ECCO A/S — GLOBAL VALUE CHAIN MANAGEMENT Case Solution
The company’s had a better supply chain management and it’s time to market was also under the control. This is mainly due to the fact that the company hadn’t developed any external dependency. The disadvantage of the ECCO’s overall system was that it would face the high cost of the integration of the global supply chain due to the high level of complexities involved. As ECCO’s competitors relied on production and processing outsourcing, which resulted in lower production cost. On the other hand, coordination and integration would also have been a challenge due to the increasing international expansion.
Porters’ Five Forces
Rivalry:The competition in the industry was high as the market for the casual footwear is highly competitive, and was also subjected to change according to the consumer’s preferences. Furthermore, the competitors were in the cutting-edge competition, and each was looking for ways to lower down the cost while increasing the supply chain efficiency. In addition to this, technological advancements have subjected to increase the rivalry in the industry. Moreover, the company’s entrance in the new segment given rise to the new competitors. Therefore, the competition for the company was quite high.
Bargaining Power of Buyer:The buyer’s power seemshigh due to high threat of substitute. The competitors were also producing the similar products, which have presented many options for the consumers to select the shoes from a wide range. The switching cost was also low in the industry and the consumers were well aware of the prices.
Bargaining Power of Suppliers:The Company was less dependenton the external suppliers due to which the power of suppliers was low. Company’s majority of the production was in a house, and the relatively small proportion was outsourced. Furthermore, the company had the suppliers alternative at low prices due to which the bargaining power of suppliers was.
Threat of Substitute:The threat of the substitute was high in the industry as the many competitors were producing similar products and the switching cost was also low, which has increased the threat for the substitute. In addition, the Chinese counterfeit market has also became anincreasing problem for the company due to which the threat for the substitute is high.
Threat of New Market Entrants: The entry barriers in the industry were medium, as the shoe industry is capital intensive and involves high rules and regulation. Therefore, it would be difficult for new players to establish in such as competitive market successfully. However, the entries of new competitors were easy in China.
1) The company may increase its marketing efforts in order to ensure its competitive position in the market. And for this, it would require anincrease inits marketing budget and would also need to increase its marketing efforts by establishing marketing department. This would help the company to become the market-oriented company and would also help it to make its position strong in the market. (V. Kumar, 2011)
2) The next alternative available for the company is to increase its distribution center in Asian markets so as to decrease the costs and time in serving the market. This would also help the company to better understand the needs of the customers in Chinese markets. (Chopra, 2001)
3) The last suggested alternative available for the company is that it should increase the purchase of the raw material from the external suppliers. This would help the company to decrease the complexities and would also help the company to reduce time and cost in sending the raw materials to the production facilities. (Beil, 2009)…………….
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