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Case Title:

Esquel's Vertical Integration

Publication Year : 2004

Authors:  Firdaus Maldar, G Srikanth

Industry: Retailing

Region:Hong Kong

Case Code: DIS0002

Teaching Note: Available

Structured Assignment: Available

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Abstract:
The Esquel Group, based at Hong Kong, has been a cotton textile and apparel manufacturer since 1978. In an industry, where its competitors increasingly rely on outsourcing and specialisation, the company does everything in-house, like cotton farming, spinning, weaving, dyeing, knitting and distribution. Vertical integration of its activities provided Esquel with more control over the quality of its products, reduced lead times and enabled it to attract high profile names in the fashion and garment industry.

Pedagogical Objectives:

  • To discuss the possible merits and demerits that could be derived from vertical integration
  • To discuss the opportunities and challenges that textile and clothing manufacturers in the developing countries might face if textile quotas are eliminated.

Keywords :  Esquel's vertical integration; Backward and forward integration; Low cost advantage; Growth Strategies Case Study; Electronic data interchange; Long staple cotton, spinning mills; Supply chain management; China's textile industry; Distribution and logistics; Multifibre agreement; Merchandising, sweatshops; General Agreement on Trade and Tariffs (GATT); Istanbul declaration on elimination of quotas; Textile quotas; Marjorie Yang; Nike, Tommy Hilfiger, Marks and Spencer, Hugo Boss

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