By Sergio Signorelli & James L.

Heskett

Situation analysis Problem statement Options Criteria for evaluation Evaluation of options Recommendation Action plan Contingency Plan

World leader in the field of knitwear. 60% of all the garments sold were made up of wool. Excellent execution of marketing, manufacturing, distribution and logistics strategies. Sell a wide variety of good quality garments in different colours at low prices as compared to the competitors.

Present situation: Current product lines have reached

saturation Increased competition from firms emulating their strategies Growing amount of imported merchandise Stagnant economy

Looking for expansion in new markets like USA, Japan and existing European markets in Europe.

How to increase Profits ?

Entering US market Expanding in European markets Diversification of products Consolidation in existing markets

Profitability

Brand Image
Competition

1.

Entering US market:
i.

Profitability:
a. Increased cost due to Freight charges and Import duties b. High establishment and labour costs c. US is currently reeling under recession d. Preference for Easy-to-care-for garments e. No short-run profits. Long-run profits are also not assured f. Many risks are involved

ii.

Brand Image:
a. Benettons name and its label not well known in USA b. Huge investments on promotions are needed to create a favorable brand image c. Establishing and sustaining brand image is hard due to competition

iii. Competition: a. Increased competition Presence of established big players

2. Expanding in European markets:

i.

Profitability:
a. Not much investment is needed as compared to entering US markets b. Brand awareness among consumers is high c. Logistics will be easier d. Consumer preferences are aligned with the companys core competencies Natural wool

ii.

Brand Image:
a. Already has a good brand image that can be leveraged b. Increased as it will be present everywhere in Europe and will not be seen only as an Italian brand

iii. Competition: a. Benetton is the market leader and hence enjoys an edge over competitors

3.

Diversification of products:
i.

Profitability:
a. The existing distribution network can be utilized b. Can earn reasonable profits with low investments c. Advertising costs are minimal

ii.

Brand image:
a. Good brand image of Benetton can be leveraged to sell the accessories

iii. Competition: a. Competitive advantage as Benetton becomes a One-stop shop for all apparel purchases

4.

Consolidation in existing markets:

i.

Profitability:
a. Reduced costs increased profits b. Construction of warehouse will lead to efficient supply chain management c. Designing of the new information system will lead to better inventory management

ii.

Brand Image
a. Not much effect on brand image

iii.

Competition
a. Competitors will emulate Benetton's

strategy, but not possible immediately

After scrutinizing the implications of the options available we recommend that

It is not right time to enter US markets at this

stage

Benetton should expand in the European

market and consolidate its position as No.1 in Europe

Target countries where we have not penetrated much Spain, Sweden, etc,. Perform market analysis to find the level of demand and the maturity of the market Perform competitor analysis to understand our competitive advantage Expand accordingly in these countries

Diversification of products
Expanding our product line by adding shoes,

belts, ties and all other accessories

Introduction of a perfume brand Become a One-Stop shop for all apparel

purchase

Thank you