Case Study I.1 Zara

Zara's goes global

Theories of internationalization

Best representative of Zara's

(Inditex's) internationalization

The world market leaders

GAP and H&M

• Businessmodel:

Partial vertical integration

• Control over designs, distributions and sales
• Production outsourced
• H&M only has one brand,

in contrast to Zara and GAP

Zara

• Businessmodel:

Verticall well integrated

• Mainly own production facilities
• 50 % products are manufactured in Spain
• 26 % rest of Europe
• 24 % Asia and Africa
• Half of merchandise facturing in Spain and Portugal

Hollensen, S. (2017). Global Marketing. Amsterdam: Pearson Education Limited

Future winner with regard to the global retailing in the fashion world

Zara

• Biggest net profits
• Biggest increase of sales
• First place in number of

stores and global reach

€ 1946 million

+ 10 %

5500 stores

85 countries

Future winner with regard to the global retailing in the fashion world

Hollensen, S. (2017). Global Marketing. Amsterdam: Pearson Education Limited

Advantages

Advantages

• One of the advantages of Zara’s multi –brand store strategy is they appeal to different kind of segments.Zara has created a multi brand strategy through brand acquisitions such as Pull & Bear for casual clothes, Bershka for avant-garde clothing and Zara home for interiors, accessories and kitchenware.

• Other advantages are that Zara increases the market share of the parent brand leaving a little space for competitors’ products)

• The customer trust and knowledge (because the review what the customer opinions are about their products and modify them if they’re not good enough, so the customers return at least three times a year) .

Hollensen, S. (2017). Global Marketing. Amsterdam: Pearson Education Limited

'If You Think Zara Does Not Do Marketing,', Kalb. I, 2017

Disadvantages

Disadvantages

• When talking about advertising, both Gap and H&M use a lot advertising campaigns, whereas Zara doesn’t really advertise, although they have a very good marketing strategy.
• A disadvantage for the Zara’s multi-brand story strategy is cannibalization, because when the brand images per store aren’t clear for the customers there is a big risk of cannibalization.
• Another disadvantage is maintaining several brands as the costs are very high.
• A fourth disadvantage are the expectations on new products

Joint venture with Tata (India)

+ By forming a joint venture with Tata in India they can increase their sales/income and on time growth potential.

+ Because Tata is already present in the Indian market and well known, the market penetration for Zara will be very easy and efficient when going into a joint venture with Tata.

+Because Tata operates in different countries and thus also in different markets, they can help Zara when they want to move to other markets.

- Both Tata and Zara share the costs if the project fails.

- Cultural differences. They can but do not always lead to bad co-operation.

Because they both speak so different languages, problems in communication may occur.

ensyklopedia.com 6.9.2017 http://www.ensyklopedia.com/supply-cha...

References

• Business Dicitionary. (n.d.). Competitive strategy. Retrieved September 6, 2017, from http://www.businessdictionary.com/definition/competitive-strategy.html
• Financial Times. (n.d.). Definition of transaction cost analysis. Retrieved September 5, 2017, from http://lexicon.ft.com/Term?term=transaction-cost-analysis
• Hollensen, S. (2017). Global Marketing. Amsterdam: Pearson Education Limited.
• Kalb, I. (2016, September 25). If You Think Zara Does Not Do Marketing, Think Again. Retrieved September 6, 2017, from http://www.huffingtonpost.com/ira-kalb/if-you-think-zara-does-no_b_12187058.htm
• ensyklopedia.com 6.9.2017 http://www.ensyklopedia.com/supply-chain-management-zara-fashion-at-the-speed-of-ever-changing-fashion/zara-suppy-chain-and-supplies-around-the-world/
• White, W. (2015, June 7). Multi Brand Strategy: Examples & Pros and Cons. Retrieved September 6, 2017, from http://inevitablesteps.com/marketing/multi-brand-strategy/
• Ruddick, G. (2016, April 5). How Zara became the world's biggest fashion retailer.
• Retrieved from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11172562/How-Inditex-became-the-worlds-biggest-fashion-retailer.html