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In: Operations Management

Examine the question of at-home union manufacturing versus overseas manufacturing for ECCO. Do back of the...

Examine the question of at-home union manufacturing versus overseas manufacturing for ECCO. Do back of the envelope assessments of the following two questions: (1) Could ECCO remain profitable if it did all of its manufacturing at home? (2) Could ECCO remain profitable if it dramatically increased the compensation it paid to its overseas workers -- say, doubling their compensation?

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No. the company will not be profitable since from the figures, ECCO company remains to be enjoying the largest market share domestically with over about two shoes for every home in Denmark is from ECCO.

Doubling the compensation of the workers overseas will make the company to run at a loss. this is because the company faces great competition in the global market and increasing the workers pay will increase its wage bill and hence making it run at a loss.

Explanation:

ECCO company is one of the best shoe companies in Denmark. the company enjoys a large market share domestically as opposed to its global market share. this is due to unbearable competition in the global market. the company should thus ensure that they raise the operational environments locally and reduce the wage bills in the global market to remain profitable.

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keosha answered 6 months ago
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