Benetton's Diversifications
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Case Code: BSTR145 Case Length: 18 Pages Period: 1980-2004 Pub Date: 2005 Teaching Note: Available |
Price: Rs.500 Organization: Benetton's Industry: Diversified Countries: Italy Themes: Unrelated Diversification |
Abstract Case Intro 1 Case Intro 2 Excerpts
"You take Benetton's power, its extremely efficient sourcing and distribution, and its knowledge of world markets, and you apply that to brands like Nordica, and you can develop a sports clothing brand as well as a sports brand"
- Keith Wills, retail analyst at Goldman, Sachs & Co. in London, commenting on the sale of Benetton Sportsystem to the Benetton Group by Edizione Holding.
"Ah, being purchased by Benetton: the kiss of death."
- Matt Titus, a former product manager at Oxygen Skates, a competitor of Rollerblade's, commenting on sports equipment companies purchased by Benetton.
"I know we would be better off giving details, but I don't want to make pronouncements we can't respect, especially when we don't know the company well."
- Marco Tronchetti Provera's (CEO, Pirelli) response when asked about Pirelli and Benetton's plans for their new acquisition, Telecom Italia.
Introduction
Since the 1980s, the Benetton family has diversified into several businesses through acquisitions by its holding company Edizione Holding (Edizione). These businesses are unrelated to its core business of clothing and accessories. The Benetton family entered the areas of sports equipment through Benetton Sportsystem; food outlets and catering through Autogrill; motorways construction and management through Autostrade; the telecom business through Telecom Italia; and merchant banking and private fund management through 21 Investimenti. Some of these acquisitions proved profitable, while the others lost money for the parent company. Some of the acquired companies were later sold.
Not only did Benetton lose money through some of these acquisitions, but it also had to face investigations by the Italian Competition Authority for anti-competitive practices and non-compliance with the stipulations regarding acquisitions.
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