ECCO A/S - Global Value Chain Management
(11 pages of text)
ECCO A/S (ECCO) had been very successful in the footwear industry by focusing on production technology and assuring quality by maintaining full control of the entire value chain from cow to shoe. As ECCO grew and faced increased international competition, various value chain activities, primarily production and tanning, were offshored to low-cost countries. The fully integrated value chain tied up significant capital and management attention in tanneries and production facilities, which could have been used to strengthen the branding and marketing of ECCO's shoes. Moreover, an increasingly complex and dispersed global value chain configuration posed organizational and managerial challenges regarding coordination, communication and logistics. This case examines the financial, organizational and managerial challenges of maintaining a highly integrated global value chain and asks students to determine the appropriateness of this set-up in the context of an increasingly market-oriented industry. It is suitable for use in both undergraduate and graduate courses in international corporate strategy, international management, international marketing, supply-chain management, cross-border strategic management and international business studies in general.
The objectives of this case are:
- Global value chain analysis. This case can be used as a starting point for students to investigate how a multinational corporation (MNC) configures its global value chain activities in order to exploit location-specific advantages and gain global scale and scope advantages. ECCO has a fully integrated value chain and this allows for a discussion of the pros and cons of such an approach.
- Outsourcing versus in-house (offshore) production. The case is well positioned to allow for an elaborate discussion of pros and cons of outsourcing versus in-house (yet offshored) production (and other activities). For advanced students, this can be accompanied by a discussion of the theories that can be helpful in assessing when and how to outsource versus offshore.
- International corporate level strategy. This case can be used to discuss the sustainability of corporate international strategy with emphasis on core competencies and drivers of competitive advantage in a dynamic market. ECCO is following an inside-out strategy, whereas all the competitors seem to follow an outside-in strategy. The case can be used to discuss the relevance of changing strategic focus as well as the drivers and problems/cost associated with this.
- Industry analysis and competitive strategy. The case has enough information to allow for a Porter's 5 Forces that could be combined with some indication of macro-environmental trends via a PEST analysis. Information about main competitors allows for a competitor analysis, which can be used together with Barney's VRIO analysis to assess the sustainability of ECCO's advantages over time in this dynamic environment.
Denmark;Global, Medium, 2005
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