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2.1 The model ................................................................................................................................................... 6
3.1 The model ................................................................................................................................................... 8
4 Porter’s Five Forces ................................................................................................................................... 11
4.1 The model ................................................................................................................................................ 11
5.1 The model ................................................................................................................................................ 14
Brunello Cucinelli offers a unique kind of product to a specific customer segment. The
special story of the company, the extremely high quality of materials and the unique
location in which the goods are produced give them a specific character that allows
Cucinelli to charge a premium price. The niche that Cucinelli is focusing on is men and
women who have the desire to buy something special that is only known by an elite group
of people. It is important to notice that the major visible characteristic of the products is
the absence of the logo in the visible parts of the product. It gives the buyer the perception
of buying something special without flaunting it, which is particularly desired by elite
people. Overall, Cucinelli does not just sell clothes, he sells the idea behind them, he sells
a sense of identity. He is selling the ‘real thing’ made in Italy. During the financial crisis
he chose to narrow down his focus on the elite. In fact, he answered to the financial crisis
with increasing the quality, increasing the price and amplifying the local production in
Solomeo without relocating the production to somewhere cheaper, like many other firms
did.
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6 Our opinion about the future of the Company
As recent results show, the company is particularly successful. However, there are some
relevant issues that call the sustainability of the company into question. The most
significant risk is linked to the dependency of the company on Brunello Cucinelli who is
the founder, the current CEO, the Chairman and the whole face of the firm. Even though
he is already 62 years old, he has not determined a clear successor for himself so far. If
Brunello Cucinelli dies, there could be no one in charge of the company who is able to
run and maintain the business like he does, especially with maintaining the values that
he has created. Moreover, the company has a really weak corporate governance
structure, in which Cucinelli is making all of the key strategic decisions instead of
cooperating with the board of directors. The board members are also not highly skilled
people who could guarantee some positive contribution and commitment to the company.
Cucinelli does have two daughters, however, as he declared: “you cannot inherit a
company. You can acquire the ownership but not the ability to run it” (Gwyther, 2014: 40).
In this respect, it is possible that he thinks the stock market could be a possible custodian
of the company in the future. However, this will not guarantee that the business will be
run with the existing core values and philosophy which could lead the company to a
change in its identity. The firm is currently doing very well as can be seen in this report.
But by looking into the future and putting all of that into context; the fact that the fashion
industry is rapidly changing and therefore requires a strong leadership, the uncertainty is
in regard to the future concept of the company that could represent an existential threat.
This risk will be strengthened by the potential issue that Brunello Cucinelli could not be
able to attract highly qualified people, such as top managers and outstanding designers
since the company is based in the village of Solomeo and qualified people prefer to live
in metropolitan regions.
In order to be able to handle these future problems, there could be some possible
solutions. The improvement of the corporate governance structure would be the first step
to prevent potential risks to the company by enabling it to face negative events. Moreover,
Brunello Cucinelli needs to begin a process of detachment from his company.
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For example, this could be done by nominating a new CEO and other new managers. It
has to be noted that the detachment process would take a long time and a lot of work,
especially if Cucinelli wants to transfer his philosophy as an inheritance to the new
executives. Finally, the issue regarding the talent attraction could be solved by opening
other operative offices in big cities such as Milan, London or New York, where his main
markets are. With regards to the extension of his operations, Cucinelli should also
consider increasing the presence of his company in emerging markets which offer
significant growth opportunities, while maintaining the factory production only in Italy.
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Conclusion
A leadership approach that generates shared values and involvement of employees is a
vital aspect in order to create a unique workplace, in which people are highly committed
to their company. It creates a sense of identity that drives the success of a business, even
in times of crisis. This is exactly what is happening in the Italian fashion company Brunello
Cucinelli. However, the dependency of the company on the founder represents a
significant risk for the future sustainability of this business.
Our work applied several theories from the area of Corporate Strategy in order to analyse
the main characteristics of the business, its environment and its long-term perspective. It
was concluded that although a humanistic leadership approach is extremely important to
every stakeholder, this kind of organisational culture includes the risk that it is not able to
survive after their founder has moved on. In order to survive in the long-term,
organisations need consistency in regard to their leadership approach. In order to
perpetuate the business continuity, the leader has to start a long process of detachment
between himself and the company. This can be achieved by appointing new external
managers with the final aim of sharing the philosophy with them. It is vital to improve this
special philosophy in order to ingrain this inside of the company and the people.
This analysis was conducted trying to make a forecast about the future. However, the
assumptions made using these strategic models could present some limitations. In fact,
the Resource-Based View is based on the idea that firms have to create resources that
meet certain criteria in order to gain a long-term competitive advantage. However, Priem
and Butler (2001) criticised this model as it does not explain the importance of the
managerial role in creating and managing these resources. Moreover, a definite
sustainable competitive advantage is not achievable. In fact, the dynamic business world
implies continue changes and, maybe, a valuable resource today will not be valuable
tomorrow. SWOT analysis has also got the same problem in terms of staticity. In fact, the
current picture represent the characteristics of the company now, however it is our
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assumption that everything will remain unchanged in order to assume a future
forecasting.
In conclusion, the business is doing well and has been constantly growing since 1978. It
could be a clear demonstration that this organisational culture behind the company is
successful. It would be interesting, in future research, to see how the company manages
their risks and if this special philosophy inside and behind the company survives.
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