A Global Network and its Local Ties: Restructuring of the Benetton Group

Abstract

The paper investigates the change in strategy of the Benetton Group, since the mid nineties, in face of the severe intensive competition in the international fashion market. New competitors, in particular the European brands Zara, Mango and H&M, have challenged the Benetton position in the Italian and the European clothing market and have pushed the Group towards cost reduction through globalization of his suppliers. Benetton is a vertically integrated producer that controls (in different ways) the whole value chain from textile raw materials to the sales to the consumers. Till 2000 Benetton made part of its production in its own factories and through a wide network of domestic sub-contractors, mainly specialized in sewing. Now Benetton has drastically moved to a new strategy, abandoning Italy and organizing production around a dual supply chain: close locations (East Europe and North Africa) for quick production and far away locations (Asia) for more standardised products. The paper discusses also the redefinition of competences for the Treviso clothing district, where Benetton traditional sub-contractors have been in few years, drastically curtailed. Benetton restructuring marks the transition to a new network of competences between agents in the district.