Macpac Case Study Strategic Management Case Study

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In this regard the firm made the tactical decision to handle the outbound logistics of Porter's Value Chain in order to increase margins (NetMBA. N.D.). McIntyre realized that use of company resources would be better utilized with a direct selling approach. A Resource Audit of the firm's physical, human, and financial resources elucidated that direct sales would drive profit margins higher as employees could foster connections abroad and develop networks of retailers to sell product.

Aside from the growth in global exports, perhaps no aspect of globalization is more pronounced than the movement of production offshore to countries with comparative labor advantage. For Macpac the decision was rooted in the cost cutting realities of the post 9/11 economic malaise. The cost cutting measure meant that "it had to take almost all of its production offshore" (Benson-Rea, M. & Shepherd, D. 2008); by the end of 2003 "they had eliminated most of their in-house manufacturing" (Benson-Rea, M. & Shepherd, D. 2008). Cost cutting in the competitive environment in which Macpac operated depended on reducing labor expense in order to create greater profitability. The ability to drive revenues and profits upward and costs downward depends on developing a competitive advantage in the specific industry. Macpac was clearly a differentiated and valued product for consumers and this allowed for a competitive sales advantage over other firms. The cost cutting though revealed as yet an unrealized competitive advantage for Macpac as they found "they were playing catch-up as it was the last to go to Asia for its manufacturing" (Benson-Rea, M. & Shepherd, D. 2008). Rival companies had been able to utilize the cost advantage to compete against Macpac however, with the movement to Asia by Macpac, the company was able to better realize organizational resources and value "against competition with already firmly established positions" (Benson-Rea, M. & Shepherd, D. 2008).

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The decision to base manufacturing outside of New Zealand in "the Philippines, Vietnam, and China" (New Zealand Trade and Enterprise. N.D.) demonstrate "how the company had evolved from being a New Zealand company to a global one" (Benson-Rea, M. & Shepherd, D. 2008).

Question II

From these three strategic scenarios, Macpac's organizational behavior and response can be elucidated utilizing four academic/business environmental models: Porter's Five Forces, Porters Value Chain, Life Cycle Analysis, and the Resource Audit.

Michael Porter, a Harvard business professor developed the five forces model as a method of analyzing the industry in which a company operates. The forces are: bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitutes, and rivalry among competitors; and "together the strength of the five forces determine the profit potential in an industry" (Ehmke, C., Fulton, J., Akridge, J. Erickson, K. & Linton, S.N.D.). Macpac faced each force in varying strength however, three stand out explicitly: bargaining power of suppliers, bargaining power of buyers, and rivalry among competitors.

The power of suppliers in no small way contributed to the cost increases for the firm. "Labor, parts, raw materials, and services" (Ehmke, C. et al. N.D.) were at the core of the company's financial difficulties in the early part of the decade; the movement offshore of production was a recognition of the bargaining power of their suppliers. The power of buyers is two- fold. In the first case buyers are considered the end consumers of the product, in this case while "Macpac had a very high quality product which many people said they did not need and were not prepared.....

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