Operations Management

Benetton Group: The Evolution of Network to Face Global Competition



Table of Contents

Introduction1

Benetton's Casual Wear Conventional Business Strategy1

Change in Old Strategies to Beat the Competition1

Product Design2

Operations Management3

Revitalizing of Retail network3

Sports Industry Segment4

Changes in Strategies In Sports Segment to Beat the Competition4

Production Design of Sports Equipment4

Operations Management5

Revitalizing the Retail Network5

Characteristics of Benetton's Innovative Strategy to Manage Global Supply Network5

Conclusion6

References7

Benetton Group: The Evolution of Network to Face Global Competition

Introduction

The advent of 21st century has highlighted immense room for constant change in management strategies for businesses; primarily driven by shrinking of the world into a global village. In other words, due to extensive advancement in information technology, companies have adopted a global perspective while designing and implementing operational strategies. Thus, a set of strategies which was pivotal in the success of an organization earlier has now been proved ineffective. The organisations which were able to compete effectively at the global forum have been those who were able to bridge the gap between the required and actual state of company-wide strategies in a timely manner. In this regard, The Benetton Group, like others, has also brought about changes in its organisation-wide strategies; however, changes in one specific area of management- operations/supply chain management are comprehensively highlighted in this paper. The scheme of the paper is such that it highlights the key changes which the company made in its casual wear business wear and sports business segment in terms of product design, operations management, and retail network. The paper concludes by highlighting the key characteristics of Benetton's innovative strategy for competing at global level.

Benetton's Casual Wear Conventional Business Strategy

Benetton Group is one the biggest players in the global apparel and sports equipment industry. The company's operations management is largely supported by their efficient supply chain, which helps them get superior quality from suppliers and provide the best quality to customers. One of the most prominent business strategies which is assumed to be a driving factor behind Benetton's success was its distribution network during an era of 60s-80s. The company at that time did not own any retail outlet, but sold its product through a network of agents in different regions. Thus, these agents were responsible for managing the market by locating independent stores agreeing to sell Benetton's products; this setting was very much similar to franchising today. Moreover, Benetton has established a network of suppliers which were partly or wholly owned by current or ex employees of the company. A form of vertical integration adopted Benetton helped improve their margins by decreasing manufacturing cost, as well as increased their flexibility of production. These benefits were actually driven by the fact that unlike its competitors, its suppliers did not have other clients; thus carried out manufacturing process only for Benetton's products. Consequently, they were able to keep the quality intact, along with registering hefty margins on their sales. In order to keep their product's colour intact, they also adopted a postponing technique in which they could delay the dyeing of articles for as long ...