sources The industry experts further highlighted that Chinese toy industry was recognised as the largest toy manufacturer and exporter in the world.22 It manufactured over 2/3 of international toys thereby attaining $ 8.3 billion business turnover in 2010.23 Some of the major production and export bases of toys in China were Guangdong (specialised in electric and plastic toys), Jiangsu and Shanghai (specialised in plush toys), Shandong and Zhejiang (specialised in wooden toys).24 These Chinese provinces accounted for more than 90% of the annual sales of Chinese toys.25 Apart from China, European Union countries were also known as the main manufacturers of toys