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 - – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, increasing transportation and logistics costs, there is backlash against globalization, increasing commodity prices, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings,
competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , 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 -
Sustainable margins compare to other players in Strategy & Execution industry
– Benetton Group S.p.A., 2012 firm has clearly differentiated products in the market place. This has enabled Benetton 2000 to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Benetton 2000 to invest into research and development (R&D) and innovation.
Training and development
– Benetton 2000 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Benetton Group S.p.A., 2012 Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
Diverse revenue streams
– Benetton 2000 is present in almost all the verticals within the industry. This has provided firm in Benetton Group S.p.A., 2012 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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Benetton 2000 in the sector have low bargaining power. Benetton Group S.p.A., 2012 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Benetton 2000 to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
Products dominated business model
– Even though Benetton 2000 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., 2012 should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Benetton 2000 has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Benetton Group S.p.A., 2012, in the dynamic environment Benetton 2000 has struggled to respond to the nimble upstart competition. Benetton 2000 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, John R. Wells, Galen Danskin suggests that, Benetton 2000 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.
Slow decision making process
– As mentioned earlier in the report, Benetton 2000 has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Benetton 2000 even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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 -
Leveraging digital technologies
– Benetton 2000 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.
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.
Using analytics as competitive advantage
– Benetton 2000 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., 2012 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Benetton 2000 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Building a culture of innovation
– managers at Benetton 2000 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.
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.
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.
Buying journey improvements
– Benetton 2000 can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Benetton Group S.p.A., 2012 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.
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.
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.
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 2000 can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Benetton 2000 can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Benetton 2000 in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
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 -
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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Benetton 2000 has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Benetton 2000 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.
Shortening product life cycle
– it is one of the major threat that Benetton 2000 is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Benetton 2000 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.
Increasing wage structure of Benetton 2000
– 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 2000.
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.
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 2000 business can come under increasing regulations regarding data privacy, data security, etc.
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 .
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.
Stagnating economy with rate increase
– Benetton 2000 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.
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.