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ECCO-ANALYSIS

ECCO A/S – GLOBAL VALUE CHAIN MANAGEMENT

Executive Summary:

ECCO A/S is one of the most prominent player in the global shoe industry and is also one of the leading footwear manufacturer in the world. Since its inception in 1963 it aspires to produce top quality, casual comfort shoes with a perfect fit which are pleasant to wear in all weather conditions. The company’s USP is top quality of its product with a coupled production of, manual and machine. The production of their leather was in-house and they had a unique direct injection technology.

ECCO is a financially strong family owned enterprise and as corporation they focus on constant innovation and high quality products. They started it operations from Denmark, and in a continuous pursuit to gain a global foothold and to optimize its value chain, they have expanded their operations in Portugal, Slovakia, Indonesia and Thailand. They soon plan to invest heavily in China, to setup up a world class manufacturing unit which will cater to at least 25% of its forecasted global demand.

ECCO, being a successful and closely knit family owned enterprise had a strong culture of bonding and attachment and it percolated down in the management strategies as well. They strongly encouraged that at least 80% of company’s leader should come from inside the company. They were conscious of the fact that in their journey to be global leader, employees were their biggest asset and thus they invested heavily on employee trainings and career development activities, so they could upgrade their skill and capabilities with evolving time.

ECCO is an exception in the industry, as it still believes that the key to maintain quality standards and product uniqueness is its ‘in house production’, which contributes to over 80% of their production. It believes in outsourcing only when it feels that the product is not aligned with their technological expertise.

Despite of its growing success, ECCO as a company had to face to declining productivity and stagnant margins from 1999 to 2003 which led to increase in its debts, however 2004 brings signs of improvements in its financial capabilities and with its expansion plans in China, ECCO is looking to strengthen its integrated value chain from cow to a shoe, by making it more efficient and cost effective. ECCO realized that it needs to focus on long term sustainability and also it understood the importance of moving towards a marketing oriented path, which would help ECCO leverage on its innovation, research capabilities and its high quality products.

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