Change and Innovation Management

Which of the changes at Mattel are emergent, and which areplanned?
Where do the changes that kreiz is making sit on thecontinuum from shallow to deep change?
What is your assessment of Ynon Kreizs changes, given thechallenges facing the company?
What imageor imagesof change management does Ynon Kreizillustrate?
The Context
Founded in 1945, Mattel is an American multinational toymanufacturer based in California. With $1.4 billion annual revenue and 27,000employees, it is one of the worlds largest toymakers. Mattels power brandsare Barbie, Hot Wheels, American Girl, Fisher-Price, and Thomas & Friends.These were introduced between 1930 and 1986, and Mattel had not created anotherhit product for some time. Barbie dates from 1959. Smaller brands wereincorporated in what Mattel called toy box, an everything else categorythat included Polly Pocket dolls, Uno (a card game), and toys linked to thevideo game Minecraft. Mattels traditional competitive advantage was based onmaking incremental product improvements and on manufacturing cost advantage.
Mattels most important brand is Barbie, who still generates20 percent of the companys sales despite being 60 years old. Half of Barbiesales are nonoriginal body or non-Caucasian, and Barbie dolls in the image ofK-pop band BTS have been successful. The company also now sells gender-neutraldolls with the brand name Creatable World.
The Problem
Revenues at Mattel have been falling, from over $6 billionin 2007 to $4.5 billion in 2018. Mattels stock price fell from $50 in 2014 to$10 at the end of 2018. Revenue growth was expected to be flat in 2019. Barbieand Hot Wheels continue to sell well, but American Girl dolls, once famous, arein decline. The companys falling sales are accompanied by rising debt. Earlierin the decade, American Girl was selling well, linked to Disneys Frozenfranchise. But this success took sales away from Barbie. Sales of Monster Highmerchandise generated hundreds of millions of dollars, but suddenly collapsedwhen the brand became unfashionable. Sales of Hot Wheels have also stalled.
Manufacturing and supply chain management at Mattel had notchanged. Along with other toymakers (apart from Lego), Hasbro closed factoriesand started outsourcing, but Mattel made its own products. HasbroMattels maincompetitorhas similar sales and employs 6,000 people; Mattel has 40,000employees at peak factory output. Hasbros gross margins are 51 percent;Mattels are 39 percent.
The Changes
Ynon Kreiz, the companys 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 isto transform Mattel from toy maker to high-margin media company, basing movieson its familiar brands. Toy manufacturers earn only a small percentage of movierevenues, most of which go to studios and distributors. But movies can reviveold brands and increase sales of merchandise.
One of Kreizs first actions as chief executive was toreduce the workforce by 22 percent. To reduce costs further, he also planned tosell 12 of Mattels 13 factories. He also reduced a three-inch-thick strategydocument to one page, identifying three priorities: cut costs, fix brokenbrands, and capture the value of the companys intellectual property. Followingpractice in the rest of the sector, Kreiz abandoned the toy box concept andgrouped Mattels brands into two categories: toy-industry leaders (dolls,vehicles, infant/preschool) and challengers (games, construction, actionfigures).
The idea of making movies based on Mattel brands was notnew. But movies that were to be based on Hot Wheels and on the Rock Em SockEm Robot were never made. In 2016, Sony started to develop a live-actionBarbie comedy, but the star, Amy Schumer, dropped out. Mattel was not the onlytoy company to adopt this strategy. Hasbro, for example, has based movies onTransformers and G.I. Joe and planned to buy the Canadian media productioncompany Entertainment One.
Kreiz hired an experienced movie producer, Robbie Brenner,who identified Barbie, Hot Wheels, and American Girl as initial projects, alongwith Magic 8 Ballan old toy box product that gives advice and had beenalmost forgotten. In 2019, Mattel announced eight film projects with fourstudios, including Warner Bros and MGM. Paramount will make a live-action moviestarring Tom Hanks based on the astronaut Major Matt Mason, who was created byMattel in 1966. In 2019, Mattel announced that Margot Robbie would star in itsBarbie 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 flowin three years. Revenues appeared to be increasing again. Performance wouldhave been better, but Fisher-Price had to recall five million Rock and PlaySleepers at a cost of $34 million, when the product was alleged to have caused30 infant deaths. Rising sales, cost cutting, and improved financial forecastslifted the companys share price. Will Kreiz be successful in rewritingMattels toy story?
Thoroughly read the Mattel Toy Story, Exercise 5.1 on page166 and fully answer the questions. I will expect at least three citations fromthe text book. Textbook Title and Edition: ManagingOrganizational Change: A Multiple Perspectives Approach
Edition: 4th
Author: Palmer, I., Dunford, R., and Buchanan,D.
Publisher (Year): McGraw-Hill (2022)
ISBN: Choose one:
        eBook rental: 9781264206759
        Text rental: 9781260043716
Loose-leaf purchase:9781264071616