Ecco a/S – Global Value Chain Management
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 and production facilities, in this case, which could have been used to strengthen the branding and marketing of ECCO's shoes.
A multinational corporation (MNC) configures its global value chain activities in order to exploit location-specific advantages and gain global scale and scope advantages. ECCO has a fully integrated value chain and this allows for a discussion of the pros and cons of such an approach.
The globalization of production and trade have fueled the growth of industrial capabilities in a wide range of developing countries, and the vertical disintegration of transnational corporations, which are redefining their core competencies to focus on innovation and product strategy, marketing, and the highest value-added segments of manufacturing and services, while reducing their direct ownership over ‘non-core’ functions such as generic services and volume production. Together, these two shifts have laid the groundwork for a variety of network forms of governance situated between arm’s length markets and large vertically integrated corporations. An increasingly complex and dispersed global value chain configuration posed organizational and managerial challenges regarding coordination, communication and logistics.
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 and production facilities, in this case, which could have been used to strengthen the branding and marketing of ECCO's shoes.
A multinational corporation (MNC) configures its global value chain activities in order to exploit location-specific advantages and gain global scale and scope advantages. ECCO has a fully integrated value chain and this allows for a discussion of the pros and cons of such an approach.
The globalization of production and trade have fueled the growth of industrial capabilities in a wide range of developing countries, and the vertical disintegration of transnational corporations, which are redefining their core competencies to focus on innovation and product strategy, marketing, and the highest value-added segments of manufacturing and services, while reducing their direct ownership over ‘non-core’ functions such as generic services and volume production. Together, these two shifts have laid the groundwork for a variety of network forms of governance situated between arm’s length markets and large vertically integrated corporations. An increasingly complex and dispersed global value chain configuration posed organizational and managerial challenges regarding coordination, communication and logistics.