International Strategic Leadership: Case study of Benetton Group

Term Paper, 2010

21 Pages, Grade: 1,7


List of content

List of illustrations

1 Introduction

2 Strategic development of Benetton Group
2.1 Strategic profile of Benetton Group
2.2 Classification of Benetton Group´s strategic development

3 Strategic change of organizations
3.1 Strategic change
3.2 Strategic change of Benetton Group

4 Product-market choices of Benetton Group

5 SWOT - Analysis of Benetton Group

6 Conclusion

List of reference

List of illustrations

Illustration 1: Advertisement campaign: Food for life

Illustration 2: Benetton Group´s markets and brands by revenues in 2009

Illustration 3: Ansoff product-market strategy matrix

Illustration 4: SWOT-Analysis of Benetton Group

1 Introduction

In times of globalisation, engineering progress and extremely aggressive competition as well as continuous growth of dynamic and complexity within business, strategic changes are crucial for organizational surviving. Consequently, organisations have to be permanently harmonized with their environments to react to external developments effectively and to form the business proactively so they are operated in timely.1 As an excellent example for global expansion by successful management of strategy changes, the Benetton Group is classified.

Benetton is an Italian producer of high quality design clothing, which is active since the early 1960s. The company started as a family business and until today, the family of Benetton has the control over the firm. The company is not only famous for its high quality and sophisticated design, as it is known for its advertisement campaigns against racism, discrimination and ine- quality. In the 1980s, the Italian photographer Oliviero Toscani started to work for the Benet- ton Group as the designer for the marketing campaigns. Within several years, the advertise- ments of Benetton were not only about cloths, as the fight against racism and discrimination became almost more important than the clothing itself. The company did even change its name in order to express their fight against inequality in the world, into United Colors of Benetton.2

Major aim of this report is to clarify the essential importance of strategic change management on the basis the successful story of Benetton Group. The report contains several chapters that highlight the strategic changes of the company in the past and in the future, which gives infor- mation about the Benetton Group and shows the strengths and weaknesses of the company in comparison to the market. Thereby, chapter two contains information about the past and future strategic development of the company. Chapter three explains which strategic changes Benet- ton has done over the last years and how these changes have affected the company. Chapter four is about the products of Benetton and in which markets they are located as well as strate- gies are chosen to realize current market positions. The SWOT analysis for Benetton is to be seen in chapter 5 and the report will be brought to an end by the conclusion.

2 Strategic Development of Benetton Group

2.1 Strategic profile of Benetton Group

In 1965, Benetton was founded in Italy as a family business. At this time, the company wanted to sell its goods on a door-to-door basis in the Italian region of Trevistio. By choosing a direct and close to the customer way of distribution, as well as the traditional close relationships to family and friends, it did not last long to establish a regional network and even first retail outlets could be founded. Their concept was to build up a distinctive Design for Benetton as a brand, which would be under straight control of the founders.3

This was the first change in the firm’s strategy. The owners initiated an Italian-wide franchise business model. Through this model, more than 300 independent Benetton retail-outlets could be founded within 15 years. Therefore, the first change was to get from a door-to-door to a re- tail-outlet strategy. This included some few company-owned retail outlets.4 At the same time Benetton expanded its current product range and an own production facility in Italy was estab- lished. Through some self-developed technologies for processing textiles, it was possible to reach a high product quality at low prices.5 Encouraged by the success the next step of the firm’s strategy was to get from a national to an international company. The first international retail-outlet was founded in Paris at 1969.6 This strategy lasts until today. Worldwide Benetton has 6,300 stores in 120 countries.7

However, between 1988 and 1995 Benetton had to face a backdrift. 550 stores in the United States had to be closed. The reason for this was that Benetton represented a too European Im- age in the USA. However, US-Americans did not want to adopt a dress style of an Italian fami- ly with no connections to the USA.8 Anyway, the Benetton-Group developed international markets like South-America, Africa or Asia.9 In addition to this internationalization, some ma- jor changes in the firm-strategy were decided. To describe them a look back to the 1970s is needed.

Mid of the 1970s Benetton began to sell other brands next to the own-label. In 1974, Sisly was the first brand, which was included into the Benetton portfolio.10 The aim was to get a new more universal and more flexible strategy. Another step was to change into a stock cooperation. During this period, the owners introduced a new mission statement, which contained basic information and tried to create a new “lifestyle”.11 Benetton began to sponsor different projects and include a charitable mission. This was the basis for some until now unmistakable marketing activities, which were mainly developed by Luciano Benetton.12

Abbildung in dieser Leseprobe nicht enthalten

Illustration 1: Advertisement campaign: Food for life13

The picture shows a campaign of Benetton of 2003 for the African organization “food for life.” The marketing campaign contains sponsoring projects for culture, high-technology-research and as a main field charitable projects and sport-sponsorships.14 Main field on sport sponsorships are the Formula One Team, Basketball, Rugby and so forth.15 As well as the strategy of internationalization, the marketing- and sponsoring-concept lasts until today.

After some important changes in the 1980s, the 1990s were calm from a strategic perspective. The well-known marketing and sponsorship-projects were continued and since 1990, Benetton expanded on the emerging East European markets. 2003 the family handed over the operational business to external managers.16 Those are continuing business on an owner-based style. This means, as described above, to maintain the strategy to sell on markets like South America, Africa and Asia and to focus on charitable projects in Africa.

Although much has significantly changed in the world since its foundation, Benetton Group´s mission statement - which clarifies the actually sense of organizational existence including a description of company´s fundamental purpose17 - is in general staying the same: “to satisfy people´s needs with young colourful, comfortable and easy-to-wear products. This has been our route to world leadership in the design, production and distribution of clothing [...] Our range has been constantly enriched over time by intensive research into new materials and de- signs - and further additions follow.”18 In spite of several strategic changes, Benetton´s strat- egy always includes a certain straightforwardness identified in achievement of constant objec- tives.


1 Cf. de Wit, B./ Meyer, R. (2004), p. 163

2 Cf. Rugman, A./ Collison, S. (2006), p. 248

3 Cf. Thomson, J. L./ Martin, F. (2005), p. 217

4 Cf. Rugman, A./ Collison, S. (2006), p. 248

5 Cf. Rugman, A / Collison, S. (2006), p. 248

6 Cf. Manson, R. (2006), URL:

7 Cf. Benetton Group (2010), Who we are,

8 Cf. Rugman, A./ Collison, S. (2006), p. 248

9 Cf. Benetton Group (2010), URL:

10 Cf. Benetton Group (2010a), Who we are,

11 Cf. Rugman, A./ Collison, S. (2006), p. 248

12 o.V. (2010), Luciano Benetto, URL:

13 Benetton Group (2010b), Campaign, URL:

14 Cf. Manson, R. (2006), URL:

15 Cf. Benetton Group (2010c), Cultural, URL:

16 Cf. Manson, R. (2006), URL:

17 Cf. Hill, C./ Gareth, J. (2009), p. 14 et. seq.

18 Thomson, J. L./ Martin, F. (2005), p. 217

Excerpt out of 21 pages


International Strategic Leadership: Case study of Benetton Group
University of Applied Sciences Emden/Leer
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Strategic development, strategic change, product-market strategy matrix, business reengineering, Benetton, Untited Colour of Benetton, strategic profile, shocking advertisement
Quote paper
Olga Sokolowski (Author), 2010, International Strategic Leadership: Case study of Benetton Group, Munich, GRIN Verlag,


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