Benetton situation analysis of its success factors.

1. Midterm
Case studyof Benetton
Mustafa Wattar
pg. 1
International Business
Midterm
Case study of Benetton
EMBA Strategy and Leadership Program
Instructor: Dr. Rami Saleh
Student: Mustafa Wattar

2. Midterm
Case studyof Benetton
Mustafa Wattar
pg. 2
Summary:
Benetton was founded in 1955 By Benetton Family, the business started by selling
coloredsweaters door to door in Italy, the family network, friends, agents set up a set of
closelymonitored retail outlet, after 15 year period Benetton build up over 300 outlets
independently owned in Italy and new factory with new method to dye and condition
wool. However, the company is not involved in the retail outlet in major where most of
its retail stores were held by independently by other agents and entrepreneurs, one way
that the company dominated to save costs which is outsourcing the neighboring
subcontractors. The Group produces over 150 million garments every year, and Benetton
is known by its shocking and indirect advertising methods and its low cost and high
quality products.
Is Benettona Multinational enterprise? Why and why not?
 MNEs: A corporation that has its facilities & other assets in at least one country other
than its home country, such companies have offices &/or factories in different
countries & usually have a centralized head office where they co-ordinate global
management.
 Accordingly, Yes Benetton is Multinational Company because:
It has activities in many countries, actually Benetton has a network of 6000 retails in
120 countries around the world but only small fraction of its flagship is owned by the
group and mainly in Italy, Benetton mainly depends on exporting from Europe
“Italy” to the other countries but the still have some retails and stores owned by the
organization group as mentioned previously.
But the majority of the retails and stores are owned by independent entrepreneurs.
But the company’s stores whether they are owned directly by Benetton group or
agents and subcontractors they share the same strategy and they can use Benetton’s
advertising from their compunction research center in Treviso, in addition Benetton
has various brands, sportswear brands ‘Playlife’ and ‘Killer Loop’. The Group
produces over 150 million garments every year, over 90% in Europe
What are the country-specific factors that have boostedBenetton’s success?
 The Italian nation as European country they are proud of their culture and their own
products which helped Imports from Italy which is stable overtime due to the deeply
implanted good brand image of Italian fashion among costumers for example:
Japanese consumers who are known by their loyalty to the Italian brands.
However, Benetton’s success was the result of group of factors which is related to

3. Midterm
Case studyof Benetton
Mustafa Wattar
pg. 3
the country it is established in, especially that the company’s revenue was majorly
generated from Italy (48%) and 34% was form all Europe,14% Asia, 3% America,
1% rest of the world:
 Competitive Environment: the high level of competition in the Italian garments
industry which helped companies as Benetton to move its brand name and
products to the nest level and to be improved
 Labor Force: the high technologies available in the country and the availability of
the highly experienced workforces allowed Benetton to response to the increasing
demand both domestically and abroad today Benetton has over than 90,000 of
employees.
 Geographic Location: Benetton success also relays on Geographic location, since
Benetton is an Italian company which can more easily understand customer taste,
culture, and upcoming changes in fashion industry, so they have grab their target
market very strongly not only in Italy but also the whole Europe, which has helped
Benetton success.
 Government Policies: Government policies also influence on the company’s
success if the government policies is in the favor of the company so the company
do successful business in the country, since Italy is a member of the European
union and the European countries regulations and policies is in favor of the
company and they encourage and facilitate the companies’ operations and
expansion across Europe.
What are Benetton’s firm-specific advantages?
There are many factors contributed in the success of Benetton which helped the
company’s competitive advantage “producing high quality products at low cost, factors
as follow:
 Shocking and exceptional advertisements, the agents and retail outlets all over the
world were supported by this international advertising, Benetton’s advertising was
for homogeneous global consumers who are interested in fast cars and lifestyle,
the company used indirect advertising methods such as sponsoring sport events
such as formula one teams and rugby, basketball and volleyball. And the
company’s CRC “communication research center” which is a mixture of
philanthropy and advertising which sponsors 50 artists fir year and exhibits their
work and publishes it in colors, in the Benetton’s magazine.

4. Midterm
Case studyof Benetton
Mustafa Wattar
pg. 4
 300 independently owned outlets in Italy and factory with new method to dye and
condition wool.
 Outsourcing to neighboring subcontractors which is expanded after to global, this
saved the companies a lot of money, and this network has been expanded to 6000
retail stores around the world.
 90% of the company’s production was held in Europe with high quality standards
and mainly in northern of Italy.
 Benetton is one of those successful global companies that were partly successful
because of its production and design concepts were built on a strong home base.
 Strongly monitor on the agents and its global network of sales points and stores.
 Backward integration: Benetton has 900,000 hectares of land to rias sheep in
Argentina, which helped the company’s to ensure high quality wool according to
its standards and low costs.