Pierfrancesco Bresolini - Brunello Cucinelli analysis

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The humanistic approach of Brunello Cucinelli: story and analysis of an Italian fashion company

Our story starts from ...

Person, company & foundation

Theories & applicationCucinelli: practical examplesFutureSummary

1 Person2 Company3 Foundation4 Theories5

Solomeo (province of Perugia)

Brunello Cucinelli (person)Born in 1953 in a family of farmers (poor but happy)When he was 15 they moved from the countryside to the cityHis father worked in a factory and was humiliatedBrunello was getting bullied at schoolWanted to do something for the wellbeing of humankindIn 1975 left the university before finishing itFounded company in 1978, with neither employees nor moneyIn the same year he sold the first 53 sweaters

(Nalley, 2013)

Our story starts from ...

Cucinelli: practical examplesFutureSummary

I would see him in the evening silent and troubled at times, however, during the day he had been subjected to humiliations, sometimes even insults from his employer - Brunello Cucinelli (about his father)

1 Person2 Company3 Foundation4 Theories5

Brunello Cucinelli (company)In 1978 he founded Brunello Cucinelli S.p.A. Sales of menswear & womenswear, home accessories HQ in 14th-century castle in Solomeo (Umbria/Italy)Really good facilities for employeesKnown for paying very high salaries Market capitalization of 1.3 billion in 2016Currently 1,400 employees and 3,000 local contractorsHe is CEO and Chairman of the company

(Cucinelli, 2010; Proietti, 2015; Borsa Italiana, n.d.)

Brunello Cucinelli (company)

https://www.youtube.com/watch?v=stmm6BPzmEI

Brunello Cucinelli (company)

(Cucinelli, 2016)

Cucinellis revenues per geographical area

(Cucinelli, 2016)

This is an example of weakness because the most importnat mkts of cucinelli are focused on EU and US. still low china and rest of the world (which are importnat emerging markets with new riches such as russia)

"Those who work with us take part in the companys life. Everybody knows that their work is an indispensable contribution to our shared growth"Brunello Cucinelli

Brunello Cucinelli (foundation)

Donates 20% of his income to his foundationImportant for relation with communities and stakeholdersImportant restoration projects for local communitiesSponsored events for employees and their familiesSchool of Craftsmanship

(Gelardini, 2014)

I believe in capitalism. I need to make a profit, but I would like to do it with ethics, dignity, morals. It's my dream - Brunello Cucinelli

Person, company & foundationTheories & applicationCucinelli: practical examplesFutureSummary

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Environmental analysis:sector and competitorsPriceQuality / Perception(Corbellini and Marafioti, 2013)

Resource-Based View (RBV)

(Penrose, 1959; Wernerfelt, 1984)

Beauty will save the worldFedor Dostoevskij

I tell my staff, 'Give me your best, and then go home and live your life.' I've never asked anyone to work harder, but I've told plenty that they needed rest - Brunello Cucinelli

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SWOT Analysis(Humphrey, 1960)

Location and cucinelli strongCucinelli also weaknessCucinelli pass away is a threat, and also the increase of competitivity and change in customers taste could be a threatThreat bad relation with trade unions and animals association (he is using leather etc)Opportunity ---> new markets new rich. Cucinelli is working well in this sense.

StrengthsBrunello Cucinelli has a strong global presence, especially in big markets like Europe, North America and ChinaBrunello Cucinelli does not just sell clothes. He sells a lifestyle and an idea of productsThe brand is even more exclusive than other luxury brands good relationship with employees and stakeholdersImpersonification entrepreneur firm (culture of personality) Building shared vision (commitment and engagement from employees, common mission), virtuous circle of leadership (Starkey and Hell, 2012)Sense of family Ability to overcome bad time creating stronger relationships with people (Financial Crisis 2008)I think we should include CSV- corporate shared value, also it is a friendly environment

ThreatsTrends in the fashion industry are changing fastly. Because there are no switching costs, customers can change to other brands quicklyUncertain economic development in the established economies such as the U.S. or Europe where Brunello Cucinelli currently has its biggest customer baseBrunello Cucinelli is the face of the brand. If he dies, the company will face a very uncertain future

OpportunitiesIncreasing importance of online retailing. Cucinelli could strengthen its online presence Emerging markets offer many opportunities for further growth in the future due to the development of large upper classes in countries like China

WeaknessesBrunello Cucinelli has no diversified product range like other luxury brands such as LVMH or ArmaniBad relationship with trade unions and animal associations. For instance, he uses leather for his products.Limited opportunity to innovate (also for the industry in general) Corporate governance

Weak corporate governance and even if there is incentivisation for employees to speak etc, there is a top down approach about decisons. Cucinelli decides everything, it s like an enlightened monarch

Porters Five Forces

Low risk: - Many different commodities and suppliers- Also machines for clothings enough available on the marketLow risk:- New entrants need:experience, strong brand, name, reputation, retailers, network- Also many competitors Red Ocean High risk:- Customers have no switching costs and free choice of many companies- Target customer are rich people, so only limited amount of potential customers- Company always needs to follow the style and the trend if style is out company has a long way to catch up

Low risk:- Cheaper cloths no real substitute for luxury- Could be handmade cloths Big competition & rivalryinside luxury segment Red Ocean(Porter, 1979)

Sixth force

Other stakeholdersCustomersSubstitutesNew EntrantsSuppliersCompetitors /Rivalry

Sixth force

Cost or Differentiation strategy?What do you think? MEN

Suit 2360Shirt 330Leather outerwear 3390Trousers 470Sweater 860Document holder 1050(Cucinelli, n. d.)

WOMEN

Bag 1990Dress 3070Sandals 990Crewneck jumper 1580Leather outerwear 3310Trousers 950(Cucinelli, n.d.)Cost or Differentiation strategy?What do you think?

Just our suggestion, dont bring your girlfriend or wife there for shopping, otherwise the wallet will cry

(Porter, 2008: 39)Porters Generic Strategies

I dont know what I will do with my life, but whatever it is, I will do it for the dignity of humankind - Brunello Cucinelli


Cucinelli where you did not expect...

William and Catherine engagement picture



If you buy a sweater for 1,000 and you know that the funds you are paying are also going to help to build a hospital and a school, wouldn't you think better about it? - Brunello Cucinelli


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Qui-Gon: "Don't center on your anxieties, Obi-Wan. Keep your concentration here and now, where it belongs."Obi-Wan: "But Master Yoda said I should be mindful of the future."Qui-Gon: "But not at the expense of the moment. Be mindful of the living Force, young Padawan." Star wars ep. 1 - The Phantom Menace

About the future

Stay focused in the moment !However ...

Our opinion about the future

Huge competition (red ocean) - no time for uncertaintiesDoing well here and now, but the future is uncertainweak corporate governanceRisk: company born and dies with himConclusion: at the moment no sustainability for the future

Overall temporary sustainable business:

Centrality of Cucinelli (person) causeconsequenceconsequenceinterrelation

Solutions:Improve corporate governance situationTry to detach himself from the company, try to split cucinelli person from cucinelli company new CEO, new executives?Talent attraction new offices for talents/university graduates in important citiesHe is trying to direct the future of the company towards the stock market, he sees the stock market as future guardian ...

Will it be enough?

Our opinion about the future

Some examples ...

If you are an investor, I hope that you will stay with me for three, four, ten years. But if you ask me to make profits in ways that I have to change my allure, I won't do that. I won't lose my identity - Brunello Cucinelli


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Summary - Key pointsShared values Stakeholders relationEmployees relationLeadership Economic returnGood business here and now !

HOWEVER:Cucinelli dependency

Future sustainability ???

ReferencesBorsa Italiana, (n. d.). Brunello Cucinelli. [online] available from [5 April 2016].Corbellini, E., and Marafioti, E. (2013). La CSR nella moda: strumento di marketing o elemento fondante della strategia di impresa? [CSR in fashion business: a marketing tool or real heart of the company?]. Economia & management: la rivista della SDA Bocconi, (3), 61-80.Cucinelli, B. (n. d.). Spring Summer Collection 2016. [online] available from [5 April 2016].Cucinelli, B. (2010). Dignity as a Form of the Spirit, lectio magistralis at The University of Perugia, 11th November.Cucinelli, B. (2016). Annual Report 2015. [online] available from http://investor.brunellocucinelli.com/yep-content/media/07_CUCINELLI_INGLESE_11042016.pdf [2 April 2016].Gelardini, M. (2014). Brunello Cucinelli, re del cashmere e mecenate del nuovo millennio [Brunello Cucinelli, king of cashmere and mecenate of the new millennium]. La Repubblica, March 2014. [online] available from http://www.repubblica.it/next/eccellenze-in-digitale/2014/03/07/news/brunello_cucinelli-79864672/ [2 April 2016].

Humphrey, A., Dosher, M., Benepe, O., Stewart, R., & Lie, B. (1960). The SWOT analysis method. Mento Park, CA, Stanford Research Institute.Nalley, R. (2013). Life by design. Forbes Life, 28th March, 78-84. [online] available from http://www.forbes.com/sites/richardnalley/2013/03/28/brunello-cucinelli-life-by-design/ [1 April 2016].Penrose, E. T. (1959). The Theory of the Growth of the Firm. New York: John Wiley.Porter, M. E. (1979). How competitive forces shape strategy. Harvard Business Review.Porter, M. E. (2008). Competitive strategy: Techniques for analyzing industries and competitors. New York: Simon and Schuster. (First Free Press Edition 1980).

Proietti, M. (2015). Cucinelli, le figlie e il cashmere non si butta mai, si tramanda [Cucinelli, daughters and cashmere do not never throw away, hand down]. Corriere della Sera 28th November, p.33.

Wernerfelt, B. (1984). A resourcebased view of the firm. Strategic management journal, 5(2), 171-180.

References

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