Benetton Case Study Essay Research Paper ORGANISATION

Benetton Case Study Essay, Research Paper

ORGANISATION DESIGN

CASE STUDY: “Building The Benetton System”, Werner Ketelhoehn.

Benetton, having been around since 1965 has had some massive changes and events to respond to and so I feel that a timeline of the events since the company was founded to be of significant use.

1960’s; Development of Lucianos competitive advantage (discussed later).

1965 – Benetton was founded and the first factory was opened in Ponzano.

1966 – Widening of the existing company-subcontractor relationship.

1968 – First Italian store opened in Belluno.

1969 – First foreign shop opened in Paris.

1970’s; The Benetton Group expansion to represent a family of brands which include 012, Sisley and Jeans West.

1970 – Hasten expansion by building upon the partnership system developed in Italy.

1972 – Revolutionary production system concerning garment dyeing (discussed later).

1975 – ‘Benetton’ logo becomes a well known retail symbol and their product range is expanded to include the 30+ age group.

1980’s; The growth strategy of Benetton was based around the acquisition of subcontractors and raw material suppliers.

1983 – Advertising and sponsorship campaign in preparation for the global launch.

1985 – Marketing of children’s stationary with the Benetton logo on the product.

1986 – Marketing of Benetton watches.

1988 – Franchisees can now select from a choice of 12 shop layouts. Benetton now have 5000 shops around the world and there are plans being made to make Rocky Mount (NC) the distribution facility for the US market.

1989 – Benetton have a total of 80 agents (internally known as Centurioni).

Benetton – A Unique Approach.

One thing became apparent whilst reading through the case which is the number of things that Benetton do which are seen to be unique to themselves.

Take first and foremost, right from the outset when Guiliana began to use her knitting talents producing bold, bright coloured sweaters that were revolutionary at that time. The quote I should refer you to here is the one from page 2 of the case; ‘what Luciano and Guiliana have invented was a pullover for a season or a year, not a traditional pullover for life’. Even before officially forming the company, Benetton was going against the norm of the industry and this has carried right through until present days where the ‘United Colors of Benetton’ slogan has landed them in some rather warm water with accusations of tastelessness to name but one category.

Further major areas that Benetton have appeared to reap the rewards in that are unique to Benetton, are firstly technological uptake, and secondly the partnership systems in place with the Centurioni and the shop owners. I shall return to these areas later under a separate heading as I believe that these innovations were of paramount importance to the success of the Benetton Empire.

In the early 1960’s, Luciano developed a significant competitive advantage by undertaking a number of slightly different ideas; selling only through specialised knitwear stores and selling his products at a 10% discount if the retailers paid cash on delivery. Furthermore, he sort to keep his costs to a minimum (because of the difficulties associated with borrowing) by establishing subcontractor agreements (revisited later) and up-taking employee suggestions, note the example on page three concerning the buying and converting of obsolete machines.

The next item unique to the Benetton system is the discovery that, if a second Benetton store opened across the street from another, sales for both expanded. This, it was believed, was due to the existence of intra-Benetton competition, which was created by the groupings of stores in one location.

Agents, as reward for their commitment and motivation were earning a tidy sum but were greatly encouraged to reinvest the profits for the benefit of Benetton and for the agents. The agents note themselves that the rise to the top where you physically own shops is a quick rise. On page four of the case I refer you to the quote fourth from bottom which says that basically from September to July an agent had gone from not owning a shop to having five shops of his own.

Finally, I have already briefly discussed Benetton’s revolutionary, and perhaps misunderstood, ‘United Colors’ campaign. They have also furthered their controversial image with the art director producing communications posters with images of a dying AIDS patient and a nun kissing a handsome priest. The ‘Colors’ campaign went against the initial Benetton identity of cultural diversity, racial harmony and world peace. In doing so the campaign had mixed success by using the medium of Formula1 and print media. The success came in the form of increased publicity and visibility but it was seen as damaging in Germany (Benetton’s 2nd largest market) where eventually the Benetton brand was boycotted partly because of the controversial advertisements. Sport continues to play a key role in Benetton with the sponsorship at Olympic Games, Italian rugby and skiing to name a handful.

The angle I’ve taken for the initial stage of the analysis has been one that has made Benetton out to be unique. In agreement with this I feel that this next quo

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