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Ecco case presentation
- 1. Think Global! ScholarFree Consulting Zhangran(Vikki) Wang, Minwoo Choi, Jun Liu, Siyun Liu
- 2. Agenda • Background & History • Issues • External Analysis • Internal Analysis • Alternatives • Recommendation • Implementation • Q&A ScholarFree
- 3. Background 1978 International recognition 1963 Karl Toosbuy in Denmark 2000 Fully Integrated supply chain 1980 International Expansion 2004 Hanni Toosbuy Kasprzak 1998 The first flagship in London 1990 launch of major products ScholarFree
- 4. Issues • How can ECCO optimize value chain? - Procurement; Distribution • How should ECCO tailor its products to the Chinese market? - Customization; Establish New Product Line • How can ECCO thrive in the global competition? - Technology Innovation; Marketing Plan ScholarFree
- 5. Internal Environment Strength • • • • • International production units Fully Integrated value chain / Know-How Economies of scale (80%) Internal Management Well-rounded product line Weakness • • • • Budget Planning (2003) Lack of market orientation Little appeal to fashion-savvy Narrow sales supply channel ScholarFree
- 6. External Environment Opportunity Threats • High potential market • International driving force (China) • Low labor cost in Asia • • • • Changing Consumer tastes Competitive market Labor cost in Europe Liability of Foreignness ScholarFree
- 7. Alternatives • Cross-Brand with leather goods companies – Use their brand name – Share leather supply chain • Children shoes cut out – Build up cash reserve – Lowest portion of revenue ScholarFree
- 8. Alternatives Percentage of Sales Revenue 12% 11% Children Ladies Men 30% 47% Sports ScholarFree
- 9. Recommendations • Optimize value chain (1/2) – Procurement: self supply raw materials • Open farms and raise cows in Inner Mongolia, China • Raw hides for leather production, raw meat to meat processors • Partner with major meat producers, such as Shineway International Co. and Yurun Group ScholarFree
- 10. Recommendations • Optimize value chain (2/2) – Distribution: establish a distribution center in Xiamen, China • Only two distribution centers in Denmark and the U.S. • Proximity to factories and tanneries(Indonesia, Thailand, China) • Easier accessibility to other Asian countries ScholarFree
- 12. Recommendations • Tailor products to the Chinese market – Customization • Softer soles, V-shape cutout Achilles notch • Lower price – Badminton shoes rollout • Contract with Asian badminton players (Dan Lin, Chongwei Lee, Taufik Hidayat, etc.) • Substantive TV advertising and Baidu ads ScholarFree
- 13. Recommendations • Thrive in the global competition (1/2) – Outcompete Rivalries • Product/Technology Innovation ScholarFree
- 14. Recommendations • Thrive in the global competition (2/2) – Institute comprehensive marketing plan • Satisfy the changing appetite of consumers • Establish exceptional customer service ScholarFree
- 15. Implementation Recommendation 1 - 15,000 cows - Decrease leather supply from Europe - Seek meat suppliers - Price Negotiation - Employ Consultants - Construct Farm - Purchase Land & Cows Recommendation 2 - Distribution Center construction onset - Specialist/ Translator - Training - Operation ScholarFree
- 16. ? Questions
- 19. Appendix Cost Table(2004) Cow cost $1500/cow Land cost $80,000 for 15,000 square meters Gap period 15 months Farmer cost $1000-2000/farmer 15000 cows 30 farmers 2 consultants ScholarFree
- 20. Appendix Incumbent badminton footwear producers • Li Ning (Chinese national brand) • YONEX (World best) ScholarFree
- 21. Appendix • Technology – Forefoot propulsion plate • Save energy with every step as the plate provides additional torque. The "three-finger" propulsion plate enhances the natural stride by mimicking the foot's biomechanics while walking. ScholarFree
- 22. Appendix • Technology – Air-weight • Gain a lightweight but strong outsole. Air weight technology use high-density rubber in midfoot provides superior cushioning, stability, and comfort; enjoy the watertight seal but maintain flexibility due to a sole that’s built without glue or stitching to be durable, cushioning, and long-lasting. ScholarFree
- 23. Appendix • Technology – Vibram® outsole • Expect high performance no matter the temp or terrain. Whether you'll spend tomorrow bounding over ice, hot sand, gravel, rocks, or grass, Vibram is a versatile outsole material for a wide breadth of outdoor activities. – Carbon fiber textile • Steady as you go. Extremely hardwearing carbon textile for enhancing stability in all aspects of golf. The stance, the swing and of course the 4 mile walk. ScholarFree
Editor's Notes
- in 1963 was established by Karl Toosbuy in Denmark.In 1978, the company gained widespread international recognition for its comfort footwear by launching the "Joke" shoe, followed by the classics "Free" and "Time”.Throughout the 1980s, the company expanded its operations internationally to Portugal, Japan and Cyprus.The 1990s saw major additions in the ECCO collection, including the launch of Kids, Golf and Performance shoes.In 1998 the first flagship retail store opened on Oxford Street, in London.By 2000, ECCO owned every step of the production process, from design and leather production to branded retail sales.When Karl Toosbuy died in 2004 his daughter HanniToosbuyKasprzak became owner of ECCO and Chairwoman of the Managing Board.
- Strengths5 international production units with distinct core competencies and specialization(clear division of tasks between home office and foreign production sites)2. fully integrated value chain, own and manage each and every step in the production process from tanning to the end-point of sales, more control over its business3. Company maintains economies of scale with over 5 tanneries in five countries spread across Asia and Europe and nearly 80% of the shoes are manufactured in its own factories.4. business know how (maintain production size and quality at the same time)and advanced technology(“direct injection” production method)5. well-rounded product lines (ranging from sports shoes to casual shoes for men, ladies and children) and well developed distribution system6. unique culture: family ownership and internal recruitment of management positions(know the company inside-out, efficient to invest in each employee) and international mindset( reflected in workforce composition)Weakness1. cost concerns2. lack of market orientation(advertising) compared to branded marketers3. offerings are not fashionable and don’t appeal to fashion-savvy that much4. too narrow sales supply channel(only department stores)5. fake replicas and imitation products affects brand image
- Opportunities:1. promising markets have high potential (Asia and Middle Europe markets)2. lucrative North America market, significant growth in sales and revenues3. internationalization and globalization driving force(China just joined WTO in 2004)4. low labor cost in AsiaThreats:1. consumer tastes are prone to change-hard to maintain customer loyalty2. fuzzy boundaries between different footwear product categories-hard to pinpoint competitors3. increased labor cost in Europe (raw materials, leather)4. fierce competition(a. Nike and Reebok b. private labels c. Geox, Clarks and Timberland)5. liability of foreignness6. Many products coming as cheap substitutes for leather also pose a serious threat to the brand.
- Acquire well-known leather Bag companiesUse their brand name for reputation in ChinaTo build up more professional market intelligence on leather supply and sales chainProduct line cut offClose the production of children shoes (not necessary for children to give them expensive functional shoes)To minimize risk of going over broad To plan even further expansion in market/production channels in China to acquire larger market share in ChinaTo focus more on other products to compete global companies