Case Study: ESQUEL. Business & Marketing Assignment

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Case Study: ESQUEL
ESQUEL is a vertically integrated company that deals with the production of cotton apparel in China. It is the world's leading producer of cotton shirts that started by servicing the low-end market. Its manufacturing activities involve spinning, weaving, dyeing, trimming, and packaging of both retail and wholesale apparel. The following are responses to the questions from the case study.
1.      
ESQUEL started as the largest producer of premium cotton shirts globally that distinguished itself from other apparel manufacturers. It later expanded to involve the manufacture of garment, woven and knit fabrics, cotton spinning, ginning, and farming. By placing all manufacturing activities in-house, ESQUEL tracked all production activities and profit margins (Peleg-Gillai et al., 3). The in-house idea helped the company to maintain its apparel quality, which led to flexibility in cost-effective production. Also, making their products from the basic raw materials enabled them to keep high standards of quality to match their desire from farming to the finished products. 
By centralizing its manufacturing activities, the company attained the right balance and management of its production activity. Implementation of new technology and innovation was made more accessible using RFID, allowing the company to maintain its product quality and diversity (Peleg-Gillai et al., 2). ESQUEL also introduced other initiatives such as the environment protection initiative, which aims at reducing air pollution by adopting the use of coal-fired power stations. 
2.      
Vertical strategy refers to a technique through which a company integrates its competitive potential by centralizing different stages of production and distribution. I believe that degree at which ESQUEL combined vertical strategy is the right channel for vertical strategy. It allows the firm to have full control over many aspects of the company, such as efficiency and consistency of both products and services (Peleg-Gillai et al., 2). Also, the company can have better control and management of their supply chain and handling of customer needs and reviews. 
The pros of integrating vertical strategy include the freedom to invest in assets that are well specialized and gives the company more control of the business. Also, vertical integration allows the firm to save on transaction costs and provides a more competitive advantage. The con of vertical integration is that it takes a lot of time to cope with it. The firm wi...