MASTER IN BUSINESS ADMINISTRATION
DECISION MAKING & BUSINESS POLICY FORMULATION
A Case Study: Salvatore Ferragamo, SpA
I. BACKGROUND OF THE STUDY
This case describes the history and present dilemma facing Wanda Ferragamo and her six children, all of whom are involved in the family business. The House of Ferragamo, a Florence-based maker of high quality Italian clothing and leather good, was founded by Salvatore Ferragamo. Throughout his 57-year career, he achieved a worldwide reputation for comfortable shoes of creativity and the finest quality. Since his death in 1960, Wanda had successfully overseen years of expansion while insisting on family togetherness. She believed that the family should form a cohesive decision-making body, “like the seven arteries to the heart”.
II. OBJECTIVE OF THE STUDY
The objective of the study is to come up with a strategy that will enable the company to sustain both high quality products and continued growth, specifically doubling the sales over the next five years.
III. AREAS FOR CONSIDERATION
Industry Level Analysis
The luxury goods industry flourished during the booming world economy of the late 1980’s reaching $52 billion by 1990; a rapidly growing class of newly rich consumers seemed willing to pay higher prices for prestigious labels. Well-known purveyors of high fashion clothing, perfume, and other expensive wares increased production of “exclusive” products and concocted new items to sell, typically under the same upmarket brands.
In a market where even poorly managed luxury firms made a profit, “creativity” and “style”, rather than hardheaded business strategies, were typically viewed as the key to success. As a full-line retailer of luxury goods, Ferragamo’s boutiques competed with the Hermes, Valentino, and Chanel boutiques, often located along the same street. In this environment, Ferragamo’s prices were somewhat lower than the others, reflecting a...