Think Global!ScholarFree Consulting

Zhangran(Vikki) Wang, Minwoo Choi, Jun Liu, Siyun Liu

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Agenda• Background & History• Issues • External Analysis• Internal Analysis• Alternatives• Recommendation• Implementation• Q&A

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Background

1980International

Expansion

2000Fully

Integrated supply chain1963

Karl Toosbuy in Denmark

1990launch of

major products

1998The first

flagship in London

2004Hanni

Toosbuy Kasprzak

1978International recognition

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Issues• How can ECCO optimize value chain? - Procurement; Distribution

• How should ECCO tailor its products to the Chinese market?

- Customization; Establish New Product Line

• How can ECCO thrive in the global competition? - Technology Innovation; Marketing Plan

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Internal EnvironmentStrength• International production units • Fully Integrated value chain / Know-How• Economies of scale (80%)• Internal Management• Well-rounded product line

Weakness• Budget Planning (2003)• Lack of market orientation• Little appeal to fashion-savvy• Narrow sales supply channel

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External EnvironmentOpportunity• High potential market• International driving force (China)• Low labor cost in Asia

Threats• Changing Consumer tastes• Competitive market• Labor cost in Europe• Liability of Foreignness

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Alternatives• Cross-Brand with leather goods companies

– Use their brand name

– Share leather supply chain

• Children shoes cut out– Build up cash reserve

– Lowest portion of revenue

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11%

47%30%

12%

Percentage of Sales Revenue

ChildrenLadiesMenSports

Alternatives

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Recommendations• Optimize value chain (1/2)

– Procurement: self supply raw materials• Open farms and raise cows in Inner Mongolia, China

• Raw hides for leather production, raw meat to meat

processors

• Partner with major meat producers, such as Shineway

International Co. and Yurun Group

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Recommendations• Optimize value chain (2/2)

– Distribution: establish a distribution center in Xiamen, China• Only two distribution centers in Denmark and the U.S.

• Proximity to factories and tanneries(Indonesia, Thailand,

China)

• Easier accessibility to other Asian countries

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Recommendations

Xiamen

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Recommendations• Tailor products to the Chinese market

– Customization• Softer soles, V-shape cutout Achilles notch

• Lower price

– Badminton shoes rollout• Contract with Asian badminton players

(Dan Lin, Chongwei Lee, Taufik Hidayat, etc.)

• Substantive TV advertising and Baidu ads

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Recommendations• Thrive in the global competition (1/2)

– Outcompete Rivalries• Product/Technology Innovation

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Recommendations• Thrive in the global competition (2/2)

– Institute comprehensive marketing plan• Satisfy the changing appetite of consumers

• Establish exceptional customer service

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Implementation

Year 2

- Price Negotiation- Employ Consultants

- Distribution Center construction onset

- Construct Farm- Purchase Land & Cows

Recommendation 1

Recommendation 2 - Specialist/ Translator - Training- Operation

- 15,000 cows- Decrease leather supply from Europe- Seek meat suppliers

Year 1 Year 3+

Questions?

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1999 2000 2001 2002 2003 20040

5001000150020002500300035004000

25522836

3216 3360 3169 3394

Net Revenue

Appendix

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Appendix

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AppendixCost Table(2004)

Cow cost $1500/cow

Land cost $80,000 for 15,000 square meters

Gap period 15 months

Farmer cost $1000-2000/farmer

15000 cows

30 farmers

2 consultants

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AppendixIncumbent badminton footwear producers

• Li Ning (Chinese national brand)

• YONEX (World best)

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Appendix• Technology

– Forefoot propulsion plate• Save energy with every step as the plate provides

additional torque. The "three-finger" propulsion plate enhances the natural stride by mimicking the foot's biomechanics while walking.

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Appendix• Technology

– Air-weight• Gain a lightweight but strong outsole. Air weight

technology use high-density rubber in midfoot provides superior cushioning, stability, and comfort; enjoy the watertight seal but maintain flexibility due to a sole that’s built without glue or stitching to be durable, cushioning, and long-lasting.

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Appendix• Technology

– Vibram® outsole• Expect high performance no matter the temp or terrain. Whether

you'll spend tomorrow bounding over ice, hot sand, gravel, rocks, or grass, Vibram is a versatile outsole material for a wide breadth of outdoor activities.

– Carbon fiber textile• Steady as you go. Extremely hardwearing carbon textile for

enhancing stability in all aspects of golf. The stance, the swing and of course the 4 mile walk.