Benetton Case Study

Register to read the introduction… Sales, which included T-shirts and denim jeans, reached $78 million, 98 percent of which came from the domestic market. With 1,000 stores in Italy alone, Benetton realized that the home market was saturated, and launched a major export campaign. Benetton targeted the rest of Europe and made plans to enter U.S. and Japanese markets. In 1979 the first store was opened in North America. By 1981, Benetton, operating under the name Invep S.p.A., had become the world leader in the field of knitwear, generating three times the sales volume of the next largest manufacturer. By 1982, with 1,900 shops in Europe (1,165 of which were in Italy), Benetton was opening stores at the rate of one each working day. To handle its expansion, Benetton invested in distribution and marketing operations, building a $30 million computerized state-of-the-art warehouse, which made it possible for a staff of seven to handle more than 30,000 incoming and outgoing boxes in a 16-hour work day in 1983. Having grown to a mature multinational company, Benetton needed expert managerial direction. Aldo Palmieri, from the Bank of Italy, became Benetton's first managing director in 1982, and brought the company into an era of wide expansion, globalizing its capital base. Although Luciano Benetton was not initially receptive, leading Palmieri to leave in 1990, the company eventually adopted Palmieri's vision after he had been rehired in 1992. In 1984, 55 percent of Benetton's $303 million in sales was generated from foreign turnover, outperforming domestic sales for the first time. The United States became Benetton's fastest growing market by early 1985, boosting sales by 35 percent. Retail operations also were opened in Eastern Europe--Budapest in March and Prague in September--marking the opening of the first shop by a Western manufacturer since 1948. Following a corporate reorganization in December 1985, the company was renamed Benetton Group S.p.A. It was now one of the world's largest garment producers, with four factories in Italy and one each in France, Spain, Scotland, and North Carolina, and an annual production growth rate of about 30 percent. In July 1986, Benetton made its first public offering on the Milan and Venice Stock Exchanges, and the listing was subsequently extended to the Rome and Turin Stock Exchanges. Through an innovative corporate finance deal, Benetton sold 20 percent of its equity on the London and Frankfurt capital markets, raising about $500 million, of which some $100 million was earmarked for research and development over the next three years. In early 1987, Palmieri approached the international capital market, focusing on the United States, and also began to finance acquisitions and joint ventures. In March, he raised an international syndicated loan with Citibank and authorized Morgan Guaranty Trust to place in behalf of Benetton Group S.p.A. eight to nine million American Depository Receipts--worth about $150 million--on the New York Stock Exchange. This was the first time that an Italian company had attempted to float stock directly on Wall Street. In addition, Benetton formed Benetton U.S.A. Corporation, listed on the Toronto, Madrid, Tokyo, and Frankfurt exchanges, and made private placements in …show more content…
Examples include a 1995 campaign aimed at generating AIDS awareness in India. Support for War Child, a charity that helps children in war zones around the world, has also been praised. Autographed Toscani posters were offered to visitors at a clothes show event in exchange for donations to War Child. The Food and Agricultural Organization (FAO) of the United Nations invited Benetton to create a communications campaign for the first world food summit held in Rome.
Benetton's use of information technology facilitates the management of the global business from Ponzano Veneto. Students from around the world study at Fabrica, Benetton's arts and communications research center near Treviso, learning communications in all its forms and using the new technologies that will take them, and Benetton, forward into the future.
Further …show more content…
In a slick move, Benetton purchased a majorty stake in its sibling, Sportsystem, effectively segueing into the sporting goods and activewear industry, then introduced and stocked a chain of sporty stores called Playlife. To bolster its U.S. presence, the firm formed a joint venture with Sears (Benetton USA) and saw that alliance collapse after another provocative ad campaign ("We, on Death Row") enraged everyone from consumers to politicians in