With reference to one organization that you have studied, discuss the
importance of ethics and strategy in Finance.
Mattel has address diverse strategies in order to achieve different goals; even do these
methods have not always being ethical or legal procedures the company still decided
to choose this option as a way of getting high beneficial factors for example since
mattel is one of the most biggest companies to produce all kind of toys such us babies,
monsters, hot wheels and diverse other the cost of raw material increase due to the
demand of this product, since the normal type of plastic (polythene) and paint use to
fabric all kind of toys have become very expensive to obtain due to the quality and
chemicals apply to this materials in order to prevent the abrade of them or damages
caused in structure. For the company to reduce cost in liabilities they decided to
change the suppliers, from which they sold cheaper materials, according to the New
York Times the quest to drive down cost and increase profit has lead to poor product
quality and puts end users at risk due that the toys where coated with toxic lead paint
and contain 180 times the legal limit lead content some of the product like dolls came
out with poorly attached small magnets that could perforate the intestines if
swallowed.
By lowering the cost of raw materials through out changing the supplier the company
would decrease values in the current liabilities where the company debts have to be
paid within a year. This money would also be used in other ways in this case for
improving the packaging or even used to buy more raw materials and increase the
production process where more Mattel toys are going to be made and launched in the
market through out this strategy of changing the materials for increasing the number
of toys that are being send there would be more opportunities to make costumers buy
more without waiting, having more opportunities of increasing the profit values in the
company or even to cover up the liabilities or debts that the company owns .
Since the quantity sold would increase and the selling price sticks the same Mattel’s
finance accounts would change increasing rapidly due that since on trading account
the sales revenue which is define by selling price times quantity is the one where the
company gain most profit due that according to the number and money given by the
cost of sales is going to be use as cover up for paying taxes, expenses or dividends. So
as more sales revenue we got more retained profit is going to be left for the business
and they can decide to plugged it in as a source of finance or not. Even do this strategy
use by Mattel Corporation is not ethical due to the bad quality of products and
harmful materials given to the user, the impact and good financial incomes didn’t last
long, since the production settle in china because of the cheaper labor and very low
taxes the company Mattel was being sanctioned and demanded by many customers
that got affected by this case, there where also companies involved due to the bad
publicity it create such us nickelodeon figures that went out as recall toys. Mattel end
up being the first manufacturer to encounter a breakdown in the Chinese production
chain, even do the factories in china have been sources of poisonous pet food sold in
stores in the United States, the government has said that it was working to improve its
product regulations, even as members of Congress have called for legislation requiring
more inspections of imports from China.
Companies that creates bad unethics strategies in order to improve finance have
experienced bad scenarios having a bad reputation in market such us Mattel
Corporation that by trying to reduce cost in liabilities or increasing profit they got
various demands that at the end would be very expensive for the company to cover up
the cots. Being an unethical company brings a lot of disadvantages that may cause a
break down of it due that since people stop trusting what they sell it would be difficult
that they keep buying the products having a decreasing profit. That’s why is better to
risk the ethical options rather than making your company get bad publicity image,
which is very difficult to gain again.
References
O'DONNELL, J. & TODAY, U. (2016). Mattel Toys' Lead Was 180
Times The Limit. ABC News. Retrieved 23 April 2016, from
http://abcnews.go.com/Business/story?id=3621974&page=1
Polyethylene - Knowledge Encyclopedia. (2016). Madehow.com.
Retrieved 23 April 2016, from
http://www.madehow.com/knowledge/Polyethylene.html
Real-World Examples of Bad Business Ethics: Companies You
Know. (2016). Bright Hub. Retrieved 23 April 2016, from
http://www.brighthub.com/office/entrepreneurs/articles/115557.
aspx
Story, L. (2007). Mattel shifts into crisis mode after quality
problems. Nytimes.com. Retrieved 23 April 2016, from
http://www.nytimes.com/2007/08/28/business/worldbusiness/28iht-
mattel.4.7289869.html?_r=0
Story, L. (2007). Lead Paint Prompts Mattel to Recall 967,000 Toys.
Nytimes.com. Retrieved 23 April 2016, from
http://www.nytimes.com/2007/08/02/business/02toy.html
The end of cheap China. (2012). The Economist. Retrieved 23 April
2016, from http://www.economist.com/node/21549956
