Introduction: Strategy is concerned with an organisations basic directions for the future,its purpose,ambition,resources and how it interacts with the world in which it operates(Lynch. R,p5 2003),thus it can be seen that there area number of techniques or ways in which the company can use these to achieve its goals and objectives,the purpose of this case study is to study the techniques used by MacPac to achieve its growth /achievement,the reasons for the losses suffered by MacPac and the steps taken to address these losses as well as an insight of MacPac’s current situation.
Reasons for MacPac’s initial international success Macpac Attained a lot of success after the year of its establishment especially in the international markets, thereare a number of reason for MacPac international success, these can be summarized as: One of the basic reasons for MacPac’s international success was there Value Added or differentiated strategy ,According to which a company seeks to provide products or services unique or different from those of competitors ,The value added by the uniqueness of the product may allow the firm to charge a premium price for it(Johnson.
G,Scholes. K, p322 2002). Macpac provided products which were unique than its competitors with high quality but with high price, Macpac followed this strategy to target those tampers to whom quality meant everything even though the price was high. Another Reason for MacPac’s initial international success was its Resource strategy: According to which recourses of any organisation include human resource skills, investment and capital (Lynch.
R,p9 3rd ed),MacPac introduced communication audit within its organisation to develop a highly communicative environment and thus increasing its efficiency, it introduced high performance appraisalwithin itsorganisation, MacPac, with the recruitment of productivity consultants the production started to go smoothly and with reduction of labor cost from 25% to 14%, MacPac introduced the concept of profit sharing and introduced team building and performance as team.
MacPac’s initial success can also be attributed to its Total Quality Management, Total Quality Management Deals with maintaining a particular standard for quality. MacPac always focused on quality, quality was their main objective they believed in total quality management, they provided products of high quality which were never before introduced by any other organisation, no other organisation focused so much on total quality management as MacPac did, MacPac did not believe in marketing but believed that it had to be true to its quality.
Macpac also increased its quality by introducing accounting processes and computer systems. MacPac also introduced product refinements within its organisation leading to high quality products which no one else could match at that time. Unique Resources: Uniqueresources are the resources which critically underpin competitive advantage, this unique recourses in case of MacPac was its location in new Zealand, new Zealand was considered heaven for adventure sports at that time and MacPac gears were made in consideration of the terrains of the new Zealand, which set a standard in itself for outdoor gear.
Knowledge: Knowledge is the awareness ,consciousness or familiarity gained by experience or learning(Jhonson. G,Scholes. K 2002 p150). Being a keen tamper himselfMacintyre had the experience of what a keep tamper wants. Critical Success Factor: are those product features that are particularly valued bya group of customers and where the organisation must excel to outperform competition(Jhonson. G,Scholes. K 2002 p150),the critical success factor in case of Macintyre was the quality and design of its products.
Product Development: It is where organisation delivers modifies or new products to the existing market (Jhonson. G,Scholes. k,2002,p368) Joint Development: when two or more organisations share resources and activities to pursue a strategy(Jhonson. G,Scholes. K 2002 p378). Merging with wilderness meant that it was the first brand to offer wide range of products under one name. Market Development: when the organisation offers new products in new markets(Jhonson. G,Scholes.
K 2002 p370) , MacPac was also successful because it followed a strict Selling Strategy to its customers, it started to sell its product direct to the retailers and removing the agents and it redesigned itself for particular markets, removing agents meant that MacPaccould now get in touch directly with the retailers and get information regarding customers likes and dislikes and as such producing according to that Macpac also followed Focus Strategy in which a company focuses on a particular segment of buyers within an industry (p205 3rd ed),MacPac mainly focused on hardcore and keen tampers who only wanted the best outdoor equipment for outdoor activities, the buyers who could trust MacPac gear when they were on outdoor adventures. Macpac greatly believed in Innovation andDesign was completely dedicated to innovations and new designs leading to new products and development in the existing of the existing product which greatly contributed to its success internationally as with innovation it was able to manufacture products which were new to the customers and they were more then willing to buy them as they had never seen those products before.
Macpac also educated his customers with Catalogue’s which displayed all the MacPac’s products, and giving the customers a wide range to choose from, These catalogue’s were placed in retail stores which sold MacPac products Reasons For the losses MacPac incurred during 2001-2005 Macpac although Did Great during the initial years and succeed in establishing it brand internationally,it suffered huge losses during the years 2001-2005 the main reasons for the losses that MacPac incurred during this phase can be explained using PESTFramework PEST analysis identifies environmental factors into 4 major types, Political, Economical, Social, Technological. (Jhonson. G,Scholes. k,p82 1993) Political: One of the main reason for MacPac’s loss was the event of 9/11.
MacPac’s sales dropped rapidly, because American economy trembled due to this and as America was the financial hub of the world, every other economy faced the same situation as a result the value for new Zealand dollar decreased considerably resulting in the decreased exports of MacPac, also the event of 9/11 some how brought the whole economy into a financialcrunch and as such demand for products decreased and people spend very less which had obvious effect on MacPac. Political: Post 9/11 the political situation trembled all over the world and as such there was political in stability which had obvious effects on MacPac’s process and contributed to its loss. Government were now more concerned about the safety of the people and the people too preferred their own safety. Going out seemed to be less safe as such contributed to MacPac’s loss Social: Post 9/11 the behavior of the people had changed people now had a different attitude towards outdoor activities and the industry was changing from hardcore outdoor activities towards more softer activities and were more focused on fashion, later the fashion part ook over and people now stopped doing adventurous activities and preferred to stay at their homes as a result less people bought Outdoor Adventure Equipment, all this had a great effect on MacPac’s progress and as a result it suffered losses. Economical: With the event of 9/11 the attitude of people had some how changed people now were not ready to pay for high quality costly products but preferred Low quality and elite products, MacPac which always considered quality as their objective and had high quality products could not cope up with the change as such had to suffer losses. Technological: with the shift in people’s behavior from hardcore to soft and finally fashion oriented, required new technology which MacPac did not have and may be one of the reasons for its loss.
Other reasons: The main reason for MacPac’s loss during 2001-2005 was their low Budgeting strategy and could not tackle changing trend of the people, It had low logistic management, and were less automated. Critical Issues That Macpac Is facing: Although With the introduction of the New Business Model Macpac has got on the track and recovered from the losses it suffered in 2001-2005, thecompany still faces a greater number of issues which the company has to address, the issues that MacPac faces now can be summarized as under Threat Of entry Threat of entry to an industry will depend on the extend to which there are barriers to entry (Johnson. G,Scholes. K,1997,p108).
As it is seen that MacPac entered the outdoor equipment industry easily and without much trouble showing that there was probably no barriers or less Barriers to enter this industry, as such showing that anybody could enter the industry posing a serious issue for Macpac. Also aswith the increase in globalizationnew Manufacturers can now enter any industry and as such can enter will the outdoor equipment industryaswell, posing a serious problem to MacPac Threat Of substitutes: The availability of substitute’s can place a ceiling on the price of a companies product and reduce its attractiveness(Johnson. G,Scholes. K,1997,p109), and with the outdoor equipment industry growing and newer and newer manufacturers entering into the market and producing products of their own which will be sometimes cheaper then the MacPac or even better then the MacPac.
MacPac will have to address this issue andit is a serious problem for it Competitive Rivalry: The most competitive condition are those in which the entry is likely, substitutes ,threats and buyer supplier exercise power/Control and as the current outdoor equipment industry in increasing in the number of competitors there is increase in the number of substitute’s available to the buyer creating rivalry between MacPac and its competitors to sell their products more,Macpac’s competitors will often find ways to outrun Macpac by offering better benefits to buyers or else reducing the prices of their products,which will be harmful to MacPac. Thus creating a issue which MacPac faces now. Maintaining Level Of Quality:
With the outsourcing to Asia Macpac faces the problem of maintain the quality of their products, as the main idea of MacPac to outsource to Asia was to reduce the cost andMacPacbelieves that the buyers can never know where the product is made, as such he has to make to has to maintain the quality of its product to the quality and the standard of the products manufactured in new Zealand and USA,if MacPac Fails to maintain the quality standard then it will lose it brand image which will result in losing customers. Outsourcing: outsourcing occurs when an organisation decides to buy in products and services that were previously produced in-home(Jhonson. G,Scholes. k,2002,p450),but outsourcing requires managers to be more competent at maintaining the performance ,they suppliers or distributer need to educated regularly about the organizational goals ,priorties and standards,thus increasing the cost without the guarantee that the supplier will full understand what was taught to him,thus putting the image and resources of the company at risk.
Resource Management: With MacPac becoming from just a New Zealand Company to a global one it will require effective management of its resources as well as Finance/wealth Management. MacPac’s Business Model: After suffering huge losses during 2001-2005, MacPac had to redesign its business structure in order to avoid any further losses but they did this not ahead enough, had they developed this model before chances are that they would have avoided the losses which they suffered during 2001-2005. Macpac developed a business model that stabilized their position and saved them from suffering any further losses. MacPac changed their business model to a formal structure.
Formal Structure: A formal structure is based on the primary activities that have to be undertaken by an organisation such as production, finance and accounting, marketing ,human resource and information management(Johnson G Scholes. k 2002 p 422) Financial Control: In financial control the role of the center is to set financial targets, allocate resources, appraise performance and intervene or correct poor performance(Jhonson. G,Scholes. K 2002 p448),Macpac also introduced finance management strategy and did not pay until the finished goods were supplied and as such did not have the burden of surplus stock kept as final goods, Macpac basically introduced a finance management strategy which saved them cost and other expenditure incurred previously.
Human Resource Management:organisations which successfully manages change are those which have integrated their human resource management policies with their strategies (Jhonson. G,Scholes. K,1993 p416). Macpac developed a new resource strategy and started to recruited people who love outdoor activities and as well used MacPac’s products as a result they brought an un inevitable expertise, it helped MacPac to spend less on the training of its employees as they already new a lot about it products, MacPac also hired a new CEO who could Created a strategy that could get MacPac out of loss. Technology/Information management: Knowledge creation and information managementare issues at the front of managers minds as a potential source of improved competitiveness. (Jhonson. G, Scholes. k, 2002,p490).
MacPac also stared to send the designs electronically as such reducing its overall cost that were not covered in previous business model,MacPac also used automatic machinery and increased its workforce The Main change was to shift the attention from innovation and design but to introduce a wide range of products Logistics Strategy Before 2001 MacPac had not focused on logistic management but in the new business model they designed a strategy to manage and increase its logistics, and as such MacPac increased its logistic staff from 0 to 3 persons MacPac also introduced sales strategy by increasing its sales force to double to reduce its chances of loss again and thus increase it sales MacPac also introduced the budgeting strategy in its new business model and revises its current bonus system Increased offshoring to become a global company Macpac also sought supplier’s recommendations and that of its competitors too; Recommendations
It is seen that MacPac faced a number of problems after its establishment, these problems occurred especially when MacPac entered international market, and it continued to suffer losses even after the implementation of the new business model which only worked after few years of its implementation. Companyas such for a company like Macpac which experienced many difficulties and issues, the following recommendations are given. 1. In aspect to marketing proper marketing should have been done and proper research should have been done, forecasting of the market should also been done, and all the aspects of starting a business should been taken into considerationdevising any strategy or plan. 2. Proper Budgeting and financing strategy should have been adopted to meet the requirements of the organisation and at proper times 3.
Proper allocation of resources should have been done, along with proper market research been done so that the company could read the market trends and adjust accordingly. The organisation should have been more flexible and more goals oriented 4. Goal and objectives of the organisation should have been clearly set forward with clear objective of what the company needed from its employees and where it wanted to be after a particular period of time 4. Consider the use of strategic management. One of the advantages of strategic management is it enables a firm to proficiently identify how a certain organisation should deploy its resources in the environment and adapts the organisation to satisfy the long-term objectives of the firm. It is important to note that strategic management deals with several time spans.