Case Study Description of Benetton Group S.p.A., 2012
"On May 31, 2012, after 36 years on the Milan Stock Exchange, Benetton was officially delisted and taken private by Edizione, the Benetton family's holding company. Since 2000, Benetton shareholders had seen its market value fall from $4.3 billion to $720 million at the end of 2011. At $2.6 billion, Benetton's sales in 2011 were virtually the same as they were in 2000, but Inditex from Spain, Hennes & Mauritz (H&M) from Sweden and Fast Retailing from Japan had all grown several times larger over the same period. What happened to this global retail giant? Under the direction of four different CEOs since 2000, Benetton had attempted to move from being an Italian supplier of knitwear with licensed small retailers throughout the world to a vertically integrated global player by tightening management over its supply chain and rolling out directly operated superstores. These moves helped Benetton gain more control over its operations, but they also ate into its profitability. In 2012, Benetton found itself competing with fashion giants who could respond faster to market trends and deliver comparable clothes at half the cost. With Benetton under private ownership, would Harvard Business School graduate Alessandro Benetton be able to make the changes required to return the company to its former strength?"
Authors :: John R. Wells, Galen Danskin
Topics :: Strategy & Execution
Tags :: Competitive strategy, Economy, International business, Leading teams, Reorganization, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "Benetton Group S.p.A., 2012" written by John R. Wells, Galen Danskin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Benetton 2000 facing as an external strategic factors. Some of the topics covered in Benetton Group S.p.A., 2012 case study are - Strategic Management Strategies, Competitive strategy, Economy, International business, Leading teams, Reorganization and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Benetton Group S.p.A., 2012 casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, increasing energy prices, increasing commodity prices, challanges to central banks by blockchain based private currencies,
there is backlash against globalization, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Benetton Group S.p.A., 2012
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., 2012 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Benetton 2000, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Benetton 2000 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., 2012 can be done for the following purposes –
1. Strategic planning using facts provided in Benetton Group S.p.A., 2012 case study
2. Improving business portfolio management of Benetton 2000
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 2000
Strengths Benetton Group S.p.A., 2012 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Benetton 2000 in Benetton Group S.p.A., 2012 Harvard Business Review case study are -
Analytics focus
– Benetton 2000 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.
Effective Research and Development (R&D)
– Benetton 2000 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., 2012 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Benetton 2000 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Benetton 2000 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 2000 is one of the most innovative firm in sector. Manager in Benetton Group S.p.A., 2012 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Benetton 2000 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 2000 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Benetton Group S.p.A., 2012 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Benetton 2000
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Benetton 2000 does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Benetton 2000 is one of the leading recruiters in the industry. Managers in the Benetton Group S.p.A., 2012 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Benetton 2000 is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Benetton 2000 has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Benetton Group S.p.A., 2012 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Benetton 2000 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Benetton 2000 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.
Superior customer experience
– The customer experience strategy of Benetton 2000 in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Benetton 2000 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Benetton 2000 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Benetton Group S.p.A., 2012 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Benetton Group S.p.A., 2012 are -
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 2000 supply chain. Even after few cautionary changes mentioned in the HBR case study - Benetton Group S.p.A., 2012, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Benetton 2000 vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Benetton Group S.p.A., 2012 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Benetton Group S.p.A., 2012 can leverage the sales team experience to cultivate customer relationships as Benetton 2000 is planning to shift buying processes online.
Need for greater diversity
– Benetton 2000 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.
Skills based hiring
– The stress on hiring functional specialists at Benetton 2000 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Benetton Group S.p.A., 2012, it seems that the employees of Benetton 2000 don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Interest costs
– Compare to the competition, Benetton 2000 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.
No frontier risks strategy
– After analyzing the HBR case study Benetton Group S.p.A., 2012, 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.
Increasing silos among functional specialists
– The organizational structure of Benetton 2000 is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Benetton 2000 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Benetton 2000 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 2000, firm in the HBR case study Benetton Group S.p.A., 2012 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Benetton Group S.p.A., 2012 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 2000 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Benetton Group S.p.A., 2012, is just above the industry average. Benetton 2000 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.
Opportunities Benetton Group S.p.A., 2012 | 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., 2012 are -
Creating value in data economy
– The success of analytics program of Benetton 2000 has opened avenues for new revenue streams for the organization in the industry. This can help Benetton 2000 to build a more holistic ecosystem as suggested in the Benetton Group S.p.A., 2012 case study. Benetton 2000 can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Benetton 2000 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 2000 to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Benetton 2000 to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 2000 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.
Developing new processes and practices
– Benetton 2000 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.
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 2000 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 2000 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Benetton 2000 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.
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 2000 can use these opportunities to build new business models that can help the communities that Benetton 2000 operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– Benetton 2000 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.
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 2000 in the consumer business. Now Benetton 2000 can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Benetton 2000 to increase its market reach. Benetton 2000 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.
Manufacturing automation
– Benetton 2000 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Benetton 2000 is facing challenges because of the dominance of functional experts in the organization. Benetton Group S.p.A., 2012 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.
Threats Benetton Group S.p.A., 2012 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., 2012 are -
High dependence on third party suppliers
– Benetton 2000 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.
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 2000.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Benetton 2000 can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Benetton Group S.p.A., 2012 .
Regulatory challenges
– Benetton 2000 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.
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 2000 needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 2000 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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Benetton 2000 in the Strategy & Execution sector and impact the bottomline of the organization.
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 2000 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Benetton 2000 with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Benetton 2000 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 2000 can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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., 2012, Benetton 2000 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 .
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.
Consumer confidence and its impact on Benetton 2000 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.
Weighted SWOT Analysis of Benetton Group S.p.A., 2012 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., 2012 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., 2012 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., 2012 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., 2012 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 2000 needs to make to build a sustainable competitive advantage.
