Case Study: Value Chain Analysis ECCO
Value Chain Analysis The value chain analysis identifies how ECCO can gain competitive advantage and create value in the company by separating the business system into a series of value-generating activities (NetMBA.com). ECCO is one of the world’s leading shoe manufacturers controlling 80% (Nielsen, Pedersen, & Pyndt 2008) of its entire supply chain and is considered to be a fully integrated vertical value chain. In ECCO’s case, this gives them the opportunity to manage all their production and tanneries that are scattered around the globe to produce and design the shoes they are making. The value chain by Porter is illustrated as: These activities offer customers a value that exceeds the cost in the value chain which results in a profit …show more content…
Most footwear companies would rather focus on branding and marketing and follow an outsourcing strategy, but ECCO on the other hand is determined in prioritizing quality, which they believe is only possible if they control most of the value chain. In-house production is very rare and difficult to imitate because of the cost, as it requires large capital investment. This strategy is nearly impossible for startup companies, but ECCO has been able to keep up with the margin and profitability (ECCO Annual Report, …show more content…
Every year ECCO opens approximately 120-150 new branded stores, and some which are relocations or refitting of existing stores. ECCO aims to be close to their customers as possible, and to do that they manage their sales activities close to shoe stores in three regions; North America, Asia Pacific and Europe, Middle East and Africa. These regions cover about 90 markets where ECCO products are for sale, i.e. about half of the world’s countries. ECCO distributes through wholesale, retail, e-commerce and
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