Buy essay on Benetton: Cultural Aspects of Global Business

The major strategy of Benetton is transformation into a multinational company. This means that Benetton strives to create an integrated global production system, which will cover those two-thirds of the globe, where the company has not yet been presented. Family holding “Edizione” is a shareholder of companies, the general turnover of which makes around 7 billion euro. The core of the holding is Benetton Group (67,14% of shares), 5000 shops of which function in 120 countries. Edizione owns shares of industrial, telecommunication, engineering, and agricultural enterprises, as well as the media (United Colors: The Benetton Campaigns, 2002).
History of Benetton is a story of the unprecedented success of the company which managed to make annual sales exceed $ 1 billion in just 40 years. Since 1968, when the first store was opened in Belluno, Luciano Benetton in many ways changed the world market of daily fashion. He believes that his success is explained by the universal boredom, and it was just necessary to offer people all the colors of the rainbow.
In the mid 1990’s, 2600 Benetton stores across Europe brought the company $ 351 million. While the perspectives for growth in Europe hadn’t yet been exhausted, Benetton decided to move on to Japan and the U.S. However, in both countries the success did not come immediately: boutiques in major department stores pursued a policy of discounts on non-tradables in contrast to philosophy of Benetton. Especially for the conservative American buyers, Benetton also had to develop a collection in different colors. Neon-green color, popular in the Old World, was transformed into a nut tone and light natural colors, taking into account the tastes of Americans and American climatic conditions (Antick, 2002).
As a result, a number of shops working with Benetton at franchising scheme has grown since that time up to 5 000. Today, the company itself controls only the largest stores in Europe (2-3%) in order to be able to quickly capture moods and desires of customers in the most competitive Western market. In countries where Benetton functions, the company relies on cooperation with local partners. However, the company is still tightly controlled through a family holding company, which receives all the information from more than 100 countries.
Each region is coordinated by agents of Benetton. Benetton sends them custom-designs of each collection, and they are to offer representatives of the shops several thousand models to choose from. This scheme helps achieve 2 important goals: to produce goods by order and make the contents of shops extremely diverse. As a result, the products provided there are often very different not only in different countries or cities, but in two stores, located on the same street. This, in turn, generates the phenomenon of Benetton competition with itself, which provides the company with guarantees that in case of failure of one shop it would be compensated by the success of another store in the neighborhood (Five secrets, 2003).
However, the first signs that the global strategy is wrong in this seemingly idyllic picture of prosperity, appeared in the U.S., where the number of clothing retailer shops of Benetton started to decline. One reason for this phenomenon was the advertising company of Benetton which was becoming more and more shocking. Obviously, this alienated consumers. Ads contained the following shocking images: a man dying of AIDS; duck with feathers covered in oil, as the visual impact of the war in the Persian Gulf; a military cemetery; a portrait photo of naked Luciano Benetton; picture dead Croatian soldier, photos of mating horses; kiss of a nun and a priest, etc. The main scandal happened in 2000, when Oliviero Toscani produced prints of prisoners sentenced to death with very positive traits, opposing the American system of justice with the death penalty (United Colors: The Benetton Campaigns, 2002).
Besides, in a number of markets of third world countries, such as Cuba, Benetton Company focuses its advertising not on the traditional “average” consumer, but on the elite of society and visiting tourists. In addition, the closure of more than 300 retail stores in the U.S. also shows that American consumers are a very different kind of people who are most worried about how to buy maximum benefit for their dollars and most of all are guided by the difference in prices, rather than other advantages of the goods. In 1995, some clothing retailers in Germany started refusing to pay for unsold goods, arguing that the sales decline by almost 30% compared with the previous years and attributing this decline to the shocking manner of advertising companies. 50 retailers attempted to institute legal proceedings against Benetton (Antick, 2002).
In general, by 2000, the company was in stagnation: with total sales of 2 billion euros, the return on sales didn’t exceed 1,5-2%. Benetton finds itself in a paradoxical position – its brand name is known to everybody, but sales did not grow. One of the reasons for this was that the company didn’t follow the results of marketing researches, but acted on impulse. Now Benetton ad campaigns have become calmer. However, the company is still committed to raising acute social themes, organizing campaigns against hunger in third world countries and for protection of apes, fighting against AIDS, as well as Africa Works campaign as an incentive for thousands of Africans to take small credits and start their own small but productive business.
However, starting business in other countries, Benetton should take into account differences in economic, political and social systems; in the level of technological development; in the development and use of media and advertising channels; differences in culture, lifestyles and traditions; in the perception of the world; differences in meaning, sound and other associations; in the perception of the colors; language differences; different attitudes towards advertising; distinctions in needs, tastes, preferences and consumption models; different stages of product life cycle; differences in the degree of willingness to purchase; different competitive environment; and differences of legal and business systems.

References:

Antick, P. (2002). Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion. Fashion Theory: The Journal of Dress, Body & Culture 6(1): 83-109.