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Benetton

With regard to the attached article (which can be found at the following link http://www.businessweek.com/magazine/content/11_12/b4220021488483.htm) and Chapter 8 of the textbook, Essentials of Contemporary Management by Gareth Jones, I am looking for help in analyzing the following. Direct information from the article and textbook would be helpful for my understanding, rather than just opinion.

1) In what ways did Benetton's use of its control systems result in declining performance?

2) Specifically, what were the control systems and how did they add to the issue?

3) How did Benetton's competitors use their control systems to gain a competitive advantage?

4) Who were the competitors and what were the control systems they used that were more beneficial?

5) What kinds of changes has Benetton made to its control systems?

6) Have the changes Benetton made gone far enough or should they do more and, if so, what else might they do and how will that help?

7) Will the changes to the control systems that they have made be enough to increase its performance or ensure the company's survival? Why or why not?

Solution Preview

1) In what ways did Benetton's use of its control systems result in declining performance?

Benetton is not vertically integrated and does not have adequate insight into its operations in order to accurately gauge consumer demand. An example of this can be seen here in the article:
"The Italian company sells almost 80 percent of its products through franchisees and partners at wholesale prices, less than half the retail value. Analysts say that by not operating most of its own stores, Benetton hasn't been able to track demand and tweak merchandise assortments as well as rivals such as H&M and Inditex, which operate most of their retail locations."

2) Specifically, what were the control systems and how did they add to the issue?

I. Benetton operates as a franchise and does not control a majority of its stores , this greatly reduces their operational effectiveness.
II. Benetton creates its own designs that change only seasonally and does not react to ...

Solution Summary

The essentials of contemporary management are examined. The direct information from the articles are given.

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