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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.

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