Q: 1. why has it opted for offshoring as opposed to outsourcing?

ANS: ECCO has aimed to produce footwear for easy to perform work and leisure. ECCO opted for offshoring to establish their market presence internationally and increased flexibility for reducing the labor cost.

The reason for offshoring in contrast to outsourcing was that outsourced products did not maintain the quality of the product in the value chain process of the company. The company has to decide to either stay in correlation with the Italian company which has specialized in injection technology to improve the quality of product, or not. The company starts offshoring from China to maintain the quality of the products uniformly in the global value chain.

The organization had created its position on the culture and quality of its products and was deemed to be counted among the big names such as Adidas, Clarks and Nike; a quality downfall would have been costly for its image.

In addition to all that, the organization needed to cut down its costs due to the production being too expensive in the UK, so producing offshore was the best technique to control its quality and to produce the products in the least amount.

The essential part of ECCOs product strategy is based on their “direct injection” Technology,ECCO produced the uppers of shoes manually which includes sewing with a very high utilization of capital-intensive machinery. Through this direct-injection technology, the company has produced eighty percent (80%) of the total production in-house, the other twenty percent (20%) were outsourced from others and those products were not according to the standard the company had aimed at. According to Kasprzak, the company’s technology and its ability is the main strength for producing high quality products. The company believes that our product design is best for the current scenario.

ECCO AS Global Value Chain Management Harvard Case Solution & Analysis

Q: 2. what are the pros and cons of each approach to globalization?

ANS: OUTSOURCING: With the perspective of globalization, outsourcing isadvantageous for the business. The company outsources the required products to different organizations and the other organizations create those products and send them back to the first organization. Through outsourcing, the companies cut off labor costs and are able to transfer the savings to the consumers enjoy the products with paying less amount but quality has to be ensured by the Outsourcer Organization.The main advantage of Outsourcing is that it creates aglobal economy, as more work is being done in different parts of the world, which in-turn, checks and creates money, jobs and a positive impact on the GDP.

Outsourcing also improves the efficiency in the economy as high skilled workers have ample time to concentrate on the major and tricky parts of the task while the mediocre works are outsourced, which utilizes less time for task completion, in short, this benefits the economy. Also, it helps to improve the strength of the relationship between the countries because through outsourcing the companies share their goals with cooperation. Other than that, it provides opportunities of jobs and leads to higher wages in the developing countries.(Czinkota, 2014)................

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