Pacific Brands Case Study

In: Business and Management

Submitted By Bullie
Words 1025
Pages 5
Introduction:

Pacific Brands Limited is the largest supplier of everyday essential brands in Australia and New Zealand, retailing and distributing some of the biggest brands like Berlei, Hard Yakka, Bonds, Sheridan, Holeproof, Kayser, etc. The purpose of this case study is to analyse the fundamental issues relating to Pacific Brands strategy to close all seven of its Australian factories, and source its merchandise from southern Chinese factories resulting in the layoffs of 1850 Australian workers . Pacific Brands’ decision was made to save a company labouring under too much debt – about $740 million at the time – operating in a highly competitive, global market and suffering the impact of the worldwide financial crisis on the company.

Australian consumers may love Australian products, but they don’t like paying for them . Pacific Brands CEO Sue Morphett stated that the rise of cheap offshore manufacturing meant that Pacific Brands could no longer afford to make clothes in Australia ... manufacturing in Australia no longer provides any competitive advantage to the company.

What are the keys problems and/or issues?

Offshoring for the purpose of this discussion can be defined as the relocating of one or more aspects of a firm’s business to another country’s location to lower costs. This makes Pacific Brands as a multi-national corporation (MNC) as according to when an organisation is in the multinational phase of internationalisation, the organisation’s principal concern is to take advantage of production costs in certain countries (Schermerhorn et al, 2011).

There are two key issues that we can identify in this case study:

1. The decision to fire company workers:
When an MNC outsources, cuts back, or loses a domestic operation to shift work to lower cost international destinations, the loss of local jobs is controversial. The case study outlines many…...

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