Entrepreneurship in the Fashion Industry: The Case of Carolina Herrera

Entrepreneurship in the Fashion Industry: The Case of Carolina Herrera

DOI: 10.4018/978-1-7998-3568-4.ch006
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The fashion industry employs more than 300 million workers in the world with a turnover of more than a trillion dollars, which is equivalent to being the seventh economic power on the planet. The presence of Latin America and the Caribbean in this industry is growing, where Carolina Herrera is of fundamental importance. The objective of this chapter is to analyze the critical success factors of this company to recognize it internationally as an icon-brand and to study the entrepreneurial spirit of the company to be an example for new generations (and even to competitors). A SWOT analysis will be made complemented by a PESTEL analysis to achieve these goals. The chapter ends with conclusions and perspectives after COVID-19.
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Fashion is a cross-sector concept that encompasses several industries, such as apparel, footwear, leather, jewelry, perfumes, and cosmetics (Brun et al., 2008). The fashion industry, as “a singular social object,” is at the crossroads of arts, as part of the creative industry, and business, with the production of goods (Godart, 2010). This duality explains why the core of this industry is to produce symbols – the “label” of top designers converting passive objects into symbolic ones (Leclair, 2017), and to maximize EBITDA (earnings before interests, taxes, depreciation, and amortization).

The case of CH Carolina Herrera, founded by the Venezuelan businesswoman and billionaire María Carolina Josefina Pacanins Niño, is different and unique compared to other fashion firms. One of the main differences is her social origin, so she did not need to work for a living, since she works for pleasure, passion, and to help others, especially women. A Spanish noble title created by King Felipe V in 1722, Marquis of Torre Casa, was awarded to Carolina Herrera after her second marriage to the aristocrat Reinaldo Herrera Guevara. She had always belonged to the upper social class, as she was the daughter of Commander Guillermo Pacanins Acevedo, governor of Caracas, between 1950 and 1958. Due to this fact, she met at thirteen years of age the Spanish designer Cristóbal Balenciaga Eizaguirre (1895-1972), one of the top couture designers in Spain.

CH Carolina Herrera entered the world of haute couture almost by chance, after having traveled to New York in 1980 with fabrics designed by her. He showed them to Diana Vreeland, fashion editor for Harper’s Bazaar and director of Vogue, and she suggested to design dresses and see the market response. After having returned to Caracas, she ordered to be performed twelve dresses designed by her to build a small collection of 24 dresses. Back in New York, she sold them off in a friend’s New York apartment. It was September 1980.

In April 1981, she presented her first full collection of couture-quality creations for women, featuring exaggerated shoulder and sleeve treatment, that was enthusiastically received by 400 members of the press and the Beautiful People at New York’s exclusive Metropolitan Club. Three months later, in July, she attended with her husband the wedding of Prince Charles and Lady Diana Spencer, staying at Kensington Palace with Princess Margaret. Shortly after, she distributed her creations in the leading stores: Saks, Bergdorf, and Mark, and it was a best seller.

CH Carolina Herrera followed the typical step-by-step process carried out in startups. Her first sale was a pilot test for CH Carolina Herrera, who did not even need to rely on focus groups, as she had the contacts to join the market. She had not yet created a firm or similar, but this sudden success gave her the idea of setting up a formal company. She had everything ready to do it, publicity included, that was conceived and carried out by the Venezuelan publisher Armando de Armas.

The objective of this chapter is to analyze the success of CH Carolina Herrera as an entrepreneur. To achieve this goal, the author will apply a SWOT analysis (Strengths, Opportunities, Weaknesses, and Threats) to observe which factors affect the firm, and will analyze which key success factors have driven the firm towards the international recognition of CH Carolina Herrera as an icon brand. The study of the main traits of the entrepreneurial spirit of the company will serve as an example for the new generations that are struggling for business success in Latin America and the Caribbean.

Key Terms in this Chapter

Sharing Economy: Services and assets shared between private individuals, either free or for a fee, through the internet.

Second-Hand Market: Economic agents (organizations and individuals) dealing with transactions of used goods.

Vertical Integration: It appears when a firm owns or controls the entire supply chain.

Fast Fashion: Designs that quickly come off the runway to capture current fashion trends.

ASPs: Acronym of Agile Supply Partnership defined by the combination of a portfolio of relationships to balance the rigidities of long-term strategic alliances.

Extended Producer Responsibility (EPR): It is a policy approach where producers are given responsibility–be it financial and/or physical–for the treatment or disposal of products they put on the market.

SWOT Analysis: Acronym of Strengths, Weaknesses, Opportunities, and Threats, it is a sort of analysis directed to have a complete view of a specific problem to be solved or analyzed.

Circular Economy: A business strategy that consists of optimizing the use of productive resources to recycle waste generation and eliminate negative externalities on the environment.

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