Ecco Case Essay

In this competitive business arena it is crucial to strategize and come up sound managementsolutions in order to stay afloat in the market. This is an individual report of ImperialCompany which showcases all the key management decisions that were taken to maintain acompetitive edge in the global market operations of its products. It will be sequenced in thefollowing format:1.Introduction to the Athletic Footwear Industry2.Thorough Business Environment Scanning3.Evaluation of Competition Forces

The objective of these establishments, apart from achieving labor cost savings, was to spread risk. Initially, the various production sites were capable of producing the same types of shoes, indicating an insignificant degree of specialization in the production units. However, in recent years ECCO had strived to narrow each unit and capitalize on its core competencies.

Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents’ position (Porter, 1980b; Sanderson, 1998) The most common forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:

Factors that can limit the threat of new entrants are known as barriers to entry. In this case barriers to entry are low because: there is no government intervention to prevent businesses from entering the industry, resources are abundant, and customers’ switching costs are low as well as fixed costs to start this type of business.

Ques 1: Draw a detailed process flow map of the current process at receiving Plant#1. What is the capacity of each operation in the process?

There are other footwear’s that provide the same level of comfort and satisfaction such as the shoes designed by Nike, Adidas, Bata etc. as well as sell at a competitive price.

Threat to new entrants: There is no barrier to entry in this industry but it might be difficult for newcomers to compete against existing well establishing companies.

1. Why is Auhll (CEO of Circon) resisting to the takeover? How do incentives of Auhll conflict with those of other (minority) shareholders?

Build the management-research question hierarchy, through the investigative questions stage. Then compare your list with the measurement questions asked.

The threat of new entrants is measured by the level of entry barriers, brand reputation and customer loyalty, potential for existing competitors to expand, growth of buyer demand,

Barriers to Entry: The entry barriers in the market are relatively low, making it easy to access. However, as the market is saturated it could be unlikely for new companies to decide to start new enterprises in this field.

The bargaining power of buyers stands in a direct relationship with the bargaining power of suppliers. If the bargaining power of buyers is substantial it increases the opportunity cost of suppliers. The greater the buyers concentration the greater their bargaining power. This bargaining power is also increased in markets where the suppliers’ concentration is high. The bargaining power is also increased when the cost of switching from one supplier to another is low. In instances where backward vertical integration is possible i.e. buyers setting up their own chains of suppliers the bargaining power of the buyer increases in that their prices may become more competitive. In a market where the buyers are more concerned over quality than price their bargaining power decreases as they are less inclined to shop

The firm also made compromises to its approach in some cases by outsourcing its production for shoes that could not benefit from its in-house technology. Most firms in the shoe industry outsourced production as a way to cut production and vendor logistic costs.

Threat of New Entrants – The threat of new competitors entering an industry is high when initial

Barriers to entry- there can either be high barriers to entry which makes the market unattractive and hard for new entrants or there can be low barriers to enter which make it easy for new entrants in the market.