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 - – challanges to central banks by blockchain based private currencies, technology disruption, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, wage bills are increasing, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings,
banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, 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 -
Ability to recruit top talent
– Benetton Benetton's is one of the leading recruiters in the industry. Managers in the Benetton Group S.p.A., 2000 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Benetton Benetton's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Benetton Group S.p.A., 2000 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Strategy & Execution field
– Benetton Benetton's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Benetton Benetton's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Benetton Benetton's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Benetton Benetton's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
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.
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.
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.
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.
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.
Learning organization
- Benetton Benetton's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Benetton Benetton's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Benetton Group S.p.A., 2000 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 -
No frontier risks strategy
– After analyzing the HBR case study Benetton Group S.p.A., 2000, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Skills based hiring
– The stress on hiring functional specialists at Benetton Benetton's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Benetton Benetton's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Benetton Group S.p.A., 2000 HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Benetton Benetton's has relatively successful track record of launching new products.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Benetton Benetton's supply chain. Even after few cautionary changes mentioned in the HBR case study - Benetton Group S.p.A., 2000, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Benetton Benetton's vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Benetton Group S.p.A., 2000, is just above the industry average. Benetton Benetton's needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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.
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.
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.
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.
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 -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Benetton Benetton's to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Benetton Benetton's can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Benetton Benetton's can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Benetton Benetton's can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Benetton Benetton's can use these opportunities to build new business models that can help the communities that Benetton Benetton's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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.
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.
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.
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.
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.
Developing new processes and practices
– Benetton Benetton's can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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 -
Technology acceleration in Forth Industrial Revolution
– Benetton Benetton's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Benetton Benetton's needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Benetton Benetton's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
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.
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.
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.
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.
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.
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 .
Increasing wage structure of Benetton Benetton's
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Benetton Benetton's.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Benetton Benetton's.
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.