Zara Case Analysis

1564 WordsApr 21, 20097 Pages
Zara is a retailing chain of Inditexthat specializes in high-fashion at reasonable prices. In the last 12 months, Inditex’s stock price has increased by 50% despite bearish market conditions. The 50% increase is due to the investor expectations of Inditex’s growth. Inditex’s growth can be contributed to the decisions it has made in creating a vertically integrated centralized process. The centralization of its vertically integrated operations in Europe provided it with its competitive advantage; however, I believe it will also make it fail if it decides to grow substantially into other markets. Financial Analysis compare to competitors In comparing Inditex financial performance against its competitors, it is apparent that Inditex is…show more content…
Information Technology: Zara was able to balance convergence and divergence within the company that provided a great platform for its expansion into other countries. They followed standard procedures in selecting the market that closely resembled the Spanish market, had a minimum level of economic development and relatively easy to enter. The decision of an “oil-stain” approach in entering made it easier to scale operations by opening up a flag-ship store to fully understand the local environment and culture, then after additional stores would be added. This is similar to the approach Amazon.com is taking in expanding its operations abroad by targeting easy to enter countries and limiting the amount of categories before expanding. In addition because many of the markets they entered were similar to Spain they were able to use basic/standard designs to make up 85%-90% of the product mix. Zara’s expansion procedures also left room for customization for each market and store that wasrequired for different cultures and countries. Some of the areas that had to be tailored between countries were the type entry mode (franchised, owned, joint), product mix and offerings that fit their market (decided by the store owners), pricing (some countries are more price sensitive like Germany; however, France was more fashion sensitive) and brand positioning (based on purchasing power and taste). Zara’s open culture amongst headquarters and the

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