Macpac Case Study Strategic Management

Macpac Case Study Strategic Management of Macpac Case Study Analyzing the case study of Macpac identifies multiple strategic issues which the company faced in its peripatetic from startup to "iconic New Zealand Company" (Benson-Rea, M. & Shepherd, D. 2008). Of these strategic scenarios three in particular stand out as representative of the challenges facing organizations in the "worldwide movement toward economic, financial, trade, and communications integration" (Business Dictionary. N.D.).

Globalization provides context for Macpac's three strategic challenges and subsequent policy choices: expansion of sales beyond New Zealand to encompass the scope and breadth of global markets, direct selling to retail partners; and of greatest importance to their financial survival, the outsourcing of manufacturing to Asia. These three strategic challenges form the foundation as to how Macpac moved through their life cycle from introduction, growth, maturity, decline, and ultimately renewal.

An analysis of each of these three strategic challenges will allow for a more perspicuous view of the development of the organization. Macpac's advent over three plus decades was concomitant to the rise in export opportunities for companies around the globe. Based in New Zealand the company initially sold predominantly in their locale however, the late 70's and early 80's saw the expansion of exports of the firm's outdoor gear to Australia, accounting for "five percent of total sales of one million: (Benson-Rea, M. & Shepherd, D. 2008).

This initial movement to an export driven sales approach further develops the basic principles of Strategic Management: customer focus, competitive advantage, and resource-based analysis (Lynch, R.N.D.). Bruce McIntyre "the entrepreneurial founder of Macpac" (Benson-Rea, M. & Shepherd, D. 2008) understood that the future of the business was rooted in the development of global markets. From a strategy perspective an organization will typically follow one of two models or both in developing their blueprint: prescriptive process and emergent process.

"A prescriptive strategy is one whose objective is defined in advance and whose main elements have been developed before the strategy commences. An emergent strategy is one whose final objective is unclear and whose elements are developed during the course of its life, as the strategy proceeds" (Lynch, R.N.D.). In the case of sales expansion beyond New Zealand borders, there was a combination of both processes. McIntyre clearly had designs on expanding the business to Australia and in this regard the prescriptive process was evident.

Too, McIntyre looked to the U.S. For market growth, and subsequently to Europe in economically strong countries: Great Britain, Switzerland, Netherlands, and Germany. These efforts while having the desired outcome of increased global sales relied more on changing developments and elements as the strategy unfolded. The U.S. market for example was extremely tough for Macpac to crack while Europe seemed to fit well into their sales and marketing approach. Invariably the prescriptive and emergent process together was responsible for the success of the export strategy.

In 2005 exports accounted for 65% of total Macpac sales (Benson-Rea, M. & Shepherd, D. 2008), a figure representative of not only the burgeoning global trade environment, but a strategic shift to direct selling of product to retailers. The 1990's were a time of transition for Macpac, particularly in the shift away from utilizing agents and distributors. Of fundamental importance to the company was the expansion of sales opportunities however, the reliance on outside distribution channels was detrimental to their profitability.

In 1992 the company "started selling directly to Australian retailers…followed closely by similar arrangements in Europe and the U.K." (Benson-Rea, M. & Shepherd, D. 2008). 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). 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. &.