Dis of Managemnet Issue

1. Introduction

Pacific Brand is an Australian company that manufactures uniforms. In this modern economy, company has international relationship with China for its production. In early 2009 company affected by economic crisis and which created adverse effects on exchange rate, higher interest rate…etc. It is much cheaper to import from overseas rather than manufacture locally in an economic downturn situation. Because of this, company decided to move some of its operations to overseas and close down seven Australian factories and which resulted in the sacking of 1850 jobs. Also on the other hand company announced high pay hike to the top executives. Close down local operations for cost reduction and high pay hike are two contrasting decisions.

2. Management issues

The most important factor in this case is closing down seven Australian factories and moving its operations to China. As per Poter’s five forces, bargaining power of customers are high for Pacific Brand because of availability of variety of cheap substitute products and buyers price sensitivity. Therefore it is a good opportunity for company to enter into China based on low cost of labor. Company can make competitive advantage out of it. Company can favorably compete with other local manufactures on production cost and then pricing. On the other hand company faced several problems came from stakeholder groups like government, customers and employees. As per my opinion, the first prioritized management issue is protest against job cut, which may affected negatively to the company’s reputation. The next important issue is dissatisfaction among existing local workforce due to fear and uncertainty about their jobs. The next important issues are government intervention and ethical issues. Company decided to give huge pay hike to its top management simultaneously. The decision to increase wages would imply that company running smoothly. Therefore two important decisions made by organization are...