Mattel

Mattel is experiencing a decline in profitability. They’ve brought you in to find out why and how to fix it.

• Decline has occurred over past 12 months • There has been a 10% decline in revenue • If specific numbers are requested, show Exhibit 1 (only cost info is in Exhibit 1) • There are five divisions of revenue; read out information from Exhibit 2, but do not show Assume variable costs are steady • Price is constant on per doll basis ($20 each) • Price has been constant on per board game, early childhood, and educational game basis ($30/ each)

Mattel is experiencing a decline in profitability. They’ve brought you in to find out why and how to fix it.

The framework should center around profit. Once the candidate has focused on a revenue decline in the Barbie segment, they should seek to determine what is driving the decline (P vs. Q). Upon determining that quantity is the driving factor, if candidate asks why, have him brainstorm reasons. A good candidate will segment this brainstorm into internal and external reasons. After you have asked the candidate for a number of hypothetical reasons, if he does not correctly guess, tell him that a recent documentary released in January 2015 had caused a great deal of negative press. This documentary implied that buying young girls the traditional Barbie Dolls played a role in discouraging them from pursuing traditionally less ‘feminine’ career paths (STEM, for example) and helped cement the idea that women need to meet certain societal criteria. • A strong candidate should be able to quickly read Exhibit 1 and clearly articulate what the cause is • Effective organization when writing down Exhibit 2 will make solving the case easier • A candidate may address concerns with SG&A, but should recognize that revenue is the primary driver of profit decline (beauty, body features, skin color, etc.).