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Nicolas Villa Moya S1206486 Corporate Responsibility and Transnational Governance Luc Fransen TAKE HOME EXAM Toys

R Us Determining the value chain governance which is most susceptible to the implementation of Corporate Responsibility (CR) standards depends largely on whether consumers are willing to pay for those standards. When this is the case, then, any Corporation who does not enforce CR standards on its suppliers will lose its market share to any of its competitors who does, provided that there is global market value chain governance (Gereffi et Al, 83:2005). On the contrary, when consumers are not willing or able to pay for CR standards, or when markets are flawed, then different social stakeholders and activists must push to enforce CR standards, in addition to consumers, and in this case, Hierarchy value chain governance (Gereffi et Al, 84:2005) is the most susceptible to such enforcement, especially when lead firms (Gereffi et Al, 89:2005) are global market players, with hierarchy or captive (Gereffi et Al, 89:2005) supply networks (Bartley and Child: 2007). Let us focus on one of Toys R Us profitable products, the Barbie Doll. Toys R Us retails the doll, which is in turn made by the worlds biggest toy manufacturer Mattel. According to Gereffi et Al (86:2005), when product specifications cannot be codified, transactions are complex and supplier capabilities are high, relational value chains can be expected. This is the case between Toys R Us and Mattel in regards to the Barbie Doll. For Toys R Us (Toys R Us Website, 2013), codifying the profitable Barbie Doll is difficult, especially because its sales depend on constant innovation (a new version of the doll). Transactions of the Barbie Doll are also complex, besides having a global value chain for production, the positioning of the product in the market (Interband Website, 1

2013) accounts for a considerable part of the Toys R Us budget. Since the Barbie manufacturing factories in China, India, Indonesia, Italy, Malaysia, Mexico, and Thailand are Mattel owned (Mattel Website, 2013), and thus, Mattel is responsible for design, manufacturing and packaging, we can conclude that Toy R Us Barbie suppliers (Mattel) capabilities are high. If we also take into account the fact, that the product has to be delivered in timely fashion and in proper conditions, we should expect explicit cooperation between buyer (Toys R Us) and its highly capable supplier (Mattel). The Barbie value chain facilitates enforcement of CR standards in different ways. Activists will see Toys R US, Mattel, and the Barbie brands as fertile ground for activism. Taking into account that the manufacturing and retailing of Barbie is globalized, Barbie is a product with historically publicized branding campaigns; Toys R Us is a top of mind brand with great consumer recognition (Interband Website, 2013), and Toys R Us is the biggest specialized toy retailer in the world (Toys R Us Website, 2013). Bartley and Child (27:2007) would argue that, because of its corporate characteristics, global supply base and reputation, Toys R Us is an ideal candidate for the naming and shaming strategy on behalf of activists who want to see CR strategies enforced on by the worlds largest toy retailer. Due to the previously established relational value chain governance, Mattel (a company with similar characteristics for what concerns naming and shaming activism) would also be vulnerable target to CR activism campaigns.

References Bartley, T. and C. Child (2007) Shaming the corporation: Globalization, reputation and the dynamics of anti-corporate movements, Working Paper, Indiana University Gereffi, G., Humphrey, J., and Sturgeon T. (2005) The governance of global value chains in: Review of International Political Economy, 12: 1, pp. 78-104. Available at: http://corporate.mattel.com/about-us/corporate-responsibility.aspx, consulted March 2nd, 2013 Available at: http://www.interbrand.com/en/BestRetailBrands/2012-Best-RetailBrands.aspx, consulted March 2nd, 2013 Available at: http://www.toysrusinc.com/about-us/, consulted March 2nd, 2013

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