Benetton_case - Benetton - Entry into the American Market...

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Benetton - Entry into the American Market Adapted from the case Benetton (A) prepared by Prof. Sergio Signorelli and Prof. James Heskett. Decisions were being made about how the Benetton Group should best carry out its plans to enter the American market for casual wear garments. In addition to questions as to how best to present its products to consumers in such markets, Benetton's management was reviewing alternative methods of providing production and logistical support for new markets. It was hoped that some of or all the unique features of the company's marketing and operating strategies could be preserved to provide it with the advantages it would need in these new, highly competitive markets. COMPANY BACKGROUND The Benetton Group was one of several entitles comprising the INVEP Group, an organization that encompassed all the business activities controlled equally by three brothers, Luciano, Gilberto, and Carlo Benetton, and their sister, Giuliana. By specialising in the production and retailing of casual wear clothing items, particularly woollen sweaters, cotton T-shirts and jeans, Benetton had become the world leader in the field of knitwear, selling nearly 30 million units of clothing of which nearly half were for export from Italy. It supplied more than 1,900 shops throughout Europe which stock only Benetton products. As a result, Benetton was considered the largest consumer of wool in the world, with about 60 percent of all garments sold through Benetton stores being made from wool. THE KNITWEAR INDUSTRY The knitwear industry generally was considered to comprise basic categories of knitted underwear, hosiery and knitted overwear. In Italy, knitted overwear represented about two-thirds of the industry production. In general, knitted overwear production involved more steps, more labour, less expensive equipment and lower levels of technology than either underwear or hosiery production. It was based on contractors and sub-contractors specialising in one or more production steps. Over the years, small artisan subcontractor companies had replaced many home- workers. Among factors accounting for this were growth in the sector requiring subcontractors with greater production capability; more complex products; the passage of a new law on homework introducing standards and making use of homework more expensive and less flexible; and the introduction of tax reform to discourage the hiding of income. The knitted overwear sector of Italy consisted of approximately 17,500 companies (consisting in turn of 27,000 local units) employing a total of 130,000 people, other than home-workers. There were thought to be only 17 companies with 250 employees or more. Among these, Benetton was dominant, with more than three times the sales volume of the next largest manufacturer in the industry. As an example of a different industry development and in contrast, the knitwear
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This note was uploaded on 07/16/2011 for the course MBA M0110 taught by Professor Mahee during the Spring '11 term at Delaware State.

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Benetton_case - Benetton - Entry into the American Market...

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