Zara Fashion

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ZARA Fashion 1) With which of the international competitors listed in the case is it most interesting to compare Inditex’s financial results? Why? What do comparisons indicate about Inditex’s relative operating economics? Its relative capital efficiency? Note that while the electronic version of Exhibit 6 automates some of the comparisons, you will probably want to dig further into them? The four companies shown above have very different business models. Inditex owned much of the production and most of its stores. Inditex is thus a vertically integrated company. This made Inditex gain a competitive advantage, which is quick response to the market requirements. On the other hand, The Gap and H&M have a different business model. They…show more content…
The amount of required forecasting with all the accompanied risk was minimized to a level that no competitor would ever reach. 4) Why might Zara fail? How would you calibrate its competitive advantage as being relative to the kinds of advantages typically pursued by other apparel retailers? The vast expansion plan of Zara on one hand and its standardized production line and strategy on the other hand could lead to the failure of Zara. This is basically due to the differences in the economic, cultural, social and political conditions in each of the regions/countries it is expanding into. Hence, such strategies and product lines should be customized on a country/region basis to be able to effectively attend to the local demand without incurring additional costs. For example, certain product lines will not meet success in the Middle East due to cultural norms; hence, it would have been better and feasible from the beginning if such lines would have been directed to other regions where it would meet heavy demand. Zara’s competitive advantage mainly revolves around the high turnover of its products, low level of inventory, efficient distribution system, and commitment of its employees as well as meeting the consumer demands relating to fashionable clothes. 5) Was Galicia/Spain fertile ground for the emergence of an apparel retailing powerhouse? No. Galicia/Spain was not a fertile ground

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