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Esquel Group’s Organizational Management Case Study

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Updated: May 11th, 2021

How Did Bringing the Different Manufacturing Activities In-House Help Esquel to Control the High Quality of Their Product Content and Service?

Nowadays, managers have a tendency to believe that one of the strategies to enhance the quality of the provided services and goods is to focus on the integration and the sufficient flow of information between different departments and business entities (Gruver et al. 45). In the context of Esquel, the company took advantage of these principles. This strategy helped the enterprise introduce universal quality standards such as ISO 9001 (Peleg 4). At the same time, applying vertical integration improved a connection between the actors in the supply chain and allowed spending additional resources on training and equipment. This approach contributed to the improvement of the main and supplementary activities of the value chain while enhancing quality control procedures. Consequently, a combination of these initiatives helped the company become successful in the market and had a positive effect on the overall quality of the services.

Do You Think Esquel Was Right in Becoming a Vertically Integrated Company? What Do You Think Are the Pros and Cons of This Strategy? In Your Opinion, What Are the Unique Characteristics of Esquel Business That Made Vertical Integration Their Chosen Strategy?

In my opinion, becoming a vertically integrated company was the most suitable strategy for Esquel, and the enterprise’s decision-making followed the right path. In the first place, this approach helped the company enhance its manufacturing planning process. Introducing universal procedures was not only beneficial to the quality of the provided services but also established a centralized system of manufacturing (Peleg 12). This step was essential, as the company wanted to strengthen its positions in the apparel and accessories markets.

Consequently, based on the example of Esquel Group, the main advantages pertain to the improved reporting system, centralized manufacturing control, and exceptional quality of the services. At the same time, it is one of the ways to expand a company’s activities and cultivate financial growth (Markovitz 251). Nonetheless, apart from having an advantageous effect on the overall corporate performance, vertical integration tends to have a negative impact on the functioning of some departments. For example, an increase in costs and bureaucratic insufficiency may be potential adverse consequences of this strategy (Wilson et al. 55). The inability to overcome these difficulties will be one of the possible causes of the loss of the market share.

Therefore, the unique features of Esquel’s structure helped overcome these challenges. For example, the company had a significant number of suppliers who defined the overall quality and the speed of delivery. Consequently, applying the concepts of vertical integration would help control the quality of the products and services in the value chain. Additionally, the desire to strengthen the company’s positions in the apparel market was also one of the features that underlined the need to select this strategy. Lastly, the company’s focus on sustainability, environmental issues, and social responsibility could also be discovered as beneficial characteristics. Controlling emissions and distribution of financial resources between the departments helped the company become community-oriented.

What are Some of the Initiatives the Company Took to Become More Modern Service-Oriented? What Are the Benefits the Company Realized as a Result?

It remains apparent that information technology plays a pivotal role in different processes such as manufacturing and operations management (Zaeh 165; Ake et al. 45). Esquel was able to take advantage of this aspect and established a new system to enhance the consumer experience. In this instance, it eased the communication with the customers, as they were given an opportunity to place the order via the Internet (Peleg 13). Apart from that, the company continued to reflect its values and ethics and deliver them to the customers with the help of competent employees who cared about the company’s image and performance.

As a result of the initiatives mentioned above, the company was able to gain several benefits. In the first place, Esquel improved the quality of the provided services and products, as a new IT solution made reporting easier and faster. At the same time, a new approach helped establish trusting relationships with the customers due to the satisfaction of their needs and wants. As a consequence, it could be said that these strategies had a positive impact on the company’s financial stability, encouraged the growth of the revenues, and contributed to the development of the positive brand image worldwide.

What Are Some of the Initiatives Esquel Took to Improve Their Employees Quality of Life? To Have a Positive Impact on Society? And to Conserve the Environment? Do You Think Such Initiatives Would Have Been Easy to Justify? Had Esquel Been a Public Company at the Time It Happened?

Apart from being finance-driven, the company wanted to contribute to the development of the social spheres. For instance, Esquel paid great attention to the well-being of the employees by organizing different activities and ensuring a positive working environment (Peleg 18). This characteristic gave the company a distinct competitive advantage in the labor market and attracted qualified professionals. In turn, the company’s social responsibility strategy also attempted to change the values of the society. For example, it donated millions of dollars to the areas that experienced the earthquakes (Peleg 17). At the same time, Esquel had a tendency to spend a significant amount of its financial resources on the development of the local schools and other educational institutions (Peleg 17). These actions complied with the company’s strategy in making education available to everyone. As for the environment, the projects such as Eco Mobile Laboratory were created to increase awareness of the children about waste management (Peleg 17).

I think that the initiatives mentioned above were difficult to justify, as these projects required substantial financial investments. The major challenge was to manage the company’s financial resources to increase sales and devote time and effort to the social projects. Being privately founded helped the company introduce social plans that comply with the organizational goals, objectives, and mission statement. Gaining positive responses from the target audience helped Esquel improve its brand image, enlarge its customer base, and increase public recognition.

Works Cited

Ake, Kevin, et al. Information Technology for Manufacturing: Reducing Costs and Expanding Capabilities. CRC Press, 2016.

Gruver, Gary, et al. A Practical Approach to Large-Scale Agile Development: How HP Transformed LaserJet FutureSmart Firmware. Addison-Wesley, 2012.

Markovitz, Richard. Economics and the Interpretation and Application of the U.S. and E.U. Antitrust Law. Springer, 2014.

Peleg, Barchi. Stanford Graduate School of Business, Web.

Wilson, Randal, et al. Tools and Tactics for Operations Managers. Financial Times Press, 2013.

Zaeh, Michael. Enabling Manufacturing: Competitiveness and Economic Sustainability. Springer, 2013.

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