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By

Harshita Shrivastava (23)Shivani Bhatla (53)

Ankur Arora (111)

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• History of both Companies & maor milestones

• !esour"es# Capabilities &strate$i" ar"hite"ture

• %ynami" ie' of the "ompanies

• Stati" "ien"y*%ynami" "ien"y+,un"tuate-.uilibria

• Basis for Hori/ontal S"ope "hoi"es & mo-els ofCorporate 0ana$ement

• Hori/ontal nte$ration# erti"al nte$ration#Strate$i" utsour"in$ & %iversi4"ation Strate$ies

• Strate$i" rationale for A".uisitions*mer$ers if any

• Corporate Strate$y & Corporate A-vanta$e

• Strate$i" ssues to-ay & your re"ommen-ations

AGENDA

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 he 6nite- Colors of Benetton (Benetton)# an talian base- "ompanyfoun-e- in 1785# empathi/e- bri$htly "olore- knit'ear9

urope:s lar$est "lothin$ manufa"turer an- 'orl-:s lar$est "onsumer of'ool in the $arment in-ustry9

,resente- all over the 'orl- spe"i4"ally in 12; "ountries 'ith 7manufa"turin$ fa"tories an- over 5;;; sales outlet all over the 'orl-

$eneratin$ 2 billion uros of retail sales

Available to youn$ an- ol- in "ombine- "olours an- stylish fashion9

Benetton is 'ell establishe- in the 6S an- Cana-a an- $ro'in$ in

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1785  •  Born in ,on/ano eneto from the artisan knittin$ 'orkshop of the Benetton siblin$s

1788  • opene- its 4rst ?Benetton:s shop@ in Belluno an- "overe- all talian:s provin"e9

178   •  opene- in ,aris #a 4rst step in the international e=pansion outsi-e taly9

1787  •  irst line for ki-s

17;  •

 ,ro-u"tion of eans an- velvet trousers# shirts an- +shirts

17D  • =ten-e- by Sisley Bran- a--in$ a ne' tar$et to its "onsumer base

177  • irst sponsore- their lo"al ru$by team# A9S9 !u$by reviso

ISTORY & MILESTONES

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17;•

 =pan-s sales in the Ameri"as (EF) an- in 172 in Asia (

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Levi:s Strauss & Co9 foun-e- in 153 in San ran"is"o# California + one ofthe 'orl-:s lar$est apparel manufa"turer bran-

Sol- in 11; "ountries in more than 55#;;; retail stores 'orl-'i-e

Mission > o sustain responsible "ommer"ial# su""ess as a $lobalmarketin$ "ompany of bran-e- apparel

Vision: o be a pioneer in the "lothin$ in-ustry 'ith "onstant innovationin -esi$n an- material9 ur pro-u"ts 'ill -e4ne .uality# style an-fun"tion9 e 'ill "loth the 'orl-9

Bran-,ortfolios

INTRODUCTION

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1

3

• A"hieve- monopoly po'er by pro-u"t -iMerentiation & entry barriers# also patent for

blue eans by 6S patent an- tra-emark o"e "alle- ?aist overalls ?

18

• 'o horse bran- leather pat"h 'as use- on 'aist overalls

17;1

• ,ants have t'o ba"k po"kets

17;

2

•  Levi Strauss -ies at the a$e of 39 His nephe's inherit the business

172

• he "ompany re$isters the 'or- Levi:s as a tra-emark

1788

• he "ompany airs its 4rst television "ommer"ial

171

• LS&C9 be"omes a publi" "orporation

178

• %o"kers Nhakis are intro-u"e- in the 6nite- States9

1775

•  LS&C9 pla"es Eo9 1 amon$ apparel 4rms an- Eo9 18 overall in ortune ma$a/ine

1778

• Levi:s inta$e Clothin$ is intro-u"e- $lobally

2;;;

• LS&C9 intro-u"es Levi:s n$ineere-

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RESOURCES &CAPABILITIESResources:

• Bran- name an- reputation

• nternational presen"e

• 3;; -esi$ners

• 'ns a "ommuni"ation resear"h "enter> abri"a

• 85;; store- 'orl-'i-e in 12; "ountries

C!"i#i$ies:

• n"rease- fo"us on outsour"in$ of manufa"turin$

• %yein$ postponement pro"ess

• ,artnership in hi$h te"h resear"h

• nnovative operations mana$ement te"hni.ues

• Automate- lo$isti"s an- -istribution fa"ilities

• Stron$ "ontra"tual arran$ements 'ith key suppliers aroun- the 'orl-

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RESOURCES &CAPABILITIESResources:

• Levi:s the 4rst bran- to "reate an- patent the 'orl-:s 4rst blue eans

• nternational presen"e

• 5#;;; tra-emark re$istrations

• Suberp !&% "enter in Corlu

• 55;;; stores 'orl-'i-e in 11; "ountries

C!"i#i$ies:

• ast %istribution Eet'ork aroun- the Klobe

• Supplier ,artnership

• Me"tive Competitive ,ri"in$ Strate$y

• Symbol of frontier in-epen-en"e# -emo"rati" i-ealism# so"ial"han$e an- fun

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DYNAMIC VIE%

Resource Endowments

• Brand Name

•Worldwide customers

•Strong Network of Stores

Resource

Commitment• Providing the

latest fashion to

it’s clients• Improving the

informationsstem

Activities

• Increased

focus on

outsourcing

manufacturing• !igh R"#

• Strong

contractual

arrangements

Dee#o!in'C!"i#i$ies

• Lo' "ost sour"in$• 0arket %evelopment• penin$ Ee' Stores

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DYNAMIC VIE%

Resource Endowments

•Brand Name

•$irst %over &dvantage

•Worldwide customers

•Strong Network of Stores

ResourceCo((i$(en

$• ,rovi-in$

hi$h .ualityapparels

• ,ro"essimprovementsto e"onomi/emanufa"turin$

Ac$ii$ies

• Bran-Buil-in$

• Superb !&%• ra-emarkin

$

Dee#o!in'

C!"i#i$ies

• Ba"k'ar- nte$ration• Lo"al "ustomi/ation

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 E))ICIENCY*DYNAMICE))ICIENCY+PUNCTUATED

E,UILIBRIA• n the be$innin$# Benetton 'as only a small "ompany that 'aspro-u"in$ s'eaters for lo"al in-epen-ent retailers

• Shortly after the pro-u"tion of knit'ear# follo'e- the pro-u"tion ofshirts an- eans9 n

• the be$innin$ Benetton sol- them un-er -iMerent bran-s

•  he be$innin$ of Benetton:s forei$n pro-u"tion "an be tra"e- ba"kto 172

• n 1775 'ith the -e"ision of taly to pe$ the Lira rate of e="han$eBenetton ha- to -elo"ali/e pro-u"tion

• n the be$innin$ of 2;;;# -ue to severe "ompetition Benetton ha-

to in"rease fo"us on outsour"in$ manufa"turin$9 Also it ha- to"han$e the stru"ture an- the number of "olle"tions + Sprin$#Summer# Autumn an- inter

• n 2;;# Benetton:s full pa"ka$e pro-u"tion represente-# in terms ofvolume# 398O

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STATIC E))ICIENCY*DYNAMICE))ICIENCY+PUNCTUATED E,UILIBRIA

• rom the early 178;s throu$h the mi- 17;s# Levi Strauss e=perien"e-si$ni4"ant $ro'th in its business e=perien"e- rapi- e=pansion of itsmanufa"turin$ "apa"ity from 18 plants to more than 83 plants in the6nite- States an- 25 overseas

• By the 177;s# the bran- 'as fa"in$ "ompetition from other bran-s an-"heaper pro-u"ts from overseas# an- be$an a""eleratin$ the pa"e of its6S fa"tory "losures an- its use of oMshore sub"ontra"tin$ a$reements

•  he %o"kers bran-# laun"he- in 178 'hi"h is sol- lar$ely throu$h-epartment store "hains# helpe- the "ompany $ro' throu$h the mi-+177;s# as -enim sales be$an to fa-e9

•  he "ompany took on multi+billion -ollar -ebt in ebruary 1778

• n 2;;2# Levi Strauss be$an a "lose business "ollaboration 'ith almart#pro-u"in$ a spe"ial line of PSi$natureP eans an- other "lothes fore="lusive sale in almart stores until 2;;8

• By 2;;# Levi Strauss 'as a$ain sai- to be pro4table after -e"linin$ salesin nine of the previous ten years9

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• Eor-i"a in 177

  !eason + entry into the sportin$ $oo-s se"tor un-er BenettonSportsystem

• A".uire- various marketin$ "ompanies

•A/imut S9p9A9# Benair S9p9A9# an- Benlo$ S9p9A9!eason Q inte$rate $roup lo$isti"s

• uromer"ato# talyJs lea-in$ superstore "hain

•  ierras %el Sur Ar$entino in 1771# be"omin$ the o'ner of 7;;thousan- he"tares of bree-in$ area for sheeps# for a totalpro-u"tion of over 8 million kilos of 'ool

• mportant te=tile an- knittin$ fa"tories throu$h the aliate-"ompany limpias that to-ay o'ns# in several talian provin"es#ten plants supplyin$ the maority of the ra' materials ne"essaryto the Kroup:s "lothin$ -ivision

AC,UISITIONS

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AC,UISITIONS

• Kreat estern Karment Co9 (KK)# a Cana-ian "lothin$

manufa"turer9 !eason + e=pan- the 4rmJs "lothin$ line by

a--in$ ne' fashions an- mo-els# in"lu-in$ stone+'ashe- eans

• CCC (Custom Clothin$ e"hnolo$y Corp9)# the soft'are"ompany that "reate- the te"hnolo$y for "ustom+4t blue eans

for 'omen in 17759 !eason + value+"hain+analysis an-

improvement

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DIVERSI)ICATION

•  

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• penin$ of ri$inal 6CB stores

• Bou$ht interest in Kalli ilati

• Consoli-ate- interests in four suppliers of 'oolen an- "otton materials

• ?.uasi+verti"al inte$ration@

• Controlle- the 'hole value "hain from retailin$ to "lothin$ an- te=tile

manufa"turin$

• %e"i-e- pri"e pai- an- the $eneral terms of supply

• Sub"ontra"tors

o Lon$+term relationships base- on "ooperation an- trust

o !ene' an- in"rease the or-ers at every season

o A-vise about ne' ma"hines that 'ere most pro4table

o 4nan"ial assistan"e throu$h its leasin$ an- fa"torin$ "ompany9

VERTICAL INTEGRATION

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VERTICAL INTEGRATION

• penin$ of ri$inal Levi:s stores

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 he Benetton su""ess has been ine=tri"ably linke- 'ith the -iMerent

types of innovation that ha- been -evelope- from the Kroup9 ,re"isely#-istin$uish itself by>•,ro-u"t innovation•,ro"ess innovation•r$ani/ational innovation

•PRODUCT INNOVATIONn the seventies Benetton: "ompetitive a-vanta$e 'as $roun-e- onpro-u"t innovations base- on the use of bri$ht "olours9 !i$ht from thebe$innin$# Benetton oMere- a ne' pro-u"t "hara"teri/e- by bri$ht"olors an- tar$ete- to youn$ people

ORPORATE ADVANTAGE

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•PROCESS INNOVATIONn 178D Benetton intro-u"e- the postponement te"hni.ue

that basi"allyreverse- the tra-itional -ye+4rst+knit+after mo-e into knit+4rst+-ye+after9

Spin or pur"haseyarn

%ye yarn

inish yarn

0anufa"ture$arments parts

 

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•ORGANISATION INNOVATION

• %istribution Strate$y• Communi"ation &

A-vertisin$• Iuasi+verti"al

inte$ration• %ual supply "hain

ORPORATE ADVANTAGE

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• ruly $lobal oneKlobal

• Same $arments are sol- throu$hout the 'orl-uniformity

•

supporte- heavily 'ith print me-ia usin$i-enti"al a-vertisements 'orl-'i-e,romotion

• Benetton "ontribute- to the "reation ofthe "asual style# tar$ete- at thebe$innin$ for youn$ people# but shortlyafter sprea- to other a$e $roups9

Se$mentation* tar$et

• Benetton a"hieve- the pro"ess of

hori/ontal inte$rationnte$ration

• he strate$y of total look 'as "omplete-'ith the intro-u"tion of pro-u"ts su"h asshoes# spe"ta"les# perfumes# 'at"hesan-# most re"ently# e'ellery9

%iversi4"ation

•a".uisitions# as in the "ase of?Cal/aturi4"io -i arese@ in 17#an- throu$h pro-u"tion li"en"es in

perfumes# spe"ta"les an-'at"hes9

0&A

CORPORATE

STRATEGY 

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• o "ontain this risk# the Kroup maintains a strate$i" fo"us on pro-u"tionan- or$ani/ational e"ien"y poli"ies relate- to the pro"ess ofpro-u"tion -e"entrali/ation# "ompletion of pro-u"tion "y"les inoverseas units# an- or$ani/ational "ost re-u"tion9

Competitive pressure

• in"rease their investmentSales net'ork:s buy+in

• su"h as China an- n-ia# in"lu-in$ throu$ha$reements 'ith lar$e+s"ale retailers for the openin$of ?stores in stores@ in lar$e -epartment stores in thelar$est "ities

Ability to -evelop thebusiness in emer$in$

markets

•  inRuen"e-# amon$st other thin$s# by businessoutlook# interest rates# ta=ation# lo"al e"onomi"

"on-itions# un"ertainty

Chan$es in "ustomerspen-in$ habits

• mo-erately "han$e their marketin$ strate$y an- itsreRe"tion in a-vertisin$ ima$es

Criti"ism a$ainst the"ompany

• "reate the fun-s for vi"tims of -omesti" violen"e -onate money to A%Sor$ani/ations# $ive a'ay "lothes to the thir- 'orl- "ountries# be"ome a

sponsor for "hil-ren 'ith -isabilities# even maybe "reate s"holarships for$ifte- but poor stu-ents et"

0aorly aMe"te- by

"ontroversial a-s

UES +- RECOMMENDATIONS

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,ro-u"t innovation

AMor-ability

Iuality in the pro-u"t

n"reasin$ -eman-

A-aptability 'ith "han$in$ timesLea-er in so"ial 'ork

oun-e- employee "ommitment pro$ram an- re-tab foun-ation

ORPORATE ADVANTAGE

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•n 173;# Levis survive- the $reat -epression•Consumer -eman- shifte- from -urability to fashion•Levis 'as issue- to employees in -efense in-ustry -urin$ orl- ar•Capture- -iMerent se$ments "apturin$ -iMerent -eman-s

•n 2;;2# Levis 'as rate- for no9 1 bran- for bran- a'areness &bran- retention•,romote- fre.uently musi" an- theatri"al pro-u"tions•A-s stresse- on youthfulness• o maintain revenue# intro-u"e- Levi:s Strauss si$nature eans•0a-e 5O of sales throu$h "hain & -epartmental stores

•Levi Strauss & Co9 unveile- its PKlobal Sour"in$ & peratin$Kui-elines#P establishin$ a "o-e of "on-u"t for all "ontra"tors 'homanufa"ture or 4nish LeviJs pro-u"ts# as 'ell as a "o-e for sele"tin$"ountries in 'hi"h to -o business•n 2;;2# ma-e a$reement 'ith al+0art

CORPORATE

STRATEGY 

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•irst of all the Levi:s pro-u"ts are "onsi-ere- as the most -urablepro-u"t9 herefore that area is se"ure-9 But the areas 'hi"h levi:s la"ksare "omfort ability an- ine=pensiveness9•mprove sales an- rea"h their most valuable tar$et market# Levi shoul-sell eans -ire"tly to teena$ers9 Sin"e Levi ha- "ontra"tual -isa$reements'ith al+0art an- other ?bi$ bo=@ stores# the "ompany shoul- seekalternative routes

•or Levi# the "ompany shoul- rebran- their eans an- "reate a ne' store'ith an invitin$ atmosphere for people of all a$es# spe"i4"ally teena$ers•Levi "oul- "reate an online presen"e in so"ial me-ia plus an i,hone orAn-roi- base- $ame 'hi"h 'oul- allo' people to -o'nloa- a freeappli"ation 'hi"h 'oul- allo' "ustomers to "ustomi/e an- pur"hase eansan- oMer an intera"tive $ame

•Another threat "an be sta$nation of i-eas 'hi"h nee-s to be improve- by"onstant innovation• Lo'er -o'n its pri"es to some e=tent the sales volume "oul- bein"rease- to a very lar$e e=tent• Levi:s pays its ma=imum attention to the men:s 'ear9 Althou$h the'omen se"tion an- ki-:s se"tions are present but they are not full 4llin$

the re.uirements mu"hh ki-: i hi h i i h l- b i i

•irst of all the Levi:s pro-u"ts are "onsi-ere- as the most -urablepro-u"t9 herefore that area is se"ure-9 But the areas 'hi"h levi:s la"ks

are "omfort ability an- ine=pensiveness9•mprove sales an- rea"h their most valuable tar$et market# Levi shoul-sell eans -ire"tly to teena$ers9 Sin"e Levi ha- "ontra"tual -isa$reements'ith al+0art an- other ?bi$ bo=@ stores# the "ompany shoul- seekalternative routes•or Levi# the "ompany shoul- rebran- their eans an- "reate a ne' store'ith an invitin$ atmosphere for people of all a$es# spe"i4"ally teena$ers•Levi "oul- "reate an online presen"e in so"ial me-ia plus an i,hone orAn-roi- base- $ame 'hi"h 'oul- allo' people to -o'nloa- a freeappli"ation 'hi"h 'oul- allo' "ustomers to "ustomi/e an- pur"hase eansan- oMer an intera"tive $ame

•Another threat "an be sta$nation of i-eas 'hi"h nee-s to be improve- by"onstant innovation• Lo'er -o'n its pri"es to some e=tent the sales volume "oul- bein"rease- to a very lar$e e=tent• Levi:s pays its ma=imum attention to the men:s 'ear9 Althou$h the'omen se"tion an- ki-:s se"tions are present but they are not full 4llin$

the re.uirements mu"h•he ki-:s se"tion 'hi"h is ust in start shoul- be $iven attention to

ECOMMENDATIONS