Assessment of the Vertical Integration Strategy of ECCO
The vertical integration strategy of ECCO considers the value of internal quality control and the supply chain. They want to ensure that their customers’ experiences and the quality of their products are of the highest caliber. The supply chain of ECCO is divided into three tiers. The suppliers and manufacturers themselves make up the first tier. The second tier consists of the merchants who offer ECCO products for sale (Nielsen et al., 2008). The third tier consists of the customers who ultimately buy their goods. ECCO can guarantee the highest quality of its products and a consistent customer experience because of its direct relationships with each of these tiers.
Regarding the value of internal quality control, ECCO is aware of its significance. They understand that to guarantee their products are of the highest quality, they must have quality control procedures. To achieve this, they have put in place their quality control procedures, like their Quality Assurance Program (Latorre, 2009). This program was created to ensure their products adhere to the highest quality standards. They have also established quality control labs, which test and check their goods before distributing them to customers.
Unlike their competitors’ strategies, ECCO’s approach to vertical integration is very different. For instance, many of their rivals heavily rely on contract manufacturing, which can result in a lack of control over the quality of the products. In addition, many of their rivals need more internal testing facilities to guarantee the quality of their goods. As a result, they cannot assure customers of the quality of their goods (Nielsen et al., 2008). ECCO’s strategy explicitly acknowledges the importance of internal quality control. They understand that to guarantee their products are of the highest caliber, and they must have quality control procedures. To achieve this, they have set up their own testing facilities and quality control systems. This starkly contrasts the strategy of many of their rivals, who rely heavily on production outsourcing and lack internal testing facilities.
Regarding its vertical integration strategy, ECCO also recognizes the value of innovation. To stay ahead of their rivals, they are always looking for ways to enhance their operations and goods (Jones, 2004). This includes funding R&D projects and looking into ways to cut expenses and boost productivity. They also invest in technology to ensure their products are current with the newest trends. This makes it possible for them to continue competing in the international market.
ECCO recognizes the importance of outstanding consumer service. From when customers purchase until they receive their product, they work to give them the best experience possible. This includes offering customer support and giving prompt, effective answers to customer questions. They also provide various customer service options, including phone, email, and online chat. All of this contributes to a customer’s satisfaction with their purchase and a positive relationship with the business.
Risks and Benefits of this Supply Chain Strategy
The initial investment in ECCO’s quality control procedures and testing facilities is one of the costs and risks connected with their supply chain strategy. They also assume the risk of being forced to handle their production and distribution. However, the potential advantages of this tactic outweigh these expenses and risks (Jones, 2004). One benefit of this supply chain strategy is greater control over the quality of their products. They can guarantee their products are of the highest quality by controlling their production and distribution. Since they are in charge of the entire process from beginning to end, they can also guarantee a consistent customer experience. Increased customer satisfaction and loyalty may result from this.
This approach may also result in increased cost savings. They can reduce costs by reducing their reliance on outside manufacturers and distributors by managing their production and distribution (Latorre, 2009). Additionally, by investing in their quality assurance procedures and testing facilities, they can lower their risk of expensive product recalls and other problems related to subpar goods.
Overall, ECCO’s supply chain strategy is both economical and advantageous in the long run. They can guarantee that their products are of the highest quality by investing in their quality control procedures and testing facilities. Additionally, they can reduce their reliance on outside manufacturers and distributors by controlling their production and distribution, resulting in lower costs. All of this may result in longer-term cost savings and increased customer satisfaction and loyalty.
Recommendations to ECCO Leadership
ECCO leadership should increase its attention to customer service. They have made significant investments in their internal testing facilities and quality control procedures, which have helped to guarantee that their products are of the highest caliber. However, they must concentrate more on offering top-notch customer service to guarantee enduring customer loyalty and satisfaction. This includes offering customer support and giving prompt, effective answers to customer questions. They should also provide various customer service options, including phone, email, and online chat.
I advise the ECCO leadership to increase its research and development expenditures as another change. They have already invested in their quality control procedures and internal testing facilities to stay ahead of their rivals, but they should also concentrate on doing so. To do this, businesses must look for ways to cut expenses, boost productivity, and invest in technology to keep their products up-to-date with current fashions. Finally, I advise ECCO leadership to increase funding for sustainability programs. They already have a quality assurance program but should also put more effort into sustainability projects, like lowering their carbon footprint and turning to renewable energy.
References
Nielsen, B. B., Pedersen, T., & Pynt, J. (2008). Ecco A/S-Global Value Chain Management: Case and teaching note from Richard Ivey School of Business. https://hbsp.harvard.edu/product/908M14-PDF-ENG
JONES, G. (2004). Multinationals and the first global economy before 1914. Boston: Harvard Business School. https://hbsp.harvard.edu/product/804013-PDF-ENG
Latorre, M. C. (2009). The economic analysis of multinationals and foreign direct investment: A review. Hacienda Pública Española/Review of Public Economics, 191(4), 97-126. https://ideas.repec.org/a/hpe/journl/y2009v191i4p97-126.html
write