Esquel Case Study and CSR (Vertically integrated business Based in…
Esquel Case Study and CSR
Vertically integrated business Based in Gaoming, Guangdong Province.
Ginning: Separating cotton seeds from Fibre. Purchased to so Esquel could insure quality. Located close to bottom farms.
Spinning: 2 Mills located in Xingiang due to close proximity to high qual cotton. And low energy cost. 2nd Mill was used to fill alternative orders allowing for different fabrics.
Knit Fabric: Invested in its own factory to insure quality and reduce shrinkage. (Set up in Malaysia). Then moved to Gaoming in 1996
Woven Fabric: Set up its own plant as textiles from Japan were becoming too expensive and quality was getting worse. Factory was set up in Gaoming. And expansion happened in 2006 to increase capacity, and energy efficiency.
Garment Manufacturing: Factories located across many different countries, which reduced economies of scale. However if avoided import tariffs to the U.S. Which could be up to 20%. US was a major market for them.
Accessories: Entered market as it was not satisfied with poor trade practices + quality issues, margin losses associated with outsourcing. It met half internal demand and some external demand. Reduced waste by recycling plastic.
PYE: Branding, launched 2 luxury end consumer stores in Beijing 2001. Also operated 9 shirt shops. These gave a better understanding of Chinese market.
Distinguished itself in 3 ways
by being vertically integrated
invested in IT to improve operational effectiveness, and added value services to customers
Corporate culture, emphasis on ethical practice, creativity and continual improvement.
Not only focused on business performance but on bringing good to society.
Ashridge Parent model
4 levels of parent company involvement
Portfolio managers (Financial interest only)
Value generated by turning firms around
Identifying gaps that can be exploited in other business
Sharing competencies or incorporating them in subsidiary business. In putting centrally held resource in SBU