“Strategy can be thought of as a long term plan of action or execution designed to achieve particular objectives, such as achieving competitive advantage for an organisation. It reflects the values, expectations and goals of those who are in power within the organisation.” (RDI course material-Strategic Management module; Unit 1-Nature and scope of strategic management; Lesson 1-Nature)
Strategic decisions direct the company towards the path of growth. A company formulated and undertook decisions in such a way that a strategic direction was made to ensure all possible opportunities for success and keeping control of challenges alongside. Every strategic decision that is made will have an implication for change all the way through the whole organisation.
ECCO, the Danish pioneer in the footwear industry, as the founder, Karl Toosbuy, declares has always aimed ‘to be the world’s best shoes-shoes with internal values’.
Though the inception of the company has been in Denmark in 1963, today ECCO has been successful in creating an international profile. With reference to the case study, ECCO is one among the renowned companies of the world, operating in the footwear industry, with an in-house production of 80%.
From the given case study it is learnt that there seemed to be a strategic drift, for ECCO, for a period of five years from 1999 to 2003 .They were not going the way they had to going. There was stagnation in the productivity and the opening margins were lower than expected. Strategic initiatives to overcome the negative trend, paved way for an emergent strategy to come in, in order to save the company from transforming into an initial public offering (IPO).
In 2004, the United States, Germany and Japan had been the main markets, where ECCO exported about 90% of their production. Ever since then, like most other large organisations, the company has been seeking market opportunities and working persistently to create new market, especially in Asia, Central and Eastern Europe where they could target countries that were probably still to be explored.
The Ansoff Matrix
The Ansoff Matrix also known as the Product /Market Expansion Grid is a useful devise that would assist in the development of a strategically planned process for market growth and expansion. The grid has been given two dimensions as the name suggests; Product and Market.
Igor Ansoff pointed out that there are essentially only four strategies which lead to growth.
• Increasing sales of existing products in existing markets.
• Introducing the existing product into the new markets. Exporting is the usual example of this strategic option
• Introducing a new product to the existing market. This could be a substitute product providing it would be used in large quantities
• The fourth strategy identified by Ansoff is the introduction of a new product into new markets. This is generally considered to be a high risk strategy although where the new product uses existing technology ,the risk may not be that significant
[pic]Figure 1.1- Ansoff strategies matrix (Source: rdi course material-Marketing Management Module; Unit 2-Marketing Environment; Lesson-Marketing Audit)
ECCO has a clear and well defined vision, “to be the most wanted brand within innovation and comfort footwear- a position that can only be attained by constantly and courageously researching new paths, investing in employees, in core competences of product development and production technology.”(source: given case study)
Considering ECCO to as having pursued the strategies of the Ansoff Matrix, a description fitting the criteria is given in each quadrant of the matrix. Taking each quadrant in turn:
✓ The simple...