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Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case StudyLorenzo Zanni (University of Siena) Università degli Studi di Sie na Facoltà di Economia Richard M. Goodwin

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Page 1: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

“Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study”

Lorenzo Zanni (University of Siena)

Università degli Studi di SienaFacoltà di Economia Richard M. Goodwin

Page 2: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

THREE GENERAL QUESTIONS

1) Is it possible to compete with a small scale in the international markets? What is the future for Small and Medium sized firms (SME) in a global economy?

2) In terms of organizational structures and competitive strategies what can we learn from the Italian experience? Is it possible to underline some original “glocal” (global and local) solutions analysing the Italian experience?

3) Considering fashion business, what are the main strategic changes in the competitive scenario? Is it possible to focus the attention on some case studies which can explain the recent evolution?

Page 3: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

THE OBJECT OF ANALYSIS

1) THE MAIN CHARACTERS OF THE ITALIAN INDUSTRIAL SYSTEM

• The role of SME • The industry specialization• Industry location and the role of Clusters2) THE COMPETITIVE ADVANTAGE OF ITALY IN THE FASHION

BUSINESS• Peculiarities of Fashion Business• The competitive advantage of Italy in the fashion business: the new

scenario3) ENTREPRENEURSHIP AND ORGANIZATION STRUCTURE: THE

NETWORK APPROACH• Definition of Network Organizations • Characteristics of Network• Different types of Networks4) THE GUCCI CASE STUDY• The emergence of a large global player: Gucci Group • The impact on the SME’s sub-contractors (the network)

Page 4: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

I) THE MAIN CHARACTERS OF THE ITALIAN INDUSTRIAL SYSTEM (Onida 2004)

1) THE PREDOMINANCE OF SMALL FIRMS IN COMPARISON WITH OTHER EUROPEAN COUNTRIES

 Recent data confirm the high number of firms in Italy (entrepreneurial attitude)

The predominance of micro-firms (less of 10 employees)The average dimension of the Italian manufacturing firms is lower

then in the other UE countriesIn the last decades the importance of micro-firms has reduced only

a little  

The success of the “Made in Italy” during the 80’s and 90’s in the international markets is mainly based on SME’s

Page 5: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli
Page 6: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

2) THE ITALIAN INDUSTRIAL SPECIALIZATION IN MATURE OR TRADITIONAL INDUSTRIES

• The Italian market share in the UE are strong in “light industries” characterized by firms with small dimension (mechanics, textile, clothing, furniture, shoe and food industry) (Tab. 1)

• The Italian industry is traditionally “export oriented”: Italy is the eight country in the world in terms of export (Tab. 2-4)

• Italy is still the 12th more industrialized country in the world in terms of GNP (2014 data). But in the last few years Italy is loosing part of its competitive advantage in the international markets in terms of market shares

Italy is now facing the concurrence of less industrialized countries.It is interesting to describe how some Italian firms are defending and

sometimes even enlarging their market shares

Page 7: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

Tab. 2: The main actors of the Italian export (source Istat-ICE 2004)

Industry specialization

Type of firm Number of exporters Export (in value)

Small (less 50 employees) 92,5% 30%

Medium (50-250) 6,3% 27%

Large (+ 250) 1,2% 43%

Page 8: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

The capability to compete in foreign markets

Page 9: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

The impact of the crisis• Italian GNP 2009: -5% (Source Istat)• Italian Export 2009: -17,5% (Source Ice)The difficult situation in the domestic market, but good export capability• Italian GNP 2010: + 1,7% • Italian GNP 2011: + 0,4% • Italian GNP 2012: - 2,4% • Italian GNP 2013: - 1,9% • Italian GNP 2013: - 0,2% (Source IFM - estimate)• Italian Export 2010: + 11,4% • Italian Export 2011: + 5,9% • Italian Export 2012: + 2,3% • Italian Export 2013: + 0,1%• Italian Export 2014: + 2,7% (Source Ice - estimate)•

Page 10: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

The importance of export for Italian national growth

Page 11: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

3) THE INDUSTRIAL SPECIALIZATION INFLUENCES THE TERRITORIAL DISLOCATION OF THE ITALIAN FIRMS

At geographical level the process of industrialization in Italy has not been homogeneous: in emerges a “Leopard-skin” Italian

process of development with three main geographical areas (Picture 1)

• North of Italy: large firms predominance, the “company-town” model• South of Italy: the failed effects of the State action (“Intervento Straordinario

nel Mezzogiorno”) the creation of “cathedrals in the desert” they did not create other industries around their activities, neither they generated a spin-off effect of entrepreneurship

• “Third Italy” (Central and North-East of Italy): predominance of small firms localized in industrial districts Definition of industrial district: “social-territorial entities characterized by

the active presence in a concentrated area of a community of people and a group of industrial firms” (Becattini 1989)

industry specialization and productive decentralization external economies linked to the cultural heritage (A. Marshall) in these regions there are more network organizations

Page 12: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

Picture1 ‐ manufacturing labor local systems in Italy (Source: elab. Edison Foundation on Istat 2001 data)

Page 13: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

THE ROLE OF CLUSTERS“Clusters are geographic concentrations of interconnected companies, specialized suppliers,

service providers, and associated institutions in a particular field that are present in a nation or region. Clusters arise because they increase the productivity with which

companies can compete” (Porter 2001).

Instead of examining firms as isolated actors, the cluster-based analysis emphasizes the linkages among companies and supporting institutions and the synergies related both to

cooperative and to competitive behaviors of belonging enterprises

Porter (2003) claims that clusters have the potential to affect competition in three ways:• by increasing the productivity of the companies in the cluster (efficient access to specific

inputs, employees, services, information and public goods; facilitate coordination and transactions among companies; good diffusion of best practices)

• by driving innovation in the field (enhanced ability to perceive opportunities; share of knowledge creation processes; exploitation of local resources)

• by stimulating new businesses in the field (high visibility of business opportunity; commercialization of new and complementary products; starting of new companies)

Their relevant importance of industrial district in Italy (Istat 2012) :

• Around 200 in all Italy• 45% of workers in manufacturing industries• 43,5% of total export (years 2009-2011) of whom 13,5% are textile-leather-clothing

Page 14: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

II) THE COMPETITIVE ADVANTAGE OF ITALY IN THE FASHION BUSINESS (Porter 1990; Saviolo-Testa 2000)

• The importance of Italian clusters in the fashion industry: a national system of value which allows to control different stages in the whole filiera (see Picture 2)

• Creativity combined with functionality• High quality in small scale production (craftsman)• Flexibility (division of labor and specialization)• Demand pull innovation (Italian clients are very exigent)• Original market segmentation (houte couture, prèt à porter,

diffusion, bridge and mass)

The emergences of a new scenario for the Italian fashion business:– Market changes and new factors affecting the “Made in Italy” – Difficulties in the export capabilities of fashion industry– Italian clusters are good incubators of new entrepreneurship but

they do not help the dimensional growth of the firms

Page 15: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

Equipment producers/suppliers

Service suppliers (trend forecasters, fashion press, consultants, etc.)

FibresIndustry (natural and

man-made)

Greige goods yarn mills

Textile mills

Converters

Selling/buying agents

Wholesalers

Apparel manufacturers

End users

Retailers

R&D, raw materials supplying, fibers processing, fibers marketing

Finishing treatments: bleaching, shearing, brushing, embossing, dyeing, glazing, crinkling, printing, etc.

Fabric construction: weaving, knitting, embroidering, or processing solutions (e.g., films, foam) or directly fibers (e.g., felt, nonwoven fabrics)

Yarn spinning (spun yarns and filament yarns)

Supplier/buyer intermediation, communication

Cutting, trimming, spreading, bundling, sewing, sticking, pressing, packing

 Time and space transformation, communication, services

Evaluating, purchasing, innovating, communicating

Picture 2: The Fibres-textile-apparel filiére                         

 

Page 16: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

The Italian Diamond: the old and the new scenario

Diamond factors

(Porter 1990)

The Old Scenario

(’80-’90)

The New Challenges

Firm Strategy, Structure and Rivalry

Autonomous SME

Cluster innovations

Cluster networks

Craftsman (production)

Large global player

New comers (imitation)

De-localization

Brand and Distribution

Demand Conditions

Hedonism

Fashion victims (passive)

High demand in few countries

New consuming habits

No logo; less brand loyalty

Globalization

Related Supporting Industries

Mechanics

“Hard” infrastructure

Small independent retailers

Specialized services

“Soft” infrastructure

Distribution chains

Factor Conditions

Devaluation (cost leadership)

Local labor markets

Family business

Introduction Euro currency

Cognitive gap

Family succession

Page 17: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

Fashion Market segmentation in term of price

• Houte couture

• Prèt-à-porter

• Diffusion

• Bridge

• Mass market

Page 18: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

III) ENTREPRENEURSHIP AND ORGANIZATIONS STRUCTURE: THE NETWORK APPROACH (Lorenzoni, 1990)

1. Different definitions of “Network” in the managerial literature

• The totality of all the units connected by a certain type of relationships (Aldrich and Whetten)

• An aggregate of relations existing among individuals (or “units” or “members” or “nodes”) (Kaneko and Imai)

• Our point of view: an heterogeneous aggregate of firms, linked by multi-faceted and cooperative relations, organized around a focal firm and instrumental in achieving at least partially common objectives  

- The predominance of external growth processes (alliances vs. internal growth)- Different entrepreneurial profiles: “general and serial entrepreneur” (Mc Millan) vs. “limited and diffused” entrepreneurship

Page 19: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

 2. Main Characteristics of Network

- Advantages for leading firm: quality; innovation; more flexible production and shorter production runs; not necessarily a dimensional growth

- External firms: a semiautonomous position (dependent for certain parameters); independently owned and not exclusively dependent on the focal firm for business

-   Different links among the partners of the network:� strong relationships: the focal firm can influence the external firms with a “non-hierarchical power” (non conventional mechanism of coordination, equity or non equity) using: trust among partners; reciprocity; mutual adjustment; multiple line relationships (horizontal, vertical, lateral) � weak relationships: among external firms (without intermediation of the focal

firm)

-   The process of innovation in a network organization: interplay among different partners (see Japanese literature); even small firms can innovate; some obstacles for innovation in Italy (difficult access to funds and to information) 

Page 20: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

 3. Different types of networks (see Picture 3)

 

• Different stages of evolution from informal relationships to planned networks. During this evolution it emerges: a higher level of systematic activities; changes in memberships; a more deliberate consciousness in the patterns of the inter-company relationships;

• At the beginning: strong influence of the focal firm

• Later: mutual relationships; less coordination functions and more strategic crossroad of the information flows

Page 21: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

a) Simple and informal constellation

b) Planned and formal constellation

Picture 3: Different types of networks – a possible evolution

Page 22: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

In brief, NETWORK ORGANIZATION:

1) ALLOW TO REACH SOME PECULIAR ADVANTAGES

    - Time savings

  - Quality improvements

   - Innovation

    - More flexible production

    - Reduction of costs (external growth)

  

2) IS CHARACTERIZED BY DIFFERENT RELATIONSHIPS AMONG THE PARTNERS

    - Equity

    - Non-equity

  

3) HAS A WIDE APPLICATION VERSATILITY

    - Research & Development

    - Marketing and distribution

    - Financial

    - Coupling different networks

Page 23: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

III) THE CASE HISTORY: GUCCI AND THE LEATHER TUSCAN NETWORK (Bacci 2004)

• Different actors in the leather Tuscan cluster

• The Gucci case history

• The network organization and the main changes in the SME cluster

Page 24: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

1) THE ACTORS (leading firms and SME’s)

1. Large global player (as Gucci, Prada, Ferragamo)• New model of corporate governance: the role of the international finance;

luxury groups; • New strategies: multi-business activities (brand extension in different related

industries as cosmetics, glasses, shoes, watches, etc.); multi-brand groups;• New organizational formula: decentralization of production; national

production platform; transnational network• New sources of competitive advantage: have a craftsmen production organized

at an industrial level; the role of brand; the importance of communication; direct control of distribution channels (flagship stores; franchising network)

2. Medium local leader (small groups)• Decentralization of production• Different market segmentation but similar marketing strategies (the importance

of design, communication and direct control of distribution)3. The micro and small business (the “distrectual firm”)

• Simple sub-contractors (they produce part or components) • Specialized sub-contractors (they produce products)• Partner supplier (they have designer capabilities)• Mixed producer (in part sub-contractor and in part autonomous)• Autonomous small firms (they sell with their own brand)

Page 25: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

2) Gucci: a brief case history1921 founded by Guccio Gucci in Florence, the son of a leather craftsman with a cosmopolitan

culture. It was a small luggage and saddlery company where he sold exclusive leather goods created and produced by the best craftsmen he could hire.

1938 Within a few years, the small Florence shop grew and attracted a wide clientele base. A branch was opened in Rome

1947-1953

Creation of the "bamboo handle handbag", which later became one of the company's icon products. Introduction of the sons in the business (second generation in the family business)

1953-1969

Death of the founder. The 4 sons have the control of the company.

Company growth and commercial internationalisation (stores in London, Paris, New York, Palm Beach, Hong Kong). Linkages with Hollywood actress and other important testimonials (Jackie O shoulder bag)

1982-1995

In 1982 Gucci became a s.p.a.: the third generation has the control of the company; difficulties in managerial strategies. In 1989 the Anglo-Arab Investorcorp acquired the 50% of shares. In 1993 all the shares are acquired by Investorcorp

Begins a turnaround strategy managed by Domenico De Sole (Chief executive officer of Gucci Group) and by Tom Ford (design and style manager): repositioning of the brand in the luxury market; focalisation of the business in leather, accessories and apparel industry

1995-1998

In 1995 Gucci Group was launched as became a publicly traded company, listing on the New York and Amsterdam stock exchanges. It issued further shares in 1996.

Decentralization of production in the local system (mainly in Tuscany): internal activities specialised in design, marketing and logistics. High investment in communication. Direct control of distribution and new openings (174 monobrand shops at the end of 2002).

Page 26: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

1998-

1999

The firm was named "European Company of the Year 1998" by the European Business Press Federation for its economic and financial performance, strategic vision as well as management quality

In 1999 it launched a "strategic alliance" with the French group Pinault-Printemp-Redoute (PPR). At the beginning. PPR owns 68% of the group

2000-2003

Growth strategy (brand extension and takeovers at international level). Actually Gucci Group had whole or partial interests in 3 main business area and in the following companies or brands:

Fashion: Gucci (100% share of ownership, also watches 100%); Yves Saint Laurent (100%, also perfume brand 100% and watches brand 100%); Sergio Rossi (70%); Bottega Veneta (78.5%); Alexander McQueen (51%, also perfume brand 100%); Stella McCartney (50%, also perfume brand 100%); Balenciaga (91%)

Perfume: Roger & Gallet; Boucheron (also jewellery and watches); Ermenegildo Zegna; Oscar del la Renta; Van Cleef & Arpels; Fendi

Watches: Bedat & Co (85%)

Since the turnaround of the mid-1990s Gucci has continued to prosper (4.000 employees) and a highly profitable business operation.

The Gucci brand is considered one of the most frequently mentioned brands (in 2003 n.53 in the world in the Interbrand global ranking).

2004 PPR owns the total control of Gucci: a new CEO (Robert Polet) and 4 new young style directors. New partnership with unions and retailers for reaching the Social Accountability SA 8000 and 14.000 (ethical label)

Page 27: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli
Page 28: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

2005-2007

In 2005 Mark Lee is CEO Gucci Division

Roger Polet is Chairman and CEO Gucci Group, the world’s third largest luxury group. Coming from Unilever, bringing considerable global management experience and in-depth knowledge of the development of consumer brands in a multicultural environment

In 2007 the Group’s business grew by 15% in terms of sales and by 40% in terms of EBITA. Frida Giannini is Creative Director of Gucci Division

2008-2009

The Group balance a well defined portfolio brands with 8 clearly identified brands: 3 are the engine of the growth (Gucci, Bottega Veneta, YSL), Boucheron offers complementary expertise in few segments (jewellery, watches), 4 cutting-edge brands with high potential for long-term growth (Balenciaga, Stella McCartney, Alexander Mc Queen, Sergio Rossi)

Controlled development of an integrated distribution network: the Group directly operates 560 stores in major markets throughout the world and wholesales products through franchise stores, duty-free boutiques and leading department and specialty stores

Strategic partnership with Soeind Group (Swiss group, luxury watches)

YSL Beauté is sold to l’Oreal (but remains a partnership); Bedat & Co is sold

In 2008 Gucci generates 2,206 million Euro in revenues (+4,2%) and 625 million Euro in operating profits (-3,4%). The incidence of leather goods on total sales was the 55,3%, followed by shoes (15%) and clothing (14,3%).

Page 29: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

2009 In 2009 Patrizio di Marco is the new CEO Gucci Division: his main goal is to balance the unique tradition and the historical exclusive values of the brand in perfect equilibrium with fashion and trend soul

In 2009 Gucci generates 2.266 million Euro in revenues (+2,7%)

Gucci has more than 7.000 employees and other 7.000 work in the regional induced activity. Gucci manufactures all products in Italy and licenses the production and distribution of eyewear and perfumes. Through Gucci Group Watches, located in Cortaillod (Switzerland), the company also assembled and distribute in all the world Gucci brand timepieces, combining outstanding Swiss craftsmanship with modern design aesthetics

2010 February 18th: Alexander Mc Queen died. Gucci Group confirmed its commitment to continue with the brand and has provided all logistical, financial and human support to the Alexander McQueen team. In March 2010 Sarah Burton has been appointed Creative Director of the brand (supervision of the creative direction and development of all collections)

In 2010 Gucci turnover was 2.666 million Euro (+17%) with a significant profit growth (+22,9%). Gucci recorded further strong growth in emerging markets; Asia-Pacific is becoming the main market area for the brand.

The Gucci brand’s retail network comprised 284 stores (92 in emerging countries).

Page 30: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

2011-

2012

Gucci main values: “exclusivity, quality, made in Italy, Italian craftsmanship, design leadership in the world of fashion”.

Strategic positioning: perfect balance of modernity and tradition, innovation and craftsmanship, trendsetting and sophistication.

Craftsmanship and Made in Italy: strong linkages with the territory; 100% Made in Italy; 45.000 workers in all Italy; the project “artisan corner” in the shops; the project “made to measure”

Support in the creation of 3 “Network contracts”: Gucci has sponsored the birth of 3 networks contracts to improve innovation, efficiency in the value chain, economy of scale, facilitate credit access: 1) P.re.Gi. Network (7 firms, leather goods artisan; 11 mil. Euro turnover); 2) Almax Network (8 firms, bags producer, 20 mil. Euro turnover, 300 employees); 3) F.a.i.r. network (9 firms, accessories and leather; 45 mil. Euro turnover, 200 employees)

Eco-friendly initiative for the environmental impact reduction of the firm activities

Innovation: Launch of the new collection in the kids market all made in Italy.

Opening of the Gucci Museum (Icon Store, Library and Gift Shop, Coffee and Restaurant)

Selective Retail strategy: 317 shops worldwide (they realized the 73% of the Gucci turnover, the other 27% distributed in selected retail stores)

Economic Performance: In 2011 Gucci turnover was 3.140 million Euro (+17,7%) with a profit growth at group level (+26,4%). In 2012 Gucci turnover was 3.639 million Euro.

The network of subcontractors: 750 direct supplier, 1500 subcontractor, 45.000 employees

Page 31: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

2013-2014

Economic Performance: In 2013 Gucci turnover was 3.561 million Euro (-2,1%) with a profit growth (Ebitda 35,8%). The composition of turnover for business area is: 58% leather goods, 14% shoes, 11% clothing, 5% watches, 2% jewellery, 10% other products. In 2014 (first trimester) Gucci sales 838 million Euro (+0,3%)

Strategic positioning: reduction of wholesale point of sales (indirect channels) and increase of direct retail store. Pushing to the top of the luxury market the Gucci positioning; in Spring 2009 the turnover of the bags collection was: 32% entry price, 48% medium segment; 18% high market; 2% top; in Winter collection 2013-14 the figure are respectively 2%, 47%, 48%, 3%.

Craftsmanship and direct investment in the “Made in Tuscany”: continue the strong linkages with the territory; 7.000 workers in the regional network. Key words for manufacturing investments: efficiency, flexibility, specialization. In 2014 Gucci invested 21 million for a new manufacturing plant near Florence

Improving the “Network contracts”: from 3 networks contracts to 12 networks; 97 small and medium size firms are involved; 1.500 employees in the networks; social responsibility and ethical code are compulsory

Investment in correlated business: in 2013 Gucci group acquire Richard Ginori an historical porcelain firm based in Florence

Page 32: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

• Craftmanship: past and present with the project “artisan corner” inside the stores

• Frida Giannini (Creative Director from 2006) Exploring Gucci’s rich heritage and its incomparable craftsmanship capabilities, Giannini has created a unique vision for Gucci that fuses past and present; history and modernity

Page 33: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

b) The different way to communicate the world of Gucci

a) The shops

b) The products

c) The Advertising

d) The web site: http://www.gucci.com

e) Gucci museum: http://www.guccimuseo.com/en

f) Gucci and the Arts (exhibition, cinema, events)

Page 34: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

• The shops

– direct control of distribution

– internationalization of distribution

– Flagship stores (in the photo Seul FS)

• The new products: icon products (the new Bamboo bag)

• The Gucci Digital Flagship Store

• The Gucci Museum in Florence

Page 35: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

c) THE FUTURE: OPPORTUNITIES AND RISKS

• The Gucci case history is a good example of leading firm that was able to overcome family succession problems and to develop “a glocal strategy”. Its local network shows high capability to support the crisis.

• The opportunities of globalization (new rich people in Asia) with new personalized products and services:– made to order handbags; – accessories personalized; – made to measure

• Future challenges are approaching (in 2009 De Marco said: “at 1 billion Euro it’s easy to remain Made in Italy, at more than 2 billion it’s much more difficult!”

Page 36: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

• Growth of the local network (see table 1): small and high qualified firms (luxury supplier) while firms specialized in mass markets are increasingly reducing

• Higher selection of local supplier: acquisition of some supplier (see table 2) and opening the relationships outside the local system

• Differentiation of supplier and of local network relationships (see picture 4): in the case of Gucci we can find around 9 partner supplier (co-development partnerships); 13 sub-contractor (integrated relationships); 30 simple supplier (market relationships)

• Not simple “predator” strategy: in some case the relationships imply a transfer of knowledge above all in the partner supplier (see table 3).

• Weakening the autonomy of SME’s: network hierarchization (less market knowledge, less projectual role) (see table 4).

3) The influence of leading actors on the SME’s sub-contractors (the network)

Page 37: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

Table 1: Changes in number of employees in the local unit in the period 1991-2001 (in %) (Source: Istat)

Page 38: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

Table 2: Acquisition of small-medium firms in the fashion industry in Florence by leading firms

Buyer Firm acquired (comune) Year of acquisition

Celine (LVMH) Marcus (Impruneta – FI) 1994

Dior Mardi (Scandicci) Nd

Gruppo Dolci Gherardini (Scandicci) 2000

Mariella Burani Braccialini (Pontassieve) 2000

LVMH, Pucci (Firenze) 2000

LVMH Fendi (Bagno a Ripoli - FI) 2001

Gucci Conceria Caravel (Fucecchio) 2001

Gucci Calzaturificio Tiger (Monsummano Terme-PT) 2002

Gucci Calzaturificio Creazioni Bartoli (Monsummano T.-PT) 2002

Gucci Calzaturificio Paoletti (Pistoia) 2002

Gruppo Dolci Pelletteria Only Leather (Scandicci) 2003

Gruppo Dolci Nuova FGF- minuterie metalliche (S: Piero a Sieve) 2003

Trussardi Pelletteria Zetati (Bagno a Ripoli) 2003

Gucci Conceria Blutonic (S. Miniato) (51%) 2004

Page 39: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

IRPET Istituto Regionale Programmazione Economica Toscana

Picture Picture 4: 4: Network structure: relationships between SME Network structure: relationships between SME and leading actors in Florence-Arezzo leather clusterand leading actors in Florence-Arezzo leather cluster

Page 40: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

Table 3: leather/shoes firms in Florence and Arezzo which have increased the following factors (%)

  Totala) Product portfolio 58b) Plant dimension 51c) Number of employees 46d) Employees’ competences 76e) Total revenues 71f) Earnings margin 53g) Number of supplier 32h) Number of clients 19

Table 4: changes in leather/shoes firms due to cooperation with leading firms (%)

Type of change Total (%)

a) I have changed product 13

b) I do not use my own brand any more 24

c) No more design 17

d) I have introduced new technologies 50

e) I used new materials 36

f) Outsourcing of some phase of production

52

Page 41: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

The impact of the recent crisis on SME (2010 Unioncamere data)

• Different performances in the 3 main industries, in 2009 high reduction of turnover, but at the beginning not too bad consequences in terms of reduction of employees (fig. 1.2)

• Reduction in the number of firms, stronger for micro artisans by comparison to industrial firm (fig 1.3)

• Despite the crisis the importance of the 3 main industrial district in the local economy remain high in terms of: number of firms (45%), employees (53,4%) and export (52,8%).

Page 42: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

FIGURA 1.2Indicatori congiunturali delle imprese manifatturiere della provincia di ArezzoVariazioni % tendenziali del fatturato, dell'occupazione e della produttività del lavoro (1)

Fatt. Occ. Prod. Fatt. Occ. Prod. Fatt. Occ. Prod. Fatt. Occ. Prod.2004 -6,9 -5,9 -1,0 -2,9 1,8 -4,7 0,7 -2,5 3,2 -2,8 -1,5 -1,32005 -5,0 -2,8 -2,3 -1,6 1,1 -2,7 7,2 -2,8 10,0 0,7 -1,0 1,72006 -3,0 -1,4 -1,6 0,0 0,9 -0,9 2,4 1,9 0,4 1,1 0,7 0,52007 0,5 -0,9 1,4 1,7 11,3 -9,6 9,5 9,3 0,2 3,7 3,3 0,42008 -8,3 1,6 -9,9 -0,9 0,3 -1,2 -1,0 4,6 -5,6 -1,9 2,7 -4,62009 sem. I -28,7 -6,7 -22,1 -17,7 -6,1 -11,6 -21,2 -1,9 -19,3 -21,1 -2,9 -18,2(1) Imprese manifatturiere con almeno 10 addettiFonte: elaborazioni su dati Unioncamere Toscana-Confindustria Toscana

Pelle, cuoio, calzature

Totale Manifatturiero

Oreficeria Tessile e abbigliamento

FIGURA 1.3Imprese toscane manifatturiere registrate in provincia di Arezzo per settoreValori assoluti al 31/12 e variazioni %

2000 2008 var. % 2000 2008 var. % 2000 2008 var. %Gioielleria e oreficeria 1.149 1.018 -11,4 522 564 8,0 1.671 1.582 -5,3Tessile-abbigliamento 812 466 -42,6 397 380 -4,3 1.209 846 -30,0Pelle, cuoio, calzature 378 277 -26,7 151 159 5,3 529 436 -17,6Altri settori manifatt. 2.285 2.335 2,2 1.055 1.160 10,0 3.340 3.495 4,6AREZZO 4.624 4.096 -11,4 2.125 2.263 6,5 6.749 6.359 -5,8TOSCANA 41.595 36.951 -11,2 27.694 27.561 -0,5 69.289 64.512 -6,9Fonte: elaborazioni su dati Infocamere-StockView

Imprese artigiane Imprese non artigiane Totale imprese

Page 43: “Entrepreneurship and Network Organizations in the Italian Industrial Cluster: the Gucci Case Study” Lorenzo Zanni (University of Siena) Università degli

CONCLUSIONS• SME companies continue to play an important role in the international

business, but the new competitive scenario obliged them to change their strategies and firm structures

• Network organizations are only a small piece of the Italian puzzle, but they are important to understand the process of entrepreneurial development in certain area of the country

• In the industrial district is quite common to find network organizations, but it is not easy to replicate this model of development in other regions.

• At the moment the Italian fashion cluster are facing new competitive challenges that will probably change some of their original characters (it becomes strategic the role played by leading firms; increasing role played by advanced services)

• More researches are needed to understand better the nature and the evolution of network organizations (key variables, stages of evolution, competition, etc.). Only the future will tell us if network organizations will continue to be important or will move into some new consolidated forms (medium or large firms, small transnational groups) 

• The Gucci case history is a good example of leading firm that was able to overcome family succession problems and to develop “a glocal strategy”. Its local network shows high capability to support the crisis, but future challenges are approaching (in 2009 De Marco said: “at 1 billion Euro it’s easy to remain Made in Italy, at more than 2 billion it’s much more difficult!”

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