Evaluation Of The Benefits Benetton Company Creates For Its Success
The first advantage that Benetton creates for itself is its great independence, due to the fact that it nearly controls every step of production. Benetton is a company that heavily relies on in-house operations, which gives them a benefit of being very close to many production steps. Whenever something needs to be adjusted the company can react with great flexibility. Even if Benetton sources out, they still have a great emphasis on control, in order to intervene when something is not as it should be. To do so, they often collaborate with former employees or reliable business partners. The enterprise acts similarly when it comes to suppliers. Benetton owns 85% of their suppliers and they further make sure to keep a good relationship with the other 15%. Furthermore, self-owned retail stores bring additional value to the enterprise. Firstly they lose the dependence on retail stores that used to sell their products. Now products can be displayed in the most attractive way and staff can work in the most efficiently. Secondly, Benetton is closer to its customers and can do more reliable research.
Secondly, Benetton puts great emphasis on new, innovative technology. They facilitated their whole communication system by the usage of IT software, which brought tremendous value for the company. Additionally, a communication center, Fabrica, was introduced. Its emphasis lies on innovation and Benetton employs various young people, in order to gain value from it. It is a very smart move to work with young people when it comes to new technologies. Young people are modern and innovative in contrast to older employees, who often think with certain boundaries. Moreover, Benetton created its company with a sole purpose to research opportunities regarding the internet. If one considers that this article was published in 2001 it becomes obvious that Benetton recognized the internet very early as a milestone and future value bringer. On their Website, the focus was not only lying on their variety of products but also on additional content like music or holiday offerings, in order to lure more potential customers to the site.
On point of critics regards the high level of vertical integration. On one hand, it can be seen as an opportunity to remain mostly independent, but on the other hand, it also increases the overall complexity of the company. This can lead to difficulties in fast decision making. If certain units of the company are not decentralized it becomes hard for the heads to act efficiently. Bounded rationality describes the limits of one's ability. If the most important work is not divided over a sufficient amount of people, the quality of major decision making can suffer from it.
