Harvard Business School9389074January 19 1989BENETTON SpAI

Topics: Benetton Group, Benetton family, Benetton Formula Pages: 39 (9453 words) Published: November 18, 2014
Harvard Business School

January 19, 1989

I should say the new strategy relates to our intention of structuring Benetton as a proper multinational company. That means we plan to create a complex global manufacturing system to advance our mission to reach the two-thirds of the world where we do not have a presence. It is in this light that our recent choice to diversify into the field of financial services must be interpreted. The financial services companies that we operate—generally in partnership with important banks and financial institutions—have to be considerate and provide the necessary support for Benetton’s new development policy. In addition, the new and more sophisticated system that we are going to build in the field of services (not only financial services but the service industry overall) may help us in our attempts to implement the entrepreneurial formula that I have tried to explain to you. With these words, Mr. Aldo Palmeri, General Manager of Benetton, S.p.A., outlined the strategy for the future development of Benetton, a strategy designed to keep the outstanding rate of growth the company had enjoyed since its inception.

The Benetton story was a tale of huge success built from humble origins. Started some 25 years ago, the company had reached $1 billion in worldwide sales, building from its strengths in one of the most mature, labor-intensive industries in labor-expensive Western Europe. The firm was a typically Italian family concern, with four siblings—Giuliana, Luciano, Gilberto, and Carlo—involved from the beginning in the company operations. The eldest brother, Luciano, was born in 1935, and spent his childhood through the harsh times that Second World War brought to northeastern Italy. Upon his father’s death, he had to leave school at the age of fifteen to take a job in a men’s clothing store. In 1955, Luciano, who had just turned twenty, told Giuliana he was convinced that he could market the bright-colored, original sweaters she used to make as a hobby, so why shouldn’t they leave their jobs and start a business? With thirty thousand lire, obtained from the sale of Luciano’s accordion and Carlo’s bicycle, Luciano and Giuliana bought a knitting machine, and soon afterward Giuliana put together a This case was prepared by Senior Research Associate J. Carlos Jarillo and Jon I. Martínez, as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The casewriters gratefully acknowledge the assistance of Mr. Franco Furnò, manager of Organizational Development at Benetton S.p.A., in the preparation of this case.

Copyright © 1988 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

This document is authorized for use only in PGP - Managing Organizations 2014 by Prof. Abhoy K Ojha at IIM Bangalore from June 2014 to September 2014.



collection of eighteen pieces. Luciano was immediately able to sell them to local stores. Sales increased steadily over the next few years, until Giuliana had a group of young women working for her and Luciano had bought a minibus to carry these employees to and from a small workshop the Benettons had set up near their home.

In the early nineteen-sixties, Luciano Benetton put into practice several innovative ideas that helped turn the company from a small enterprise into a giant. The first idea was to sell only through specialized knitwear stores (as opposed to department stores and boutiques selling a wide range...
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