Submitted by: Anzar KhanReg #: 1511106041

Program: BBASemester: 9th

Subject: International BusinessSubmitted to: Sir Ahmed Butt

Case Study Answers

BENETTON IN THE FAST LANE

Is Benetton a multinational enterprise?

Benetton is a Multinational Enterprise as it is headquartered in Italy and has operations in other countries. It has built up to a global network of over 7000 retail stores in 120 countries. Over 80% of production still takes place in Italy & the company is still 72 % owned by the Benetton family. As one of the characteristics of MNEs is that the company and its business partners have a common strategic vision, Benetton and its independent stores across the globe are working towards a common strategic vision. Another characteristic of a Multinational Enterprise is that it draws on a common pool of resources. In this case Benetton allows the independent stores to use its brand name and part of the manufacturing savings are done by outsourcing to neighboring subcontractors.

What are the country-specific factors that have helped Benetton be a success?

Benetton is one of those successful global companies that was partly successful as to its production & design was built on a strong home base Italy. The EU countries have close economic linkages with each other and Benetton being in Italy benefited from this fact. The same European culture and lifestyle in many countries helped Benetton apply similar strategies. However, the number of outlets reduced from 700 in 1988 to 150 by 1995 in US. and it might be difficult for the Benetton family to understand the American Lifestyles from its European bases.

What are the Benetton’s firm specific advantages?

Benetton’s 80% percent production takes place in Italy and 72% of the enterprise is owned by Benetton. Benetton has its firm specific advantages in advertisements. It goes I for cutting-edge advertising that grabs public attention. Benetton’s closely monitored independent stores were able to use Benetton’s brand name, distinctive colors and were supported by clever international advertising. Benetton doesn’t advertise its products directly. Rather its advertisements are for a lifestyle. The “United colors of Benetton” ads are designed for a homogeneous global consumer interested in fast cars and a fast lifestyle. This creates an image of new age awareness as Benetton advertising has featured Formula 1 cars, AIDS, high art and “attitude”.