ategy that resulted to the acquisition of the Leaning Company reduced the management ability to carry out the normal quality inspection of the company products (Erika 28). This was the strategy that reduced the company success and quality of the products than the anticipated. In essence, the company thought that the diversification of its business would give it a lead in the manufacture of communication materials, not knowing that the cost of operation would be tremendously increase.
As well, the expansion increased the operation cost, making the company to spend billions of US dollars in running the daily activities (Wooten and Erika 7). When the Leaning Company started registering losses, Mattel had to make an effort to rationalize the impacts that this would cause in the company (Segundo 1). They had to pay the debts that the acquired company made, thereby, affecting their financial position. As a result, the company accumulated losses, amounting to $475 million, in 1997 (Erika 33). This was the beginning of the company’s nightmare in maintaining the cost of operation and quality of the products.
Secondly, the expected boom in the internet sales of the toys did not yield the outcome (Segundo 1). Indeed, the internet sales targeted the world market, and steady customer demands. Instead, the company recorded loss from the venture, thereby worsening its financial position.
Third, the raised labor requirement also did not work well for the company. Therefore, the company embarked on a job cut, to reduce the expenses. In further reducing the cost, the company opted to use cheap materials in making the toys. In fact, the materials did not meet the quality requirements, making the products to be an environmental and health hazards to the users (Erika 39). Specifically, the coloring element that the company used in making the toys contained high amount of lead that exceeded the limit that the government had set.
In summary, the problem that resulted to the