Advantages Of Zara

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II. Foreign Direct Investment and Market Entry Strategy a. Theory of FDI and Market Entry Strategy Foreign Direct Investment is ownership in a global company which is controlled by a company in base country (Dunning 2000). FDI is having some purposes which are company exact-benefit, struggles removal, and global strategy formulation. FDI is giving three advantages such as internalizing advantages, location advantages, and ownership advantages. Zara has advantages in ownership which support its global development. Zara wants to have full control of its company globally, which is one of the advantages of location by Zara. By doing this Zara can get information about all country and get knowledge from it. Last but not least, internalizing gives Zara about some insight and information for its market entry globally (Polo & Flavian 2000; Dunning 2000). b. Market Entry…show more content…
Zara’s Competitive Advantage Zara’s key of success is on its competitive advantage in the markets. i. Vertical integration Vertical Integration of Zara (Palladino 2010) It can be inhibited that Zara sustain its competitive advantage by its well-managed business model. Zara used exceptional delivery channel and synchronized supply chain management (Palladino 2010; Holweg 2005). ii. Short lead time One of its competitive advantages is the quickness to create and put clothes in the stores. It takes just about two weeks to do it, while other retailer need averagely more than 5 months. Zara can produce in such short time because of its in-house production in Europe and Zara controls its producing cycle closely (Roux 2002). The rest of its manufacture is subcontracted to factory in Brazil, Vietnam, Bangladesh, China, Turkey, Morocco, and Portugal. In order to provide items in store within two weeks and acquire more elasticity, the most stylish stuffs are produced in headquarter (Hansen 2012). Short lead times are useful to make sure future prediction, avert desuetude of product, and decrease the
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