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 ...view middle of the document...
One of the problems they faced here was, as per Maslow’s theory of human needs, when someone has lost their job, the “Safety needs” have not been met (Schermerhorn et al, 2011). Some may consider that Pacific Brands made the wrong decision by laying off 1850 Australian workers. However, despite the obvious hardships to the employees and local communities, there is nothing ethically wrong with this decision. According to the utilitarian viewpoint, behaviour that would be considered ethical delivers the greatest good to the greatest number of people (Schermerhorn et al, 2011). In this situation, the CEO of Pacific Brands has made a utilitarian decision to cut 1850 jobs in order to keep 7000 other jobs in the current economic climate. Also, Pacific Brands has recognised the need to improve efficiency with the desired outcome of becoming more competitive by lowering manufacturing and operational costs through offshoring. By being competitive, the company will be able to survive, maintain their position and compete against cheaper foreign brands “as Australians want to pay less for their clothes” (Schermerhorn et al, 2011).
The decision to increase executive remuneration:
When looking at the company leadership from an outside perspective, it seems as though the CEO is demonstrating conflicting the company values and showing an inconsistent set of personal ethics by cutting labour costs in manufacturing while increasing her own salary by 150%.If the company needs to cut costs, and that justifies moving jobs overseas, then the increase in her own salary appears to be maximising her own self interests at the expense of the shareholders. In addition, the statement it makes is a blow to the organizational culture, demonstrating that the need for sacrifice is not a shared value across all levels of the company (Schermerhorn et al, 2011). This decision resulted in bad press, protests, and political interference which damaged the company’s brands and reputation.
While all of the forces in the general environment can influence business activities, the global financial crisis and its subsequent effects on economies around the world provided a stark example of how economic conditions can change quickly and dramatically.
Pacific Brands had to adapt to the changing corporate environment and adopted a ‘cost-reduction strategy’ by offshoring...