...CASE STUDY ZARA 1. Which theory is internationalization? the best representative of Zara’s (Inditex’s) In the case of Zara, the Uppsala model can be considered as the best representative theory concerning their internationalization strategy. The Uppsala model is an organic growth model, which aims to minimize psychic distance through small incremental steps in the internationalization process. Zara opened its first store in La Coruna in 1975 and focused on the domestic market in the early stages. Gaining experience from the home country before entering a foreign market is characteristic for the Uppsala model. The expansion of Zara was first limited to Spanish cities with more than 100,000 inhabitants. Due to the maturity of the Spanish market, Zara was aiming to expand to the international market. Because of the geographic and cultural proximity to Spain they started their foreign operations by opening a store in Portugal. This enabled a gradual learning-by-doing process, concentrating first on countries close to Spain. Subsequently they preceded the internationalization process by entering different European markets. The intention was to keep a low level of psychic and cultural distance in order to internationalize step-by-step. After obtaining more knowledge and experience in foreign markets, Zara started expanding to other regions more rapidly and out of consideration for geographical or cultural proximity. In general, the internationalization strategy of Zara can be best...
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...INTERNATIONAL MARKETING CASE STUDY ZARA: THE SPANISH RETAILER GOES TO THE TOP OF WORLD FASHION Professor: Jennifer Stack Student: Martina Sekuloska San Sebastian October,2014 International marketing [ZARA:THE SPANISH RETAILER GOES TO THE TOP OF THE WORLD FASHION] INTRODUCTION Inditex is a fashion retailer which dates back to 1963 when it started life in a small workshop making woman’s clothing. Today it has more than 6.460 stores all over the world (Inditex, 2014). Officially it all started with the launch of the first Zara store in La coruña, north-west of Spain in 1975. At that time the textile maker Amancio Ortega decided to open his own store after years of work in the textile industry. This was followed by the brand’s internationalization at the end of the 1980s and the successive launch of several another retail concepts: Pull&Bear, Massimo Duti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe. Today, Inditex is considered to be the greatest fashion retail group, and its founder Amancio Ortega, the richest person in Spain. Zara is the flagship chain of the Inditex Group which generates nearly 65% of the net sales of the group (Inditex annual report 2013). It encompasses many different styles, from daily clothes, to more formal elegant clothes for women, men and children. This case study tackles the challenges of being the world’s fashion retailer, the sustainability of the competitive strategy, and the group’s internationalization process. ...
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...12% world 18% Net profit 2,500 1,946 1,741 1,258 1,262 1,322 2,000 1,500 1,000 500 0 2007 2008 2009 2010 2011 Number of employees 0 20,000 40,000 60,000 80,000 100,000 120,000 2011 2010 2009 2008 2007 79,517 109,512 100,138 92,301 89,112 Inditex´s Annual Report addresses its economic, social and environmental performance for the purposes of achieving the maximum transparency in its relationship with all its stakeholders annual report 2011 index 06 54 Letter from the Chairman | 08 Business model | 10 A look back over 2011 Customers Milestones for the year. International presence | 22 Suppliers | 70 Employees | 84 Retail formats. Zara. Pull&Bear. Shareholders. Economic Massimo Dutti. Bershka. Stradivarius. Osyho. Zara Home. Uterqüe. | 42 Community | 100 and financial report....
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...changing society, technologies and trends make the big fashion companies to propose not just a brand but also a fast fashion brand accessible to all eager customers. One of companies “…that introduced the idea of fast fashion some two decades ago, then developed a highly centralized and often studied—but rarely duplicated—design, manufacturing, and distribution system” (Berfield & Baigorri, 2013) is Zara International. Zara International belongs to, “…Spanish retail giant Inditex owns some of Europe's most popular clothing stores and is rapidly expanding around the world” (Inditex Group (Zara), n.d. para.1). After releasing the company Zara International by Index Group, parent company, Zara’s brand becomes one of the most popular in clothing industry worldwide and continues to keep the position despite of the fierce competition. The study case Zara International: Fashion at the Speed of Light would reveal and emphasise the main characteristics of the popularity and particularity of the fast fashion industry through analysis some of the aspects and rules of the Spanish company, Zara International. DISCUSSION OF FINDINGS It is well-known that every organization would like to excel in some criteria specific to their sphere of activity. Due to fast changing trends, the management should acknowledge that they should continuously improve and motivate all working parts of the company. Because the main purpose of an organization is to achieve the established objectives, the management...
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...ZARA Word count: 3799 Table of Contents Executive summary 2 Zara background 3 External factors and competitive forces 3 PESTEL 3 Porter’s 5 4 Internal factors 6 Resources and capabilities 6 Manufacturing 8 Logistics 8 Public relations crisis and their effect on peformance 8 Evaluation of strategic options and recommendation 10 References 12 Appendixes 13 Executive summary This project aims to provide an in-depth analysis of external and internal factors affecting performance of world leading retailer Zara. First of all, the brief background on Zara is provided in order to familiarise reader with the business model they implement. Secondly, the PESTEL framework is utilised as the base for analysis of external environment and its potential effects on company’s performance. Further, the Porter’s 5 forces are identified in order to assess where the competitive advantage stems from. After assessment of external environment, this paper provides the overview of internal factors which might be crucial for success, as well as drawbacks of Zara’s internal organisation. Assessment of internal environment starts from the evaluation of Zara’s resources and capabilities, followed by the critical analysis of manufacturing and logistics processes. Further discussion of the PR issues and its effects on company performance is provided. In addition, the benefits of corporate socially responsible policies are discussed. Overall conclusions on Zara strategic...
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...Political 4 5 Economic 4 6 Social 5 7 Technological 6 8 Environmental 6 9 Legislative 8 10 Conclusion 8 References 9 Introduction The global apparel market is a consumer-driven industry. Also, globalization and new technologies have allowed consumers to have more access to fashion. As a result, consumers are changing, competition is fierce, and companies are evolving to meet these demands. Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to maintain that advantage and growth they must confront certain challenges and face traditional retailers in the apparel industry. So, now our group will analysis the PESTLE of Zara Company. (Lopez & Fan, 2009) Overview Zara is one of the largest international fashion companies and belongs to Inditex, which is one of the largest fashion retailers worldwide. Inditex operates in textile design, distribution and manufacturing. (Inditex, 2011 b) Zara operates in 78 countries worldwide with 1557 stores in the world’s largest cities. (Inditex, 2011 c) The company is founded in 1975 by Amancio Ortega, located in Spain and had in 2010 a net sale of 8.088 million of euro. (Inditex, 2011 a) The have worldwide 1557 stores in 78 different countries. (Inditex, 2011 a) Aim: democratize fashion, offering latest fashion, medium quality and moderate price (Lopez & Fan...
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...Zara: IT for Fast Fashion Abstract The case describes a discussion Zara Executives are having whether to update or to keep the current IT equipment of its stores. It goes into detail how the company works and that speed and adaptability are its key objectives. Finally the advantages of both options are shown, leaving it to the reader to decide which option is the best. Company Zara, based in La Coruna, Spain, was found in 1963. Since 1958 they are part of Inditex, a Holding Company atop several clothing retail chain. In 2002 they had about €3.9 billion in revenue and a net income of €438 million, with 11% net margin. Zara is the biggest retailer of the holding with 550 of the 1558 stores from the Inditex companys. Moreover it is responsible for 73,3% or Inditex’ revenues, coming 46% from Spain, with Fance as the second-largest market. Zaras woman sector has 60% contribution to its revenues; men and the fast-growing child sector both 20%. Product/System The store employees work with great autonomy and responsibility. They can choose which items they want to order from a given offer, which was chosen by the Product Store Manager. Each department gets new items 2 times a week. Commercials organize that orders and produced items match and decide in case of a mismatch which store gets the items. Zara does all of the production processes in Spain and Northern Portugal, making it possible that the time from design conception until it can be in store is as little as three weeks. Business...
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...primer paso para poder analizar la estrategia de Zara es comprender su misión, visión y valores. Dado que Zara es tan solo una parte del grupo Inditex, podemos referirnos a los valores del grupo para comprobar que se encuentran totalmente alineados. De hecho, al buscar la misión, visión de valores de Zara, la empresa nos redirige a la web del Grupo, no sin antes afirmar la siguiente frase: "El cliente es el centro de nuestro particular modelo de negocio, que integra diseño, fabricación, distribución y venta, a través de una amplia red de tiendas propia.” [1] De los valores del grupo inditex destacamos la primera frase: “El principal objetivo del Grupo es ofrecer productos de la máxima calidad a todos sus clientes garantizando la sostenibilidad de sus procesos a largo plazo.” [2] Como podemos observar tanto la versión Zara como la versión completa del Grupo indeitex mencionan un elemento clave para su actividad: el cliente. Podría decirse que uno de los principales objetivos de Zara es el de presentar una gama de productos de buena calidad y diseño a un precio razonable. Lograr este objetivo tan amplio no es sencillo, por este motivo, Zara decide segmentar el mercado posicionarse competitivamente enfocándose hacia un público joven, informal pero exigente y con gusto para la ropa de diseño. Una de las decisiones principales de alto nivel tomadas por Zara es el situarse en un gran numero de mercados internacionales. Actualmente Zara tiene abiertas más de 2000 tiendas en 87 países [8]...
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...outsourcing is denied by Zara. This is a good approach towards owned working force and not to get involved in activities that may lead to unethical concerns. Organization has developed a smooth image for quality management process implications in industry and now it is time to unleash new domains for organization. It is not recommended that company should start activities in outsourcing that may led to questions and confusions in current quality management and employee relationship management, but a healthy process that leads to internationalization should be considered. Another option that has been followed by management in last years is to become eco friendly and development of such sales points. The Inditex group has achieved eco-efficient and friendly certificates; a major one is LEED (Leadership in Energy and Environmental design). LEED is a famous and one of the acknowledged certificate and Inditex had got it for Zara Barcelona. Inditex management has mentioned this in its mission statement and following this objective will create a competitive advantage. Competitors are in process of getting this milestone and the group has to make new plans and create more benchmarks in this eco friendship race. Zara has spread a common concept of fast fashion. New style ranges are frequently introduced in market and thus Zara is moving parallel to market trends. Sales persons at stores with PDAs communicate and inform “The Cube” so fast that enables Zara to respond market...
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...Arab Open University Faculty of Business Studies Business Functions in Context I B203A -- Second Semester 2015-2016 Tutor Marked Assessment Managing Marketing Channels: Zara | One global retailer is expanding at a dizzying pace. It's on track for what appears to be world domination of its industry. Having built its own state-of-the art distribution network, the company is leaving the competition in the dust in terms of sales and profits, not to mention speed of inventory management and turnover. Wal-Mart you might think? Dell possibly? Although these two retail giants definitely fit the description, we're talking here about Zara, the flagship specialty chain of Spain-based clothing conglomerate, Inditex. This dynamic retailer is known for selling stylish designs that ' resemble those of big-name fashion houses, but at moderate prices. "We sell the latest trends at low prices, but our clients value our design, quality, and constant innovation," a company spokesman said. "That gives us the advantage even in highly competitive, developed markets, including Britain." More interesting is the way that Zara achieves its mission. FAST-FASHION—THE NEWEST WAVE A handful of European specialty clothing retailers are taking the fashion world by storm with a business model that has come to be known as "fast-fashion." In short, these companies can recognize and respond to fashion trends very quickly, create products that mirror the trends, and get those products onto shelves...
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...retailer Zara (a division of Inditex) has been a favorite topic in OM classes for a while. They are a successful, innovative firm whose competitive advantage really lies with their operations. The distinctive components of their operations (e.g., responsive production, excellent logistics) have been well documented. That has not kept The Economist from offering up a new article on the company which may not offer any great insight but has some interesting numbers (Global stretch, Mar 10). The secret of Zara’s success is its speed—four weeks for a new fashion idea to hit the shops—and the feedback that store managers send to head office, to help it fine-tune its ideas. There is also firm control from Spain, the sole logistics hub. Although 34% of Inditex’s manufacturing is outsourced to Asia, and 14% to parts of Europe including Turkey, those tend to be the more basic items. The high-fashion stuff, 49% of what it sells, is cut and finished in Spain though some sewing is done elsewhere. So this structure clearly makes sense. Long lead times and the concomitant inventories are more tolerable for basic T-shirts and such that will essentially always be carried. Labor savings from sourcing in Asia are likely more than enough to offset the added holding cost. That wouldn’t be true for products with more “fashion content” that may sell today but not tomorrow. Keeping that work in or near Spain shortens the lead time and avoid supply-demand mismatches. But how long will Zara be able to...
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...Zara Case 1. What are the ways that Inditex ensures that “fast fashion” is truly fast? The primary drive behind “fast fashion” for Zara and more importantly its CEO Pablo Isla is logistics. The company produces two thirds of its product in nearby location such as Spain, Portugal, and Turkey, thus ensuring significant savings on transportation costs along with significantly faster delivery times. Aside from delivery times, Mr. Isla has installed sophisticated system of monitoring sales and ordering merchandise. Stores are restocked as often as twice a week, and merchandise reaches the store within two days of the order. The fashion is monitored very closely, and those items that are successful are quickly sent to both designers for creation of like merchandise, and the company’s factories for creating more. The company has even added new shipping routes to ensure that managers get their merchandise quickly. Store mangers use handheld computers to monitored current and order new merchandise. While previously ordering new merchandise took around three hours, now it takes less then an hour. New fashions hit the stores much quicker then majority of the company’s competitors. With that said, the company is expanding rather quickly and majority of its expansion is outside of its native Spanish market. Expansion in Americas will likely put a strain on its distribution network as majority of its merchandise is produced in Europe. Asian production does account for approximately a...
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...World’ is ZARA. Fashion is more than clothing; it’s a part of our live. We live in Fashion. ZARA is a member of the INDITEX group, a Spanish group. ZARA have established its stores all over the world, Europe, America, the Middle East, Asia Pacific and among its 5000+ stores (from the INDITEX group), Hong Kong shares 8 ZARA stores from the whole wide world. Zara offers the latest trends in international fashion in an environment of thought-out design. Its stores located in the main commercial areas of cities across the Europe, America and Asia, offer fashion inspired in the tastes, wishes and lifestyles of today's men and women. Zara’s clothing has identified a significant underserved segment within it. Zara’s clothing is uniquely positioned to serve this segment of the market because of its fast paced fashion ideas, its latest technology, its efficient business strategies and its affordable prices. Due to the growing of the clothing industry and the enormous unmet need in the clothing market we see the long-term expansion and potential of Zara throughout the world. We are visionaries who see Zara as an extreme financial launch. By achieving its sales targets, Zara will position itself for exceptional profitability and self-funded growth. ZARA’s Plan is to maintain and develop its position in the market by giving well in time response to changing trends in consumer tastes through creating new designs that are suitable for all customers at an affordable price. “Zara constantly...
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...Zara: IT for Fast Fashion Case Alternatives |ISSUE |PRO |CON |ALTERNATIVE | |POS System – Upgrading |1) Avoid future issue, such as|1) Cost lot of money and time |1) Purchase extra terminal to avoid | | |software can not work with |to do the new system |software and hardware issue for now; | | |hardware; | | | | | |2) Takes time to find out if |2) Analyse/Test new IT system and | | |2) New system can support more|the new IT system and operation|operation system at same time. | | |function, such as check |system can work well as | | | |inventory; |expected. | | | | | | | | |3) Place order more flexible; | | ...
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...Zara Zara is one of the world’s most successful and dynamic apparel businesses. It is the flagship of Inditex, a vertically integrated retail and manufacturing group based in Galicia in north-west Spain. The first Zara store opened in the city of La Coruna in 1975, the brain child of Amanico Ortega, owner of a small clothing factory. Ortega was looking for a better way to run his business, one which would avoid the inefficiency of making clothes that might not sell. In the intervening decades more than 600 Zara stores – most owned directly by the company – have opened throughout Spain and 43 other countries worldwide. Zara produces and sells highly fashionable apparel for men, women and children, but its core customers are fashion conscious 18 – 35 year-old women. It offers them the very latest design trends at affordable mass-market prices. Physical product quality is good enough to see out the season, but not necessarily longer. By then the same customers will have moved on to the next “hot” look. The customers are loyal, frequent shoppers who visit a Zara store on average 17 times per year. To retain their interest, stock is constantly varied and updated. New deliveries arrive on a twice weekly basis. Few products are available in store for more than a month, adding a sense of exclusivity and urgency to buy. The stores themselves are sited in fashionable prestige locations; their interiors are smart, fresh, modern and regularly refurbished to retain their contemporary...
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