Eu Design

• Offices in New York (focusing on sales and customer relationships) and Hong Kong (focusing on sourcing and product development)

• Small company that is growing (few loyal customers)

• Profit margin getting smaller but doing well

• Trim industry not sensitive to price; reputation and reliability is everything

• Fashion industry US$1.5 trillion in 2006

• Suppliers in both Italy and Asia

• Large clients use EU for specific trims; smaller ones as a one-stop-shop

• EU had a higher profit margin when it had more suppliers (due to competition), but the number of suppliers was reduced

• Products, prices, quality and timeliness the basis for supplier selection

• Close production supervision a competitive advantage of EU

• Orders and invoices handled through a simple database program

• QC: 3 junior merchandisers to check production quality against samples; visits and calls to suppliers’ factories

• EU established good relationship with 4 trusted suppliers, to whom most of the work goes

• By 2009, 75% of production in China (up from 35% in 2002)

• GAP, Banana Republic and Ralph Lauren account for 65% of turnover

• Communication is vital for the two offices to work well

• Cost control and efficiency does not translate into low creativity – as long as the correct measures are put in place

• Employee loyalty initiatives are aligned with objectives – needs to be a formal way of evaluation though

• Organization not able to take the stress of growth – rather, felt by individual employees

• Organization not geared towards sales and no incentive to promote sales

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Issues:

• No standardized tasks – no benchmark to base KPI’s and hence incentives against

• Lack of control – informal

• No incentive system – could lead to favoritism and hence, low morale

• Cost inefficiencies

• Higher risk due to no diversification

• Company culture and control systems conflict

• Hong Kong Vs. New York cultures very different (e.g. HK wants manager whereas NY doesn’t)...