Zara: Fast Fashion Essay

3881 words - 16 pages

Group 14:Suo Lu 7430327Sourav Rahman 7354338Syed Ammar Qaiser 7593115Imran Afza Khan 7116907Muhammad Mohsin Virk 7591000Qasim Qayyum 7587417EMP 5100Introduction to Engineering Management1I. Executive SummaryInditex, founded by Amancio Ortega, operates six different chains: Zara, Massimo Dutti, Pull&Bear, Bershka, Stradivarius, and Oysho. Each chain addressed different segments of the market, but all share the same goal: to dominate their segment using a flexible business model that could be expanded on an international scale. As the parent company, Inditex focuses on providing the corporate services to its respectable chains so that they could accomplish their goals.In this report, we used SWOT, Porter's 5 forces, PESTEL and 4P's analyses to figure out the clues that Zara could follow to address the international expansion issues, which is the major problem it has to face. Overwhelmed by the complicated environment and status quo, Zara has to make a decision among several options, which international market to enter, how to keep its excellence in different countries. Due to the success from deep vertical integration, how to maintain flexibility among international market is a contingent issue Zara may experience during the expansion.As the largest and most internationalized of Inditex's chains, Zara operated 507 stores in countries around the world until 2001, since 1990 when it finished its rollout in Spain. At the same, it started to make mass investments in manufacturing logistics and IT, as well as establishing a just-in-time manufacturing system, a 130,000-squre-meter warehouse, and an advanced telecommunications system.Compared to its three main competitors, The Gap (U.S.), Hennes & Mauritz (Sweden), and Benetton (Italy), Zara's performance could be thought as much better. All of its superiorities are from the quick response through the whole value chain, including design, manufacturing, distribution, and retailer store operation, coupled with distinguishing marketing strategy.Zara's success is also from its distinguishing business model. Differing from other apparel retailers, Zara manufactured its most fashion-sensitive products internally. With the frequent orders with internal and external suppliers, Zara's designers continuously tracked customer preference. High-level backward and forward vertical integration helped reduce the "bullwhip effect" in Zara supply chain. Products were shipped directly from the center distribution center to each retailer store twice a week, whose location was always the fashion core in that area. The quick response enable Zara become the leader in fast fashion industry.To keep the revenue for supporting its operation, international expansion is an inevitable process. Considering the income level of Asia and the small scale of South America market, North America market could be a more promising market Zara attempts to enter. However, North America market, quite different fashion preference from...

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