While those initiatives above enhanced competitiveness, Benetton is distinguished mainly on their unparalleled ability to develop "networks" and improve integration. Perhaps it can be said that they are one of the early adopters of strategic subcontracting or outsourcing. Almost all business processes are one way or the other outsourced except of course those areas sensitive and confidential to them. These are special skills on product design and manufacturing procedures related to cutting and dyeing. Still, their networking or outsourcing activities remain in the confines of their territory in Italy. Contrary to the prevailing business models in their industry at the given period, even their retail shops are outsourced in the form of informal licensing. By informal it means that most of their transactions whether in manufacturing or retailing are based on handshakes mostly with no written or formal agreements. Conversely, their major competitors Gap and Zara own and control their retail shops. It is estimated that about 85% of business operations are outsourced.
Their vast networking strategy paved way for their tremendous growth not only in Italy but in other countries as well. These licensees played a significant role through financing other aspects of Benetton operations hence allowing the latter to focus their hard work and resources to their core competencies. The embodiment of their strategic outsourcing initiative is evidently shown in their five-stage process for their international expansion. The gauge of their successful expansion must result to buy out of their licensee or subsidiary and integrating it under Benetton management.
In terms of retail operations, the Group is heavily dependent on basic manufactured clothing products contributing about 79% of the total revenues. The balance is distributed in other businesses
like cosmetics, shoes, accessories, and intimate wear. In 1993, the global sales reached 2,752 billion lira with growth of 9.5% versus last year. In addition, the compounded annual growth for the ten years is robust at 17.3%.
The global expansion must strictly adhere to the five-stage process set by the management. Benetton is currently operating in major countries in Europe (Germany, France, and Spain), Asia (Japan, Egypt, and India), and US. To depict clearly the growing global business, 1993 figures show that about 49% of core products sold were outside of Italy with Germany and France as primary markets. Their successful surge in Japan further supported their growing international expansion. However, the conflict with their subsidiary Seibu Group hampered temporarily their market performance.
Benetton's entry to US can be viewed as one of the important expansions in their business. This move opened series of challenges that prompted them rethink their way of doing business and consider new alternatives in business operations. Suddenly, their long-standing business model is becoming obsolete as new business strategies employed by companies like The Gap and The Limited are gaining more advantages for their business. Particular areas of advantages are in inventory management and retail experience management.
To the public's perception and mind share, Benetton's popularity rooted from their "United Colors" campaign showing different