Gucci and how the brand organizes operations through strategic

Gucci is a prominent Italian luxury
fashion and leather goods brand, belonging to the Gucci Group, and part of Kering,
the French fashion conglomerate. Gucci aims to become the world-wide leader of
the luxury fashion industry (Gucci website). This brand based in Florence, was
founded in 1921 by Guccio Gucci. Gucci was valued at US$12.7 billion as of May
2017, with sales of US$ 4.7 billion (Forbes, 2017). This brand operates internationally
through 520 directly operated stores over 55 countries (Kering, 2016). However,
Gucci has been the subject of great controversy over its 97 years’ existence.

This paper will analyze how Gucci achieves its mission and how the brand
organizes operations through strategic management. In order to do so this paper
will address the following question: What is Gucci’ mission and how does this
company organize and operate accordingly? Consequently, this paper will first
address Gucci’s history and evolution through both growth and disarray as a
means to understand how management played a key role in the company’s recovery.

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In a second part, this research will assess Gucci’s success as a luxury brand through
the analysis of its operations management. Finally, this paper will examine the
brand’s international marketing accordingly to the luxury strategy.

1. Brief history
of the brand

Founded in 1921, Gucci started as a small
shop in Florence which sold leather luggage imported from Germany before
designing and producing the products himself and also provided repair services
on leather goods. The brand prospered over the 1920s until 1935 when the League
of Nations implemented sanctions against Italy for having invaded Ethiopia in
October 1935. Although the sanctions had limited impact on Italy’s position at
the time, the embargo placed by League of Nation’s members took a toll on the
import of leather, creating a shortage in supply. In order to overcome the
disadvantages caused by the political situation Guccio Gucci, turned toward
next material such as canvas and bamboo and created the iconic Bamboo Handle
Bag. The growth of the company stagnated during World War II however, after the
war, Gucci became a world-known brand and opened a store in New York in 1953
(Nagasawa and Fukunaga, 2014, p. 40). In the 1970s, the brand started licensing
its name to non-luxury product (Massi, 2013) such as ashtrays and lighters (Nagasawa
and Fukunaga, 2014, p. 45). As stated by R. W. Griffin and M. W. Pustay (2014),
licensing refers to the “contractual arrangement in which a firm licenses the
use of its intellectual property (patents, Trademark, brand names, copyrights
or trade secrets)”. According to Maria Sole Massi (2013), the licensing of
Gucci’s brand name and logo damage the brands most valuable asset, being the
brand’s exclusivity. Since its establishment and until 1994, Gucci had been a
family business but the 102 million dollars’ loss (Nagasawa and Fukunaga, 2014,
p. 40), led the family to bankruptcy. In 1994, Investcorp, a Bahrain-based
investment company, bought the brand from Maurizio Gucci and appointed Domenico
De Sole as director of operations. De sole designated Tom Ford as creative
Director (Nagasawa and Fukunaga, 2014, p. 40). The Ford and De Sole duo began
Gucci’s regeneration period through major organizational reforms in all the
fields of operations of the company such as the products, the distribution of
the products and the promotion of the brand. They also developed a new
management strategy focused on six elements: 1) re-establishing control of
Gucci product design and manufacture; 2) re-establishing control over Gucci
distribution; 3) creating a balanced product portfolio for the brand; 4)
establishing a marketing and communications platform; 5) creating a consumption
experience particular to Gucci; and 6) Tom Ford’s design direction and control
(Massi, 2013). The first three elements this management strategy allowed the
brand to solve the problems that led the company close to bankruptcy. Creating
a consumption experience along with creating a balanced product portfolio
enabled the brand to regain exclusivity. The creation of a communications and
marketing platform therefore reasserted the brand’s image as luxury brand,
previously tarnished. In order to revive the brand, Domenico De Sole and Tom
Ford had to Gucci’s core values resurface and place great emphasis on these
values. In 1999, Gucci became a multi-brand, with a balanced and yet
diversified product portfolio and integrated a prêt-a-porter line for women as
well as an accessories line (jewelry, scarves, sunglasses). In 1999,
Pinault-Printemps-Redoute – renamed Kering in 2005 – acquires 46% of Gucci. De
Sole and Ford continued to lay the foundations for a credible luxury brand
until 2004. The CEO and creative director that followed, Patrizio Di Marco and
Frida Giannini, continued to lead the brand’s growth despite the 2008 financial
crisis and its repercussions on the years that followed. In 2015, Di Marco and
Giannini left the directorship of Gucci and the current CEO and Creative
directors, Marco Bizzari and Alessandro Michele were assigned.

2. Gucci’s
operations management

After having addressed the brand’s history and the changes implemented
by Domenico De Sole and Tom Ford to reinvigorate Gucci’s status, this paper
will now analyze Gucci’s operational management. As cited by R. W. Griffin and
M. W. Pustay (2014, p. 476), “operations management is the set of activities an
organization uses to transform different kinds of inputs (material, labor, and
so on) into final goods and services”. De Sole and Ford six-dimensional strategy
put great emphasis on key factors, quintessential to the brand’s recovery but
also to its renown as a luxury fashion house. This strategy focused on
regaining control of the design and productions of goods by locating the one
and only production site in Italy, thus making Gucci’s “Made in Italy” an
intrinsic characteristic of the brand. In 2011, CEO Patrizio Di Marco,
emphasized on Italian and Florentine tradition and craftsmanship; we
tastefulness and antique expertises in order to create the brand own identity
(Massi, 2013, p. 28). Despite the unavailability of rare fabrics and materials
the choice of location was closely linked to the revival of the brand’s
exclusivity. 

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