Q 1. What are the unique features of Zara's business model ?
Zara is one of the six retailing chains owned by Inditex (Industria de Diseilo Textil) of Spain who designs, manufactures, and sells apparel, footwear, and accessories for women, men, and children through Zara and five other chains around the world.
The traditional global apparel chain had been characterized as a prototypical example of a buyer-driven global chain, in which profits derived from "unique combinations of high-value research, design, sales, marketing, and financial services that allow retailers, branded marketers, and branded manufacturers to act as strategic brokers in linking overseas factories"' with markets. Apparel production is generally fragmented with individual apparel manufacturing firms employing only a few dozen people on average, although internationally traded production, in particular, can feature tiered production chains comprising as many as hundreds of firms spread across dozens of countries. About 30% of world production of apparel was exported, with developing countries generating an unusually large share, about one-half, of all exports. Trading companies had traditionally played the primary role in orchestrating the physical flows of apparel from factories in exporting countries to retailers in importing countries. Irrespective of whether they internalized most cross-border functions, retailers played a dominant role in shaping imports into developed countries: thus, direct imports by them accounted for half of all apparel imports into West Europe. Retailing activities themselves remained quite local: the top 10 retailers worldwide operated in an average of 10 countries in 2000. Against this baseline, apparel retailing was relative...
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... new measures such as purchasing gray' fabrics in lieu of dyed/ready to use fabrics. They are also clear on the target market and position, they are not fashion trend setters but copycats' as some critics have branded them which reduces the risk of the products to some degree as does access to diverse markets. So long as the target market and products philosophy stays the same, considering the converging fashion cultures around the world, the model is sustainable.
This model cannot however allow them the high growth rates that they seem to be enjoying for a long time. Risks to their growth include among other factors the upward trend of the Euro against the dollar which makes their costs & prices higher for a large part of the world linked to the dollar. Competitor responses and their predominance in attractive markets such as the U. S. are also hindering factors.
The Global Apparel Manufacturing industry contains men’s, women’s, and children’s apparel. This industry includes manufacturers that purchase fabrics and make fabrics themselves with certain facilities. The key economic drivers of this industry are GDP of BRIC nations, Global per capita income, GDP, World price of cotton, and Global population. The industries that supply Global Apparel Manufacturing are Global Agriculture, Hunting, Forestry, and Fishing. The Demand Industries that feed off of Global Apparel Manufacturing are Global Wholesale and Retail Trade, Global Department Stores, and General Merchandise Stores. The main activities of the Global Apparel Manufacturing industry are winter clothes
“Sweatshops Are the Norm in the Global Apparel Industry. We’re Standing up to Change That.” International Labor Rights Forum. N.p., n.d. Web. 6 Feb. 2014. .
Global-Globally, the sports apparel industry is growing (Campos, 2013). Because some of Lululemon’s clothing is manufactured in China and other developing Asian countries, increases in wages in these countries have the potential to lead to higher manufacturing costs (Lululemon Athletica,
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?
Analysis & Recommendation: Zara’s main strategy is the ability to respond very quickly to the demands of target customers which called for identifying trends of the customer in advance. The company has been able to identify the trends and meet the demand with the help of its autonomously organized structure and its effective value chain systems. The present system followed by Zara has been very effective and very easy to maintain, which as a result has persuaded the company to continue without any change in the present system so far. The problem that Zara faces right now is that the system that they use, P-O-S (Point of Sale terminals), runs on DOS which Microsoft does not support anymore and any hardware change in the POS terminal will not be compatible with the current POS software. Although the sense of urgency for the change may not be that high, investing in IT infrastructure is a must as MS Dos is an obsolete technology and there is no contract or guarantee from their POS terminal vendor that they will continue supplying the same terminal with out much changes in the hardware for any specific period of time, therefore change is unavoidable. The other main issue that Zara faces is that the stores don’t share inventory information electronically and hence inventory management becomes highly difficult and manual. The decision making process is based on the judgment of employees throughout the company instead of relying on a small set of decision makers; the majority of the decisions were made by store managers and as a result they placed orders for the items rather than simply accepting and displaying what headquarters decided to send them.
In The Travels of a T-Shirt in the Global Economy, business professor Pietra Rivoli takes the reader on a fascinating around-the-world adventure to reveal the life story of her six-dollar T-shirt. Traveling from a West Texas cotton field to a Chinese factory, and from trade negotiations in Washington to a used clothing market in Africa, Rivoli examines international trade through the life story of this simple product. Her compelling story shows that both globalization's critics and its supporters have oversimplified the world of international trade.
The organization has had to ensure that it has retail stores in many countries globally and website options in more than 100 countries. The company further enhances access of online stores in more than 37 countries which is accessible all the time and people are able to access the services regardless of their location. Globalization further affects the organization in the sense of international market management which requires it to engage in strictly global decision making. The organization’s production networks have been geared to enhancing global competition (Lüsted, 2012) .The Company is further good when it comes to seizing the opportunities available in global market. For the organization to find efficient as well as cheap means of production, it has to bargain hard so as to allow its contractors to have low profits. This mostly is consequential to the suppliers cutting corners with the use of cheap
b) Zara can focus on expanding and increasing the number of outlets in Asian countries such as China and India. The scope of development is very high and the demand for fashionable clothes is increasing at a very fast rate. But it will have to focus on other local competitors who provides the latest fashion at a cheaper rate. As Zara is a known brand, so it would be easy to increase awareness among the consumers through advertisement, promotions and celeb endorsements.
The fundamental business strategy of Zara is very simple which is linking customer demand to manufacturing, and liking manufacturing to distribution. Zara has been running their business in fashion industry which is susceptible to seasons and quick changing customer tastes. Zara has been approached to and considered their business as a perishable commodity business just like a fresh baked cake or bread to be consumed quickly.
The business model and marketing strategy is the backbone of Zappos business growth and development. By adopting customer oriented business model and marketing strategy the company gains popularity and favor in the eyes of our consumers. The company is famous for creating stylish and unique design of shoes that attract a younger generation of people that helps generate profitability because the younger generation purchasing power tends to be high (Hsieh,
It is certain that people are getting more used to wasting products that are still reliable to use and, especially in fashion, not that many people are aware of the concept of sustainability. Although concept of recycling paper, plastic and glass has now spread a cross the states, people still doesn’t know how to recycle or reuse their clothing. “65 pounds of clothing and textiles a year are improperly discarded and only an eight of that goes to charities for reuse [1].” This indicates how unaware people are when it comes to taking care of their garments. Or rather, the way in which fast fashion industry promotes the value of cloth is very low, and it is because the fashion industry wants people to get rid of their clothing as soon as possible in order to sell their new colle...
This article is about the overall impacts of fast fashion. The particular section referenced discusses possible solutions and alternatives to fast fashion. It talks about how it is possible to produce environmentally friendly clothing through the use of organic cotton, bamboo, hemp, and other fiber crops that require less pesticides, water, and other inputs. It goes on to share how certain brands are beginning to implement the model of sustainable clothing. The point of this article is to introduce readers to the topic of fast fashion, give background, and show readers what they
Textile production and consumption is an increasingly global affair as production continues to shift to developing countries. Developing countries have seen an explosion in the growth of their textile exports, and for many countries textiles are a significant portion of their total exports. In response to increasing competition from low-value imports from developing countries, industry leaders in developed countries have made significant capital investments in order to increase productivity and move into advanced market sectors.
Sustainable fashion is among the developing design viewpoint and movement of sustainability with the main objective of establishing a structure, which can be sustained for the foreseeable future in terms of conservationism and social accountability. This implies that all the products made are developed with much consideration to the environmental and social influence all through its overall lifetime encompassing its carbon imprint. It is revealed that sustainable fashion is not just a short time trend but one, which could endure for a long time (Fletcher 76). Beforehand, conservationism used to represent itself in the fashion world through the contribution of a portion of transactions of products for a charitable reason.
From 2005 the textile segment has been made up of 2 companies, transforming raw materials into fabrics, from spinning to finishing and ennobling. Handicraft product quality and technological research development characterize this business segment which works with internationally recognized names of the apparel and fashion industry.