Benetton Essay Example | Topics and Well Written Essays - 1000 words

Benetton - Essay Example Benetton started out on a shoestring budget. Although the first retail shop was a success, the lack of funds prevented the family from expanding. The problem was solved by appointing agents in territories to promote the Benetton products by approaching shop owners or individuals interested in opening up retail stores to buy and sell the company products. For their service, agents were paid "4 % of the value of goods shipped from the Benetton's warehouse complex in Italy." Initially, Benetton's chains of retailing clothing stores were restricted to only certain areas in Italy catering to the younger generation. As the family business grew, so did the expansion of its operations into new markets, which enabled the company to reach a wider clientele. Benetton was no longer only confined to merely "making and selling sweaters." The company began in the "manufacturing and distribution of clothing constructed from wool, cotton and other fabrics; undergarments; shoes; cosmetics; accessories ; eye wear; auto accessories; and sports equipment." The success of Benetton can be attributed to the family's strategic business plan, which they initiated from the very beginning and continued to follow for the next 3 decades. One of the strategy's used was to attract investors to partner with Benetton's "on a 50/50 ownership basis and maximum latitude given to (and minimum structured imposed) on partners. Interested parties had to have an investment of $70,000 "(to buy fixtures for a 600- to 1000- square foot shop) and the right attitude to become a Benetton shop owner." Through the years the business evolved into an entrepreneurial culture. When the Benetton family signed up new stores, they didn't have the time or patience for formal agreements, instead they started with handshake agreements. The Benetton's didn't have time to oversee every detail of the retail stores, and gave the stores the freedom to make its own choices. Even in business partnerships, the agreements were often handshake deals and structures to give the partner as much flexibility as possible.Employees continued to work with minimal supervision and were given the freedom to "do the right thing". Unlike a traditional franchise where the franchiser dictates every detail about the business, Benetton stores were refereed to a licensee, and were given many freedoms that normal franchisee are not given 2) Is Benetton a global operation Benetton became one of the dominant forces in the international apparel retailing industry through its global operations. The company's success in the international market can be attributed to the "stage-five process." The stage-five process was created with the sole purpose of testing " the market potential and the ability of partners, agents and licensees to adopt the company's model before investing large sums of management time or capital." The Benetton family relied heavily on the stage five-process, to determine how effective and successful their business would be in a new market prior to entering it. The stage-five process can be defined as: 1) Appointing a Benetton agent in a "foreign country"