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Benetton started in 1955 as a small family business in Italy selling colored sweaters. Over time, it built a network of independently owned but closely monitored retail outlets and a factory with new production methods. Today it has a global network of over 7,000 retail stores, though it owns only about 50 flagship stores. Benetton was successful because its production and design concept had a strong home base in Italy but expanded marketing globally through independent stores using its brand name and colors. Benetton advertises a "lifestyle" rather than its clothes directly through provocative ads to grab attention and create an image of new awareness. However, its success in understanding foreign markets like the US is uncertain.

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Himansh Kumar
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67 views8 pages

Answer The Following Questions

Benetton started in 1955 as a small family business in Italy selling colored sweaters. Over time, it built a network of independently owned but closely monitored retail outlets and a factory with new production methods. Today it has a global network of over 7,000 retail stores, though it owns only about 50 flagship stores. Benetton was successful because its production and design concept had a strong home base in Italy but expanded marketing globally through independent stores using its brand name and colors. Benetton advertises a "lifestyle" rather than its clothes directly through provocative ads to grab attention and create an image of new awareness. However, its success in understanding foreign markets like the US is uncertain.

Uploaded by

Himansh Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ANSWER THE FOLLOWING QUESTIONS

1. CASE STUDY: Benetton in the fast lane


Famous for its shocking advertisements Benetton started in 1955 as a small business.
Lucianno Benetton and his family started by selling colored sweaters door to door in
Treviso, Italy. Over time a regional network of family, friends and agents set up a
closely monitored set of distinctive retail outlets. Over a 15-year period Benetton built
up 300 affiliated but independently owned outlets in Italy and a factory with new
methods to dye and condition wool. Benetton was not directly involved in the retail
outlets, who received high quality products at low costs. Part of the manufacturing
savings are realized by outsourcing to neighbouring subcontractors. Today Benetton
has kept this loose network of independent production subcontractors and distribution
agents but has now built up to a global network of over 7,000 retail stores. Of these,
Benetton owns only about 50 flagship stores and the great majority are operated by
independent entrepreneurs. Over 80 per cent of production still takes place in Italy
and the company is still 72 per cent owned by the Benetton family.
Benetton is one of those successful global companies that was partly successful
because its production and design concept was built on a strong home base. It then
expanded the marketing end of its business through closely monitored (but not
owned) independent stores. These were able to use the Benetton brand name and
distinctive colours and were supported by clever international advertising.
Benetton does not advertise its clothes 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. Benetton goes in for
cutting-edge advertising that grabs public attention. This creates an image of new-age
awareness, as Benetton advertising has featured Formula I cars, AIDS, high art , and
“attitude”.
How well this plays out globally is uncertain. For example, in 1988 Benetton had 700
retail stores in the US but by 1995 it only had 150. Is this because Benetton has too
European an image to succeed in middle America? How can an Italian family firm
understand the American lifestyle from its European bases?

QUESTIONS
1) Is Benetton a multinational enterprise?
2) What are the country-specific factors that have helped Benetton be a success?
3) What are Benetton’s firm-specific advantages?

2. Write short notes on the following:


a) Vision and Mission
b) Porter’s five forces model of competition
d) SWOT analysis

3. A) Why do companies import goods rather than produce them in their own
country? Provide two reasons?
3. B) What is diversification and how may diversification help a company?

MULTIPLE CHOICE

1. When country A’s currency is weak relative to country B’s currency, which of the
following encourages foreign investment in A?
a. A’s exports are more expensive
b. A’s imports are cheaper
c. A’s exports are cheaper
d. B’s exports are cheaper

2. The factors of production include


a. land
b. labour
c. capital
d. all of the above

3. When a company makes a product or service internationally, it must formulate a


number of business decisions called
a. marketing mix
b. marketing goals
c. marketing strategies
d. marketing branding

4. In an international skills inventory, tolerance and sensitivity to others is called


a. adaptation skills
b. coping skills
c. work effectiveness skills
d. intercultural communications skills

5. Which of the following theories helps marketers understand the behaviour of


consumers when it comes to needs?
a. Thorndyke’s theory
b. Maslow’s hierarchy
c. Notman’s emotional theory
d. Wilson’s rational theory

6. Translation services, interest charges, metric labelling requirements, and local taxes
are part of
a. retail value
b. hidden costs
c. the exporter’s fee
d. the importer’s fee
7. In which of the following types of investment does an investor buy a share of a
foreign company without a controlling interest in that company?
a. private-sector
b. portfolio
c. public-sector
d. foreign direct

8. A bank document assuring that a business has enough funds on deposit to cover an
international transaction is called a
a. bank draft
b. letter of credit
c. money order
d. line of credit

9. When a multinational company (MNC) seeks total integration of its global


operations, it is
a. ethnocentric
b. polycentric
c. geocentric
d. regiocentric

10. The rules of correct or appropriate behaviour when meeting with officials or
business people are called
a. manners
b. common sense
c. guidelines
d. protocol

11. Self-sufficiency is the ability to provide for all of your basic needs, such as
a. allowances, books, and savings
b. all luxury items
c. food, clothing, shelter, and water
d. all of the above

12. Which of the following is a particular challenge for a global company?


a. maintaining quality product standards throughout the company’s facilities
b. saving on raw materials and labour
c. ability to market a product worldwide
d. worldwide access to knowledge and ideas

13. Political risk can take the form of which of the following?
a. financial gain
b. increased market share
c. technical breakdown
d. all of the above

14. Charges for the transportation of goods can include one or more of the following
components:
a. the shipment method
b. the freight forwarder
c. the volume of the goods
d. all of the above

15. If each of the following represents a difference between the culture of plant
employees and the culture of a foreign plant manager, which difference is most
serious?
a. work hours
b. work ethic
c. wages
d. scheduling
16. When you are underpaid, you are paid enough to live on.
a. True
b. False

17. What is a border? (Standard I-International Business Vocabulary and Definitions)


a. Start or end of something and is invisible, like a boundary or limit
b. A graph
c. A line
d. A division

18. What is the difference between domestic and International trade?


a. International trade is country-to-country while domestic trade is within a nation's
borders.
b. International trade is within one country's borders while domestic trade is
between two countries.
c. International trade is country-to-country while domestic trade is within a nation's
houses.
d. They are the same; there is no difference

19. The process of using natural resources, materials, or finished products to satisfy
human wants or needs is called.... (Standard I-International Business Vocabulary and
Definitions)
a. Export
b. Consumption
c. Resources
d. Trade
20. This word comes from the base 'busy' + ness, or the act of being busy with
money, financial, transactions, sales, and purchasing. (Standard I-International
Business Vocabulary and Definitions)
a. Banking
b. Salesperson
c. Business
d. Financial institution

21. What is the currency of all of Europe?


a. Euro
b. Yen
c. U.S. Dollar
d. Yuan

22. What is the U.S.'s main export?


a. Horses
b. Cotton
c. Meat
d. Cars

23. When you see a coin from Canada or Australia with Queen Elizabeth on it, what
does that mean about Canada and Australia?
a. That Canada and Australia were colonized by England
b. That Canada and Australia love Queen Elizabeth
c. That Canada and Australia were once one country
d. That Queen Elizabeth is their president

24. If 7 U.S. Dollars equals to 97 Mexican Pesos then how many Mexican Pesos is
equal to 28 U.S. dollars?
a. 398 Mexican Pesos
b. 388 Mexican Pesos
c. 378 Mexican Pesos
d. 368 Mexican Pesos

25. If 1 U.S. Dollar equals to 6.32 Chinese Yuan Renminbi, then how many Chinese
Yuan Renminbi is equal to 6 U.S. dollars?
a. 72.93 Chinese Yuan Renminbi
b. 37.92 Chinese Yuan Renminbi
c. 29.37 Chinese Yuan Renminbi
d. 97.32 Chinese Yuan Renminbi

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