By

Harshita Shrivastava (23)

Shivani Bhatla (53)
Ankur Arora (111)

AGENDA

History of both Companies & major milestones

Resources, Capabilities &strategic architecture
Dynamic View of the companies
Static Efficiency/Dynamic Efficiency-Punctuated
Equilibria
Basis for Horizontal Scope choices & models of
Corporate Management
Horizontal Integration, Vertical Integration,
Strategic Outsourcing &Diversification Strategies
Strategic rationale for Acquisitions/mergers if any
Corporate Strategy & Corporate Advantage
Strategic Issues today & your recommendations

INTRODUCTION
The United Colors of Benetton (Benetton), an Italian based company
founded in 1965, empathized brightly colored knitwear.
Europes largest clothing manufacturer and worlds largest consumer of
wool in the garment industry.
Presented all over the world specifically in 120 countries with 9
manufacturing factories and over 5000 sales outlet all over the world
generating 2 billion Euros of retail sales
Available to young and old in combined colours and stylish fashion.

Benetton is well established in the US and Canada and growing in Japan

and the Pacific Rim
Mission:To satisfy people needs with young, colourful, comfortable and
easy to wear products, make a brand image in youngsters mind and also
to provide unique color and product, supply the product at expected time
to increase the availability of stocks.
Vision : To make a way of leadership and lead the design that are
fashionable in market to create a global brand image.

HISTORY & MILESTONES

1965

1966

Born in Ponzano Veneto from the artisan knitting workshop of the Benetton siblings

opened its first Benettons shop in Belluno and covered all Italians province.

1968 opened in Paris ,a first step in the international expansion outside Italy.

1969

1970

1974

1979

First line for kids

Production of jeans and velvet trousers, shirts and T-shirts

Extended by Sisley Brand adding a new target to its consumer base

First sponsored their local rugby team, A.S. Rugby Treviso

HISTORY & MILESTONES

1980

Expands sales in the Americas (NY) and in 1982 in Asia (Japan)

Bought its local basketball team, Pallacanestro Treviso (Benetton Basket), and their
1982 Sisley brand sponsors the local volleyball team, Sisley Volley Treviso

1983 United Colors of Benetton slogan

Acquired Formula 1 which in 1994 and 1995 won the World Championship (Mantle
1984 1998) also owned basket, rugby, volley and water-polo teams

1985 Quoted in Milanos stocks exchange & later in the New Yorks stock's exchange

1994 Fabrica, Benetton Group communication research center, is crreated

2000 Introduced new market approach adding directly operated stores

2005 Presence in 120 countries with 5000 stores

INTRODUCTION
Levis Strauss & Co. founded in 1853 in San Francisco, California - one of
the worlds largest apparel manufacturer brand

Sold in 110 countries in more than 55,000 retail stores worldwide

Mission : To sustain responsible commercial, success as a global

marketing company of branded apparel
Vision: To be a pioneer in the clothing industry with constant innovation
in design and material. Our products will define quality, style and
function. We will cloth the world.

Brand
Portfolios

HISTORY & MILESTONES

187 Achieved monopoly power by product differentiation & entry barriers, also patent for
3 blue jeans by US patent and trademark office called Waist overalls
188 Two horse brand leather patch was used on waist overalls
6
190 Pants have two back pockets
1
190 Levi Strauss dies at the age of 73. His nephews inherit the business
2
192 The company registers the word Levis as a trademark
8
196 The company airs its first television commercial
6
197 LS&CO. becomes a public corporation
1
198 Dockers Khakis are introduced in the United States.
6
199 LS&CO. places No. 1 among apparel firms and No. 16 overall in Fortune magazine
5
199 Levis Vintage Clothing is introduced globally
6
200 LS&CO. introduces Levis Engineered Jeans
0

RESOURCES &
CAPABILITIES
Resources:
Brand name and reputation
International presence
300 designers
Owns a communication research center: Fabrica
6500 stored worldwide in 120 countries
Capabilities:
Increased focus on outsourcing of manufacturing
Dyeing postponement process
Partnership in high tech research
Innovative operations management techniques
Automated logistics and distribution facilities
Strong contractual arrangements with key suppliers around the world

RESOURCES &
CAPABILITIES
Resources:
Levis the first brand to create and patent the worlds first blue
jeans
International presence
5,000trademarkregistrations
Suberp R&D center in Corlu
55000 stores worldwide in 110 countries
Capabilities:
Vast Distribution Network around the Globe
Supplier Partnership
Effective Competitive Pricing Strategy
Symbol of frontier independence, democratic idealism, social
change and fun

DYNAMIC VIEW
Resource Endowments
Brand Name
Worldwide customers
Strong Network of Stores

Resource
Commitment
Providing the
latest fashion to
its clients
Improving the
information
system

Developing
Capabilities
Low cost sourcing
Market Development
Opening New Stores

Activities

Increased
focus on
outsourcing
manufacturing
High R&D
Strong
contractual
arrangements

DYNAMIC VIEW
Resource Endowments

Resource
Commitmen
t

Brand Name

First Mover Advantage

Worldwide customers
Strong Network of Stores

Providing
high quality
apparels
Process
improvements
to economize
manufacturing

Developing
Capabilities
Backward Integration
Local customization

Activities

Brand
Building
Superb R&D
Trademarkin
g

STATIC
EFFICIENCY/DYNAMIC
EFFICIENCY-PUNCTUATED
In the beginning, Benetton was only a small company that was
EQUILIBRIA
producing sweaters for local independent retailers
Shortly after the production of knitwear, followed the production of
shirts and jeans. In
the beginning Benetton sold them under different brands
The beginning of Benettons foreign production can be traced back
to 1982
In 1995 with the decision of Italy to peg the Lira rate of exchange
Benetton had to delocalize production
In the beginning of 2000, due to severe competition Benetton had
to increase focus on outsourcing manufacturing. Also it had to
change the structure and the number of collections - Spring,
Summer, Autumn and Winter
In 2007, Benettons full package production represented, in terms of
volume, 37.6%

STATIC EFFICIENCY/DYNAMIC
EFFICIENCY-PUNCTUATED EQUILIBRIA
From the early 1960s through the mid 1970s, Levi Strauss experienced
significant growth in its business experienced rapid expansion of its
manufacturing capacity from 16 plants to more than 63 plants in the
United States and 25 overseas
By the 1990s, the brand was facing competition from other brands and
cheaper products from overseas, and began accelerating the pace of its
US factory closures and its use of offshore subcontracting agreements
The Dockers brand, launched in 1986 which is sold largely through
department store chains, helped the company grow through the mid1990s, as denim sales began to fade.
The company took on multi-billion dollar debt in February 1996
In 2002, Levi Strauss began a close business collaboration with Walmart,
producing a special line of "Signature" jeans and other clothes for
exclusive sale in Walmart stores until 2006
By 2007, Levi Strauss was again said to be profitable after declining sales
in nine of the previous ten years.

ACQUISITIONS

Nordica in 1989
Reason - entry into the sporting goods sector under Benetton
Sportsystem
Acquired various marketing companies
Azimut S.p.A., Benair S.p.A., and Benlog S.p.A.
Reason integrate group logistics
Euromercato, Italy's leadingsuperstorechain
Tierras Del Sur Argentino in 1991, becoming the owner of 900
thousand hectares of breeding area for sheeps, for a total
production of over 6 million kilos of wool
Important textile and knitting factories through the affiliated
company Olimpias that today owns, in several Italian provinces,
ten plants supplying the majority of the raw materials necessary
to the Groups clothing division

ACQUISITIONS

Great Western Garment Co.(GWG), a Canadian clothing

manufacturer. Reason - expand the firm's clothing line by
adding new fashions and models, including stone-washed jeans

CCTC (Custom Clothing Technology Corp.), the software

company that created the technology for custom-fit blue jeans
for women in 1995. Reason - value-chain-analysis and
improvement

DIVERSIFICATION

Joint venture agreement signed withTimexand Junghans

Uhren to produce watches and alarm clocks
Acquisitions includedRollerblade, Prince tennisrackets,
Nordica ski boots, Kastle skis, and Asolo hiking boots
Twingo Benetton car (in collaboration with Renault)
Line of pagers through an agreement withMotorola
Purchased the large well-known shoe manufacturer,Varese
Joint venture with the Japanese trading companyMarubeni,
creating Benetton Shoes Corporation, to sell shoes in the
United States and Canada.
Negotiations withToyoboon joint plans to enter both the
Japanese and Brazilian market
Seibu-Saison to convert its license to a production and
marketing joint venture

VERTICAL INTEGRATION
Opening of Original UCB stores
Bought interest in Galli Filati
Consolidated interests in four suppliers of woolen and cotton materials
quasi-vertical integration
Controlled the whole value chain from retailing to clothing and textile
manufacturing
Decided price paid and the general terms of supply
Subcontractors
o Long-term relationships based on cooperation and trust
o Renew and increase the orders at every season
o Advise about new machines that were most profitable
o financial assistance through its leasing and factoring company.

VERTICAL INTEGRATION
Opening of Original Levis stores

CORPORATE ADVANTAGE
The Benetton success has been inextricably linked with the different
types of innovation that had been developed from the Group. Precisely,
distinguish itself by:
Product innovation
Process innovation
Organizational innovation
PRODUCT INNOVATION
In the seventies Benetton competitive advantage was grounded on
product innovations based on the use of bright colours. Right from the
beginning, Benetton offered a new product characterized by bright
colors and targeted to young people

CORPORATE
ADVANTAGE
PROCESS INNOVATION
In 1964 Benetton introduced the postponement technique
that basically
reversed the traditional dye-first-knit-after mode
NEW into knitOLD
first-dye-after.
MANUFACTURING
MANUFACTURING
PROCESS
PROCESS
Spin or purchase
yarn

Spin or purchase
yarn

Dye yarn

Manufacture
garments parts

Finish yarn

Join parts

Manufacture
garments parts

Dye Garments

Join parts

Finish garments

CORPORATE ADVANTAGE
ORGANISATION INNOVATION
Distribution Strategy
Communication &
Advertising
Quasi-vertical
integration
Dual supply chain

CORPORATE
STRATEGY
Gl
ob
al

Truly global one

uniformity

Same garments are sold throughout the world

Promotion

Segmentation/ target

Integration

Diversification

M&A

supported heavily with print media using

identical advertisements worldwide
Benetton contributed to the creation of
the casual style, targeted at the
beginning for young people, but shortly
after spread to other age groups.
Benetton achieved the process of
horizontal integration
The strategy of total look was completed
with the introduction of products such as
shoes, spectacles, perfumes, watches
and, most recently, jewellery.
acquisitions, as in the case of
Calzaturificio di Varese in 1988,
and through production licences in
perfumes, spectacles and
watches.

SUES -> RECOMMENDATIONS

Competitive pressure

Sales networks buy-in

Ability to develop the
business in emerging
markets
Changes in customer
spending habits
Criticism against the
company
Majorly affected by
controversial ads

To contain this risk, the Group maintains a strategic focus on production

and organizational efficiency policies related to the process of
production decentralization, completion of production cycles in
overseas units, and organizational cost reduction.

increase their investment

such as China and India, including through

agreements with large-scale retailers for the opening
of stores in stores in large department stores in the
largest cities
influenced, amongst other things, by business
outlook, interest rates, taxation, local economic
conditions, uncertainty
moderately change their marketing strategy and its
reflection in advertising images
create the funds for victims of domestic violence; donate money to AIDS
organizations, give away clothes to the third world countries, become a
sponsor for children with disabilities, even maybe create scholarships for
gifted but poor students etc

CORPORATE ADVANTAGE
Product innovation
Affordability
Quality in the product
Increasing demand
Adaptability with changing times
Leader in social work
Founded employee commitment program and red
tab foundation

CORPORATE
STRATEGY
In 1930, Levis survived the great depression
Consumer demand shifted from durability to fashion
Levis was issued to employees in defense industry during World War
II
Captured different segments capturing different demands
In 2002, Levis was rated for no. 1 brand for brand awareness &
brand retention
Promoted frequently music and theatrical productions
Ads stressed on youthfulness
To maintain revenue, introduced Levis Strauss signature jeans
Made 58% of sales through chain & departmental stores
Levi Strauss & Co. unveiled its "Global Sourcing & Operating
Guidelines," establishing a code of conduct for all contractors who
manufacture or finish Levi's products, as well as a code for selecting
countries in which to do business
In 2002, made agreement with Wal-Mart

RECOMMENDATIONS
First
First of
of all
all the
the Levis
Levis products
products are
are considered
considered as
as the
the most
most durable
durable
product.
product. Therefore
Therefore that
that area
area is
is secured.But
secured.But the
the areas
areas which
which levis
levis lacks
lacks
are
are comfort
comfort ability
ability and
and inexpensiveness.
inexpensiveness.
Improve
Improve sales
sales and
and reach
reach their
their most
most valuable
valuable target
target market,
market, Levi
Levi should
should
sell
sell jeans
jeans directly
directly to
to teenagers.
teenagers. Since
Since Levi
Levi had
had contractual
contractual disagreements
disagreements
with
with Wal-Mart
Wal-Mart and
and other
other big
big box
box stores,
stores, the
the company
company should
should seek
seek
alternative
alternative routes
routes
For
For Levi,
Levi, the
the company
company should
should rebrand
rebrand their
their jeans
jeans and
and create
create a
a new
new store
store
with
with an
an inviting
inviting atmosphere
atmosphere for
for people
people of
of all
all ages,
ages, specifically
specifically teenagers
teenagers
Levi
Levi could
could create
create an
an online
online presence
presence in
in social
social media
media plus
plus an
an iPhone
iPhone or
or
Android
Android based
based game
game which
which would
would allow
allow people
people to
to download
download a
a free
free
application
application which
which would
would allow
allow customers
customers to
to customize
customize and
and purchase
purchase jeans
jeans
and
and offer
offer an
an interactive
interactive game
game
Another
Another threat
threat can
can be
be stagnation
stagnation of
of ideas
ideas which
which needs
needs to
to be
be improved
improved by
by
constant
constant innovation
innovation
Lower
Lower down
down its
its prices
prices to
to some
some extent
extent the
the sales
sales volume
volume could
could be
be
increased
increased to
to a
a very
very large
large extent
extent
Levis
Levis pays
pays its
its maximum
maximum attention
attention to
to the
the mens
mens wear.
wear. Although
Although the
the
women
women section
section and
and kids
kids sections
sections arepresent
arepresent but
but they
they are
are not
not full
full filling
filling
the
the requirements
requirements much
much
The
The kids
kids section,
section, which
which is
is just
just in
in start,
start, should
should be
be given
given attention
attention to
to