...12 3. PURPOSE 12 4. CONTENT 13 5. EXTENSION AND SIZE OF GROUPS 13 6. SUPERVISION 13 7. DEADLINES 13 ECCO achieved record results in 2011 (Source: http://www.ecco.com/en-XI/Media-Center/Annual-Report ) In 2011, ECCO achieved the highest surplus in the company’s history with a profit before tax of DKK 904 million. This highly satisfactory result was particularly due to successful new collections and improvements in sales in most of ECCO’s markets. The outcome could have been even better, if ECCO’s shoe factory and tannery at Ayutthaya in Thailand had not suffered catastrophic flooding in October with considerable human and commercial consequences. Many of the 3,500 employees in Ayutthaya lost both their home and all their belongings. Despite this, they all made an enormous effort both for ECCO, usually incompletely unfamiliar roles, and for the local community. For ECCO, the flooding meant the loss of more than a third of the company’s production capacity. The emphasis was therefore placed on quickly establishing increased production at ECCO’s other factories and among external partners. New production capacity has now been established in Thailand, and ECCO expects to be back in full production by the end of 2012. It was particularly positive that ECCO’s tannery in Thailand succeeded in restoring production as early as 1 February 2012. In 2011 ECCO increased its revenue from DKK 6.1 billion to DKK 7.1 billion, an increase of 16%. The profit before tax of DKK...
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...S ECCO A/S — GLOBAL VALUE CHAIN MANAGEMENT w Professor Bo Bernhard Nielsen, Professor Torben Pedersen and Management consultant Jacob Pyndt wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2008, Ivey Management Services Version: 2008-03-10 Despite the summer, the weather was hazy on that day in May 2004 as the airplane took off from Hongqiao International Airport, Shanghai. The plane was likely to encounter some turbulence on its way to Copenhagen Airport in Denmark. The COO of the Danish shoe manufacturer ECCOA/S (ECCO), Mikael Thinghuus, did not particularly enjoy bumpy flights, but the rough flight could not overshadow the confidence and optimism he felt after his visit to Xiamen in southeast China. This was his third visit in...
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...Værsko’! Eccos vision, mission og værdier Vision ”Det er Eccos vision at være det mest eftertragtede brand inden for innovation og komfortabelt fodtøj.” Citat: Ecco Dette betyder altså, at de ønsker at være det foretrukne mærke, når forbrugerne skal handle fodtøj, hvor nyskabelse og særligt komfort er i højsædet. Ecco’s aktivitet er og har været meget kendt for dens komfort, men det er samtidig vores opfattelse gennem vores daglige kontakt med unge mennesker, at den, især blandt disse personer, også er blevet opfattet, som ”gammeldags”, altså uden at der har været tænkt på designet. Dette har øjensynligt, afholdt en hel del unge fra at købe produktet, men det lader altså til, at Ecco ønsker at ”gaine” kendskab, gennem deres vision om i høj grad at koncentrere sig om innovation, og også være meget bevidste om den lidt yngre målgruppe. Mission Ecco kæler for skoene, nok nærmere forbrugerne. Skoen skal passe foden og ikke omvendt. Ecco’s passion for produktion støbes af personer, som har indsigt i ”eccoismen”, altså forståelse for hvad det er Ecco står for. Det kommer bl.a. til udtryk gennem de særligt udvalgte råvarer de bruger. Dette skal ske ved at fokusere på at være bedst, og ikke størst. De mener altså, at de tilgodeser forbrugeren før virksomheden selv, hvilket dog bør ses som lidt af en selvfølge at meddele sådan, da de nok næppe kunne finde på, at postulere at deres aktivitet er for at gavne virksomheden, da det ville fremstå egoistisk. Ifølge deres...
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...footwear requires tremendous amounts of capital as well as measured investment decisions. The stakes are especially high for ECCO A/S, who is vertically integrated and manufactures the majority of its products in-house. Conversely, ECCO’s competition simply outsources the majority of their shoe production. Although ECCO boasts a superior products in terms of quality, its prospective customer are largely unaware due to the amount of marketing and branding its competitors spend in a saturated and mature casual footwear market. Analysis of the global footwear industry reveals that ECCO is unique in its decision to own the value chain from Cow-to-Shoe. This unique position offers ECCO a competitive advantage when managing its overall quality and introducing new technologies. At the heart of ECCO’s competitive advantage is the use of “direct injected” technology. ECCO’s culture of emphasizing quality has created a manufacturing process that is hard to mimic even after licensing the techniques and technologies. At the same time, ECCO’s decision to vertically integrate makes changing or scaling their operations very difficult and capital intensive. This analysis will examine: - ECCO’s current situation and strategy with regards to the global footwear industry and ECCO’s most closely aligned competitors. - The internal and external resources that will enable ECCO to foster and sustain a competitive advantage in a highly competitive industry. - The role of ECCO’s fully integrated...
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...of Value chain according to ECCO. One of ECCOs biggest advantages by having a vertical integration is they create economies of scale and lowers production costs because it eliminates many of the price markups in each production step. Ecco have control of each process in the making of their shoes. This gives them a huge advantage in ensuring that there will be fewer costs and no losses of communication in the process. (page 554, Mam book) We must assume that when Ecco owns several tanneries in three different countries(Page 4, Ecco Case) the leather, which Ecco uses as main material to their upper shoe, is a process where Ecco is able to hold cost down. Making leather takes several steps (page 14 Ecco Case) and as owners of their value chain, Ecco is in a position where they are able to optimize and reduce waste easier. Others than that, by making the leather themselves Ecco is able to ensure that the quality is at highest standard. Besides that Ecco was one of the five largest producers of leather worldwide while they also sell their leather to the auto and furniture industries. Another advantage of being in control of your entire value chain is that you avoids time-consuming tasks, such as price shopping, communicating design details and negotiating contracts. Aswell does control of their inventory, investments and all innovation, gives them a way to respond quickly to the market “Being in control of the entire value chain allowed ECCO to increase production overnight...
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...ECCO is a successful and closely-knit family owned company and has a strong culture of bonding and attachment and its clearly shown in the management strategies as well. They believe that at least 80% of company’s leader should come from inside the company. They are aware of the fact that to be a global leader, employees were the biggest assets so ECCO invested heavily on training their employees and career development activities, so they could upgrade their skills and capabilities with evolving time. ECCO is a special case in the industry, as they believe that the key to maintain quality standards and products uniqueness is to have an ‘in house production’ strategy, which have been estimated to be 80% of their production. ECCO believes in outsourcing only when it feels that the product is not aligned with their technological expertise. Despite of its success, ECCO as a company had to face declining productivity and stagnant margins from 1999 to 2003, which drove the debt to increase, however in 2004 ECCO showed signs of improvements in its financial capabilities and, is looking to strengthen its integrated value chain from ‘cow to shoe’, by making it more efficient and cost effective. ECCO realized that it needs to focus on long term sustainability and also they understood the importance of moving towards a marketing oriented path, which would help ECCO leverage on its innovation, research capabilities and tis high quality products. Porters five forces Every industry’s...
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...MGSC01 - MIDTERM CASE: ECCO A/S - Global Value Chain Management Analyze the problem Alternatives Decision Criteria Recommendation Good to have a contingency plan (backup plan) Key questions: - If I’m right so far, then what? What are the implications - What is the larger context? - What else do I know? Personal? - What alternatives do I have? - What am I missing? Goals: The plan was to build five closely connected factories over the next four years with a total capacity of five million pairs of shoes per year, serving both export needs and the Chinese market, which was expected to grow in the future. Produce the world’s most comfortable and modern footwear for work and leisure. Increase revenue to 8 billion and to 9 billion by 2013, selling 24 million pairs of shoes a year. Increase production capacity by 15% per year Product Market Focus: aim at becoming better at telling what we stand for. Value Proposition: Core Activities: produced 80% of its shoes in-house Vision – integrating the global value chain - To be the most wanted brand within innovation and comfort footwear. - Position can only be attained by constantly and courageously researching new paths, investing in employees, in core competencies of product development and production technology. 80% of the company’s leaders should come from inside ECCO. 2004 Sales Children 11% Ladies 47 Men 30 Sports 12 (outdoor, walking, running and...
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...Financial Derivatives Revision Sheet Futures: * agreements to buy or sell an asset at a future time or date * traded on exchange * standardised * choose to close out before delivery * Daily settlement * Margins * Range of delivery dates * Virtually no credit risk Forwards: * agreement to buy or sell an asset at a future time or date * private agreement between two traders (clients or financial institutions) * Not standardised * Settled at end of contract * Delivery of final cash settlement usually takes place * Usually one specified delivery date * Some credit risk Closing out: entering into the opposite trading strategy to the original Hedging using futures: the objective is to take a position that neutralises risk as far as possible. Knows it will lose with an x decrease in price= take a short hedge. It will loss on an x increase= take a long hedge. Arguments for and against Hedging: * Shareholders * Competitors * Can Lead to a worse outcome Basis = spot price of an asset- Futures price of contract used Calculating Minimum Variance Hedge Ratio: * Optimal hedge ratio is when ρ=1 and σs=σf as hedge=1 * Hedge Ratio= ρσsσF * Rolling the Hedge Forward: Sometimes expiration is greater than delivery dates of the future contracts that can be used. The hedger must then roll the hedge forward by closing out one future contract and taking the same position in a futures contract with a later...
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...Assignment # 3 – Bid Strategy Bus 505, Business, Strategies, And Proposals 12 August 2012 Describe the industry and explain the general pattern of change of the particular market model. The Soft Drink industry is somewhat changing due to people becoming more health conscience. The government is also trying to weigh in on the soft drink industry by taking vending machines out of schools to replace the sugary drinks with healthy drinks. At one time soft drinks were the beverage of choice but now more and more people are choosing something with less calories and less sugar. Some brands are taking more hits than others but the soft drink industry is fighting back and trying to gain the momentum it once had. Hypothesize the basic short-run and long-run behaviors of the model in the industry you have chosen in a “market economy According to the RFP that the Mission and Installation Contracting Command Center (MICC) put out they are looking for a firm to support them on being able to provide the Sustainment Center of Excellence with instructor and training support services which will be done through two separate proposals (W911S0-10-R-0003/ W911S0-10R-0004). These proposals are looking for a small business to fulfill this requirement. The Sustainment Center of Excellence came into existence through Base Realignment and Closure (BRAC). Due to BRAC various training schools that fell under the same branch had to combine their efforts under one...
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...ECCO Markedsføringsøkonom 2012 Johan Schack Erhvervsakademiet Aarhus 22-03-2012 Indhold Disposition: 3 Værdikæde: 3 Indgående logistik: 3 Produktion: 3 Udgående logistik: 3 Marketing og salg: 3 Service: 4 Nøgletal 4 PEEST 5 Politiske forhold: 5 Økonomiske forhold: 5 Økologiske og Miljø forhold: 5 Sociale og kulturelle forhold: 6 Teknologiske forhold: 6 Evaluering: 6 Konklussion: 8 Opgave 2. 8 Bibliografi: 10 Disposition: I opgaven vil der indgå økonomi i form af økonomisk styring hvor der kigges på 2 relevante nøgletal. Desuden vil marketing og supply chain management blive inddraget i form af en værdikæde analyse som kun fokuserer på de primære aktiviteter da de ses som de relevante. Mikroøkonomi inddrages i forhold til tale om recession samt beskrivende økonomi. Til slut vil erhvervsret blive inkluderet i opgave 2. Værdikæde: Indgående logistik: ECCO styrer selv hele deres forsyningskæde. Det betyder at de selv står for at producere deres læder. Dette gør de på egne garverier, herfra tjener leverer de læderet til produktionen samt sælger overskydende læder til andre fabrikanter som er omkring 33%. Produktion: ECCO styrer hele deres produktion selv og har derfor en utrolig god mulighed for selv at styre deres høje kvalitetskontrol på deres produkter. Deres kerneområde er kvalitet, som også er en stor del af deres brand. ECCO’s filosofi er, at ”kvaliteten kommer først”, derfor oplærer ECCO sine skomagere i en række forskellige...
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...ECCO A/S – Global Value Chain Management Reading assignment questions 1. Describe the competitive environment of ECCO and determine how well ECCO is positioned (compared to competitor) to take advantage of changes in the industry. Answer The competitive environment of ECCO is quite high due to the other of producing shoes such as NIKE, Adidas and Puma etc are the big brand as well. However, the way they positioned themselves is interesting. ECCO positioned itself to be concerned in the quality rather than fashion 2. Analyze ECCO global value chain. How well does this configuration match the drivers in the industry? Answer The ECCO value chain 3. ECCO has a fully integrated vertical value chain. What are the pros and cons of this strategy? What economic and strategic factors should be analyzed to answer this question? 4. How is family ownership affecting ECCO? Comment on the corporate ownership structure and its implications for strategy-making and implementation. What alternatives exist? 1) Describe the competitive environment of ECCO and determine how well ECCO is positioned (vis-à-vis competitors) to take advantage of changes in the industry. Use Porter’s five-forces model, the PEST model, and a SWOT analysis to explain your answer. (400 words) ECCO produces mainly casual footwear with an intense focus on high-quality production. In order to deliver the highest quality product, ECCO maintained a fully vertically integrated value chain...
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...ECCO A/S – GLOBAL VALUE CHAIN MANAGEMENT | | Report submitted by:Abhas Mangal (GAPR11IT038) | | Contents Executive Summary 3 Company’s Profile 4 PORTER’S FIVE FORCES STRATEGIC ANALYSIS 5 Outcomes of Porter’s Five Forces 5 SWOT ANALYSIS 6 Evaluation of Alternatives 6 Recommended Strategy 7 Executive Summary ECCO, a global manufacturer and a supplier of shoe products, wants to expand into the Chinese market to increase its export to major markets and also increase product sales among Chinese consumers. But many Chinese manufacturers imitated the product design and features of ECCO increasing the intense competition for the company in the Chinese market. Also, ECCO for years has a sole focus on increasing the quality of the shoes manufactured by using its sophisticated in-house “direct injection” technology. But the company cannot only thrive on its quality unless the company’s efforts to ensure quality are not communicated to the consumers. Thus, the company focused less on marketing operations that is evident from its low marketing budgets as compared to its competitors. Also, the most of the products manufactured in four production facilities outside Denmark were distributed through its distribution centre in Tonder, Denmark where only six to nine percent of total production was actually sold. Thus, ECCO became inefficient to fulfil the replenishment orders that had to be delivered within a few days notice. Thus, the main challenge for ECCO is to...
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...Company Background ECCO, the world leading brand of shoes, was found in Denmark by Karl Toosbuy in1963. ECCO’s philosophy -“the shoe must follow the foot”. Karl was the shoemaker realizing that shoes had to be made to fit the foot, as a result, functional, comfortable ECCO shoes were launched in the 1970s and became a huge success. ECCO is the only major shoe manufacturer to own and manage every step in the shoemaking process. ECCO produces leather and has its own tanneries, their design and production team innovate products, introduce pioneering and high-tech production methods, shoes are made in their own factories and are sold in ECCO retail shops globally. They constantly pressed for improvements to meet customer expectations. Throughout the shoe production process, quality inspectors control every aspect - from leather thickness to stitching accuracy, in order to ensure high quality and uniform products. Quality of shoes is the brand value of ECCO, shoes are guaranteed to lightness, softness, flexibility, durability, comfort and fit. ECCO shoes are designed for women, men and kids, they also further categorized into casual, formal, as well as sports line for golf, running, training and explore. Marketing Audit Marketing audit provides a complete review of marketing strategy and performance of a company. By using STEEPLE to analyze the external environment of ECCO, in terms of technology, ECCO has an opportunity in this area. Many ECCO’s shoes have applied...
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...ECCO Case Study - Question 1 ECCO has a fully integrated vertical value chain. What are the pros and cons of that strategy? What economic and strategic factors should be analyzed to answer this question? The pros of a having a fully integrated vertical supply chain for Ecco include the following: * Improved supply chain coordination between tanning, manufacturing and distribution. This would ultimately help maintain quality and improve operational efficiencies such as logistics. * There is also an increase in the areas possible for differentiation, as Ecco can control more inputs. An example might be in the tanning process, in which their competitors may have less control over. * Ecco can also create greater barriers of entry for competitors. By differentiating competition out of the market such as marketing their strict in house controls of the tanning process. * Ecco can also access downstream distribution channels that may otherwise have been inaccessible if they were to just sub out distribution and be at mercy to what the market can provide. * Opportunities for control over investment or innovation both upstream or downstream which may otherwise not be possible will be advantageous for Ecco. * Facilities in different countries can take advantage of local resources and expertise in different areas like the leather research center in Denmark. * Overseeing operations throughout the whole value chain. * Better control and...
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...MULTIPLE CHOICE (CHAPTER 4) 1. Using a sample of 100 consumers, a double-log regression model was used to estimate demand for gasoline. Standard errors of the coefficients appear in the parentheses below the coefficients. Ln Q = 2.45 -0.67 Ln P + . 45 Ln Y - .34 Ln Pcars (.20) (.10) (.25) Where Q is gallons demanded, P is price per gallon, Y is disposable income, and Pcars is a price index for cars. Based on this information, which is NOT correct? a. Gasoline is inelastic. b. Gasoline is a normal good. c. Cars and gasoline appear to be mild complements. d. The coefficient on the price of cars (Pcars) is insignificant. e. All of the coefficients are insignificant. 2. In a cross section regression of 48 states, the following linear demand for per-capita cans of soda was found: Cans = 159.17 – 102.56 Price + 1.00 Income + 3.94Temp | |Coefficients |Standard Error |t Stat | |Intercept |159.17 |94.16 |1.69 | |Price |-102.56 |33.25 |-3.08 | |Income |1.00 |1.77 |0.57 | |Temperature |3.94 |0.82 |4.83 | R-Sq = 54.1% R-Sq(adj) = 51.0% From the linear regression results in the cans case...
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