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Category: Business

Autor: anton 23 July 2011

Words: 374 | Pages: 2

Company Introduction

Zara is an apparel chain owned at operated by the Inditex of Spain. It was founded by Mr. Amancio Ortega Gaona; currently Spain’s richest man. Zara specializes in fast fashion. At the end of fiscal year 2001 Zara was operating 1,284 stores world wide and had total revenue of 3,250 million. Inditex’s headquarters and its major assets are located in the Galacia region of Spain. Inditex also operates five other chains: Massimo Dutti, Pull and Bear, Bershka, Stradivarius and Oysho.

ZARA, a Spanish fashion chain, is a retailer who has taken a different strategy to expand and compete in the industry. The company uses an innovative design-on-demand operating model to deliver clothes from the fashion runways to store shelves faster than any of its competitors. Recently, ZARA is expanding into global markets. Its expansion has proven successful and further expansion in the United States is now being considered.

Zara owns both its production and retail units which give the upper management a better overall control. They have successfully integrated Information Technology into their business model. They also have great international growth selection criteria. Zara employs creative teams to keep track of customer’s tastes and communicate them to store managers, and makes sure that their designs are appealing to the customers. They have developed and maintained a good company culture and experience very low sales manager turnover. Certain hurdles in Zara’s path to the future are that growth based on current business model may be difficult for international expansion. Their plans of expansion may lead to complexities in aligning Inditex and Zara’s strategy. The centralized logistics model is subject to diseconomies of scale. Zara also faces threats in the form of Protectionism laws in new potential markets, possibility of natural disasters in the Galacia region of Spain and government instability. Zara can improve on these weaknesses and threats by altering the current business model and decentralizing their operations. They should open distribution centers in strategic locations around the globe. Mr. Amancio Ortega and his top management should identify and prepare potential candidates who share the same vision for Zara, to hand over the business after their retirement. They should keep pace with the ever changing fashion trends and acknowledge them in a timely manner.

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