Abstract
In November 1997, Mattel announced the creation of a global code of conduct for its production facilities and contract manufacturers. Called the Global Manufacturing Principles (GMP), the code covered such issues as wages and hours, child labor, forced labor, discrimination, freedom of association, legal and ethical business practices, product safety and product quality, protection of the environment, and respect for local cultures, values, and traditions.
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Notes
This situation was dramatically stated in the case of Nestlé and the infant formula boycott controversy. During the early stages of the controversy, the decentralized organization proved ineffective in responding to public pressure, because the source of the problem was in one region while the source of public pressure was in another part of the world. Thus the problems of turf, budgetary constraints, and differing management style and operational tactics in the two regions contributed to an exacerbation of the problem. Consequently, the top management of Nestle in Switzerland took control of the problems and installed a separate management team in Washington, D.C., which would report directly to Nestlé’s top management and bypass the authority of the area manager in the United States as well as the managers responsible for the worldwide marketing of infant formula products. This turned out to be a most innovative and effective approach. Within four years, the new organization not only resolved the issues, but also caused a 180-degree turnaround in Nestlé’s reputation, from a highly negative to a substantively positive level. The ad-hoc organization, however, could not be integrated into the Nestlé’s existing global organization and decision-making structures. Soon after the issue was resolved, the new organization was dissolved and all authority to manage infant formula marketing reverted to the regular managers. Once in power, these managers undertook to erase all credit for resolving the issue from the new ad-hoc organization. Instead, Nestlé commissioned a journalist to write a book for general public distribution at Nestlé’s expense. This book rewrote the history of the infant formula controversy as Nestlé’s executives wanted the world to see it. It placed all the blame for the controversy on Nestlé’s critics and projected Nestlé as the hapless victim of NGOs’ less-than-ethical conduct and spreading of inaccurate and misleading information. It also largely credited Nestlé’s seasoned managers for successfully handling the issue with only a minor role assigned to the ad-hoc organization. See S. Prakash Sethi, Multinational Corporations and the Impact of Public Advocacy on Corporate Strategy: Nestle and the Infant Formula Controversy (Boston: Kluwer Academic Publishers, 1994);
S. Prakash Sethi and Bharat B. Bhalla, “A New Perspective on International Social Regulation of Business: An Evaluation of the Compliance Status of the International Code of Marketing of Breast-Milk Substitutes,” Journal of Socio-Economics 22, no. 2 (1993): 141–158.
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© 2011 S. Prakash Sethi
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Sethi, S.P., Veral, E.A., Shapiro, H.J., Emelianova, O. (2011). Mattel, Inc., Global Manufacturing Principles (GMP): A Life-Cycle Analysis of a Company’s Voluntary Code of Conduct. In: Sethi, S.P. (eds) Globalization and Self-Regulation. Palgrave Macmillan, New York. https://doi.org/10.1057/9780230348578_2
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DOI: https://doi.org/10.1057/9780230348578_2
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