Ecco a/S – Global Value Chain Management Essay

1712 Words Oct 27th, 2011 7 Pages
Case 3

The International Firm in a Global Economy

ECCO A/S – Global Value Chain Management

Question 1: 1. Relate the Ecco case to the conceptualization of the organization as a global factory. What similarities and dissimilarities with the global factory conceptualization do you see and what solutions may it present?
Similarities: As 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, ECCO grew and faced increased international competition, various value chain activities. The global factory conceptualization need a fully integrated value chain to tied up significant capital and management attention in tanneries
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Thus, there is a huge bulk of existing literature on outsourcing under different market conditions.
▪ Grossman and Helpman (2005) present a framework based on which firms decide where to outsource in a general equilibrium model. In their model, outsourcing is related to relationship-specific investments governed by incomplete contracts. They clarify the determinants of the location of outsourcing.
▪Grossman and Helpman (2004) compare in-house production and outsourcing within the context of a moral hazard wherein a firm is constrained by the nature of the offered contract to an outsourcer. They clarify the relationship between the productivity of the firm and the choice of organizational forms.
▪ Alyson (2006) examines the choice of in-house production and outsourcing by multinationals using a general equilibrium model by focusing on the varying availabilities of skilled labor among countries. He clarifies that the relative amount of highly skilled labor in the country affects the choice between in-house production and outsourcing.
▪ Alvarez and Stenbacka (2007) find that an increase in market uncertainty leads to a higher proportion of partial outsourcing by applying a real options approach.

Question 3: 3. How sustainable is Ecco’s international strategy in comparison with its competitors?

Operating on a global scale, ECCO need a sustainability of

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