Case Study Description of Benetton Group S.p.A., 2000
"In 2000, Benetton was one of the leading mass fashion competitors in the world with approximately $1.9 billion in sales across 5,500 stores in 120 countries. But the company's fortunes seemed to be on the wane. Operating profits had fallen 9% from the prior year to $299 million. Having almost matched global leader, Gap Inc.'s revenues in 1985, Benetton was now only one seventh of Gap's size. Moreover, Hennes & Mauritz (H&M) of Sweden had passed Benetton in 1996 and now claimed more than double the sales of Benetton. Inditex of Spain and Fast Retailing of Japan had also passed Benetton in revenues by 2000. To make things worse, Inditex and H&M had announced in 2000 that they intended to enter Italy, Benetton's heartland. Chairman and co-founder Luciano Benetton was determined to fight back and toward this end had just launched a major new retail strategy to expand the size of Benetton's current stores, invest in large superstores and build greater control of the supply chain. The company also had high hopes for its new drive into sports equipment and apparel. Would this be enough to halt the rise of its mass fashion competitors?"
Authors :: John R. Wells, Galen Danskin
Topics :: Strategy & Execution
Tags :: Competitive strategy, International business, Leading teams, Marketing, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "Benetton Group S.p.A., 2000" written by John R. Wells, Galen Danskin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Benetton Benetton's facing as an external strategic factors. Some of the topics covered in Benetton Group S.p.A., 2000 case study are - Strategic Management Strategies, Competitive strategy, International business, Leading teams, Marketing and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Benetton Group S.p.A., 2000 casestudy better are - – increasing household debt because of falling income levels, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%,
competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Benetton Group S.p.A., 2000
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Benetton Group S.p.A., 2000 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Benetton Benetton's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Benetton Benetton's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Benetton Group S.p.A., 2000 can be done for the following purposes –
1. Strategic planning using facts provided in Benetton Group S.p.A., 2000 case study
2. Improving business portfolio management of Benetton Benetton's
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Benetton Benetton's
Strengths Benetton Group S.p.A., 2000 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Benetton Benetton's in Benetton Group S.p.A., 2000 Harvard Business Review case study are -
Successful track record of launching new products
– Benetton Benetton's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Benetton Benetton's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Benetton Benetton's in the sector have low bargaining power. Benetton Group S.p.A., 2000 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Benetton Benetton's to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– Benetton Group S.p.A., 2000 firm has clearly differentiated products in the market place. This has enabled Benetton Benetton's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Benetton Benetton's to invest into research and development (R&D) and innovation.
High brand equity
– Benetton Benetton's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Benetton Benetton's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Benetton Group S.p.A., 2000 Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Strong track record of project management
– Benetton Benetton's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Benetton Benetton's is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by John R. Wells, Galen Danskin can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Benetton Benetton's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Benetton Benetton's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Benetton Benetton's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Benetton Benetton's is one of the most innovative firm in sector. Manager in Benetton Group S.p.A., 2000 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Benetton Benetton's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Benetton Benetton's is present in almost all the verticals within the industry. This has provided firm in Benetton Group S.p.A., 2000 case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Benetton Group S.p.A., 2000 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Benetton Group S.p.A., 2000 are -
Interest costs
– Compare to the competition, Benetton Benetton's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Benetton Benetton's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Benetton Group S.p.A., 2000 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Benetton Benetton's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Benetton Benetton's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Benetton Benetton's to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Benetton Benetton's, firm in the HBR case study Benetton Group S.p.A., 2000 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, John R. Wells, Galen Danskin suggests that, Benetton Benetton's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of Benetton Benetton's products
– To increase the profitability and margins on the products, Benetton Benetton's needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Benetton Group S.p.A., 2000 has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Benetton Benetton's 's lucrative customers.
Need for greater diversity
– Benetton Benetton's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Benetton Group S.p.A., 2000 HBR case study mentions - Benetton Benetton's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Products dominated business model
– Even though Benetton Benetton's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Benetton Group S.p.A., 2000 should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Benetton Group S.p.A., 2000, in the dynamic environment Benetton Benetton's has struggled to respond to the nimble upstart competition. Benetton Benetton's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Benetton Group S.p.A., 2000 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Benetton Group S.p.A., 2000 are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Benetton Benetton's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Benetton Benetton's is facing challenges because of the dominance of functional experts in the organization. Benetton Group S.p.A., 2000 case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Benetton Benetton's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Benetton Benetton's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Manufacturing automation
– Benetton Benetton's can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Benetton Benetton's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Benetton Benetton's to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Benetton Benetton's to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Benetton Benetton's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Better consumer reach
– The expansion of the 5G network will help Benetton Benetton's to increase its market reach. Benetton Benetton's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Using analytics as competitive advantage
– Benetton Benetton's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Benetton Group S.p.A., 2000 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Benetton Benetton's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Benetton Benetton's in the consumer business. Now Benetton Benetton's can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Benetton Benetton's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Benetton Group S.p.A., 2000 suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Benetton Benetton's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Benetton Group S.p.A., 2000 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Benetton Group S.p.A., 2000 are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Benetton Benetton's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Benetton Benetton's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Benetton Benetton's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Benetton Benetton's in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Benetton Benetton's business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Benetton Benetton's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Shortening product life cycle
– it is one of the major threat that Benetton Benetton's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Benetton Group S.p.A., 2000, Benetton Benetton's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Environmental challenges
– Benetton Benetton's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Benetton Benetton's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Benetton Benetton's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Benetton Benetton's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Benetton Group S.p.A., 2000 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Benetton Group S.p.A., 2000 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Benetton Group S.p.A., 2000 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Benetton Group S.p.A., 2000 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Benetton Group S.p.A., 2000 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Benetton Benetton's needs to make to build a sustainable competitive advantage.
