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
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.
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.
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-
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
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