Ecco Case Study

Executive Summary

Founded in Denmark in 1963 by Karl Toosbuy, ECCO is one of the world's most respected footwear manufacturers. The company is fully integrated controlling the entire value chain from "cow to shoe". Over a period of time the company expanded to international markets and established manufacturing facilities in Portugal, Indonesia, Thailand, Slovakia and China.

While ECCO had a very strong focus on product quality, it did not care much about building brand and marketing its products. At the same time its competitors outsourced most of their manufacturing and focused entirely on design, R&D and marketing.

Given the situation, ECCO needs to decide if it wants to be what it is today or become a "branded marketers" like its competitors.

Situational Analysis - 5 C's Framework

1. Company

Founded in Denmark in 1963 by Karl Toosbuy, ECCO is one of the world's most respected footwear manufacturers. It is a fully integrated private firm owned by the Toosbuy family. The company offers a large variety of comfortable and modern footwear for work and leisure. Besides Denmark, the company has five international production units (Portugal, Indonesia, Thailand, Slovakia and China) and 26 sales subsidiaries supplying products globally.

2. Customer

The ECCO group produces various types of shoes including casual and outdoor shoes for men, ladies, and children, as well as semi-sport shoes, for two different seasons - spring/summer and autumn/winter. Ladies accounted for the lion's share (47%), followed by men (30%), sports (12%) and children (11%). In terms of geographical distribution, ECCO registered 90% of its sale outside Denmark with US, Germany and Japan being its top 3 markets.

3. Collaborators

ECCO is one of the five largest producers of leather globally. In addition to using leather, the company also sells leather to auto and furniture industries.

The company works in close collaboration with Italy's Main Group, a firm specialising in injection machine molds and services for footwear. Shoes with very thin sole (accounting for around 20% of total production) was outsourced as it does not fit within the company's core technology (direct injection).

While ECCO is fully integrated firm, it relies on European suppliers for majority of the raw materials apart from leather. The company also formed a formal sales subsidiary with Aibu in China to increase its sales.