Ecco Essay

2080 Words Dec 1st, 2011 9 Pages
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 situated in various countries leveraging local expertise. Because of this unique situation, competitors found it very difficult to sustain a comparable level of quality.
As noted in the case, ECCO finds itself in a highly competitive industry. The primary competitors identified in the
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Each facility in their respective country utilized local resources and expertise in specific areas such as leather research in Denmark and assembly in Slovakia. By owning the entire value chain, products can be produced more quickly and product lines can be tweaked more frequently. Inventories can also be maintained at low levels, allowing ECCO to achieve closer to a just-in-time production operation.
Vertical Value Chain Cons
The main negative for ECCO in having an integrated vertical value chain is increased costs over competitors. For most shoe companies, the cheapest option is to outsource manufacturing, which is what most of ECCO's competitors have done. Another con of owning the entire production chain is that when demand abates, there are still high fixed costs to cover to keep the plants operational.
In-house production and total vertical value chain ownership means that ECCO is solely responsible for the quality and production of the product. ECCO is able to ensure the highest level of quality for its products, but there is likely to be a diminishing return on the level of quality.
To date, ECCO has done a good job of managing the tradeoffs, but they should continue to scan the horizon for economic and strategic changes that may demand a change in their operation. As always, it will be critical for ECCO to continuously analyze various alternative cases with a keen eye towards identifying variance in possible outcomes and expected

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