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ZARA BUSINESS STRATEGY
Transcript of ZARA BUSINESS STRATEGY
IN INDIA INDUSTRY ANALYSIS FIRM STRATEGY GLOBAL PRESENCE ZARA'S SWOT ANALYSIS ASHANTI RICHARDSON
LORENZO DE CARO GGYCDAF 1975
Spain 5 PORTER'S FORCES Competitive Rivalry:
HIGH The competitive advantage of Zara is that creates 11,000 different designs annually compared to its competitors who produced 2000-4000. All three target the same group which is fashion conscious women between the ages of 18-34 with middle to high-middle income. Zara uses vertical integration for its most time-consuming products.
Which has helped reduced the variation in the demand cause an effect in the supply chain.
Zara also outdoes it competitors in sales and operating profit. Threat of Substitutes:
LOW It is hard to substitute the goods that Zara is offering. Their clothing is fashionable and affordable which is hard to substitute. Threat of New Entrants:
LOW There are already big retail companies in the market which would make it difficult for a new entrant.
The market has reached its potential and the new entrant would have to offer goods to the untapped market.
This will require investment in the R&D department which is time consuming. Zara benefits from economies of scale and has a business model that is inimitable. Almost all the cases Zara is the only customer for suppliers. and they heavily dependent in the company. Bargaining Power of Suppliers:
Therefore, the company controls all the steps of supply-chain. Because of that, can manage the design, production and distribution of the products. Moreover, the 50% of the raw material belongs to Inditex’s group and the company does not have to depend in other external suppliers. One of the most important points is that Zara have not sign agreements and for instance can change of suppliers easily if is necessary Bargaining Power of Buyers:
Moderate clothing retailers have to make sure satisfied the customers in terms in quality level and design.
Customers have more options of buying cloths over the world, because of the increases access to media such as internet. Therefore, costumers are willing to pay more if the brand fulfills the requirements or particular expectation. CREATIVE TEAM OF SOURCING SOURCING AND MANUFACTURING GOOD RELATIONSHIP WITH THE SUPPLIERS TECHNOLOGY DESIGN DISTRIBUTION RETAIL STORE OPERATIONS 1989
United States 1990
Belgium and Sweden 1995
Malta 1996 Cyprus 1997 Norway
and Israel 1998
and Japan 1999
Chile and Uruguay 1988
South Africa and
Austria and Denmark 2001
and Italy 2002
Finland, Dominican Republic,
and Switzerland 2003
Malaysia, Slovenia and Slovakia 2004
Romania and Panama 2005
Costa Rica and
Serbia and Tunisia 2007
and Oman 2008
and the former Yugoslav Republic of Macedonia. PROMOTION CONSUMER BEHAVIOR BUYING HABITS CULTURAL DIFFERENCES CONCLUSIONS SALES BY
GEOGRAPHICAL AREA Zara has done an excellent job adapting to trends and differentiating itself across many markets thanks to its outstanding data collection.
Using this information, designers can select materials and other components based on consumer buying habits.
They can determine from the beginning the relative price at which a product would be sold and at which price people could buy the product. The stores are situated in well-located position, often including the best shopping streets and shopping centers.
The incentive of managers is give them a fixed salary with incentives based on their store’s performance that represents ½ of the total sales.
Zara's industry leading “vertical integration” helped in reducing the “bullwhip effect”, that it’s the tendency for variations in final demand to get improved as they were transferred back up the supply chain.
Zara has an opportunity to expand to all continents successfully while maintaining its focus on Europe.
Zara should also take the opportunity to grow in the United States.
As Zara expands to new international markets, they need to make sure they account for cultural differences within their product design.