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Benetton

The corporate strategy of a firm is the match between the company’s internal capabilities and its external relationships. Strategy determines how a firm responds to its suppliers, its customers, its competitors, and the social and economic environment in which it functions. With respect to Benetton, the corporate strategy is identical to its competitive strategy. According to Davis and Devinney, corporate strategy is about “the firm’s positioning vis-à-vis its rivals...and about the efficiency conversion of resources into customer value” (1).

Benetton’s corporate and competitive strategy is designed to convert resource into customer value. The company is able to achieve this value through innovation in production, information processing and product design. Despite competing in a mature industry with high labor costs, Benetton enjoys rapidly rising sales and profits. Its competitive and corporate strategy enables Benetton to overcome market restraints other companies cannot, a strategy that creates value and relies on innovation. As Smyth (et al) notes: “Benetton achieves this by creating value for all those who deal with it. This includes, first and foremost the customer. The company satisfies suppliers and distributors who are often neglected” (2). Benetton’s competitive strategy enables it to manage the value-added network (links with manufacturers, retailers, suppliers and distributors) in an effective and integrated manner.

The following SWOT matrix demonstrates the strengths, weaknesses, opportunities and threats for Benetton:

Centralized purchasing Over-reliance on family leaders

Exclusive supplier contracts Mature industry

Classic design limits variety High labor costs

Grey color/responsive to change Limited demographic

Worldwide advertising coverage Highly information intensive

80% manufacture is external Long production cycles

Exclusive retailers Limited product...

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Benetton. (1969, December 31). In LotsofEssays.com. Retrieved 12:40, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1685082.html