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What is the common point between powerful brands like United Colors of Benetton, Sisley, Prince, and Rollerblades They are all under the blanket of Benetton Group. It was established in Italy relying firmly on the business acuity of Luciano Benetton and the crafty creativity of his sister Guiliana Benetton since 1965.
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. ...