Critical Evaluation of Vertical Integration vs. Outsourcing in Fashion Industry

Essay Topic: 'Critical evaluation of
the advantages and disadvantages
of vertical integration vs.
outsourcing in fashion industry'.
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Company Background.................................................................................................................3
Synthesis.....................................................................................................................................3
Soundness........................................................................................................................................5
Operations management practised by Zara and its competitors..................................................5
Key differences and special features practised by Zara and its competitors...............................6
CONCLUSION................................................................................................................................6
RECOMMENDATIONS.................................................................................................................6
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INTRODUCTION
Purpose of conducting this essay is to critically evaluate the advantages along with the
disadvantages of vertical integration versus outsourcing in fashion industry. On the other hand,
major importance that came in front of considering this topic is that many fashion retailers are
looking forward to expand their business, where they have considered different arrangements so
that their supply chain could effectively be managed (Sandhu, Shamsuzzoha and Helo, 2018).
Prime focus of this essay will consider comparison of the practices in Zara and two of its
competitors considering the two models and these are Value Chain Analysis and McKinsey's 7S
Model, which will aid them in taking right decisions in specified time frame whether they should
adopt vertical integration or outsourcing.
MAIN BODY
Company Background
Zara SA, which is a Spanish apparel retailer which mainly deals in fast fashion industry
was found in the year of 1974 by Amancio Ortega and Rosalía Mera. Basically, this company is
said to be one of the largest company in Inditex group. In the year of Zara specifically manages
to bring 20 different fast fashion related collections for it's customers in a year.
Company structure
Organizational structure that Zara is following i.e. hierarchical flow, where distribution of
takes place within functional department considering a hierarchical flow. It is a well- organized
structure, by looking at this, employees know who to report to, and would find easy to
communicate with their colleagues.
Products/services
Some of the basic products that this organisation is offering to it's customers are
accessories, clothing, swimwear, shoes, perfumes, beauty products and so on. If it is talked about
service, then Zara is also offering online service to it's customers where, they takes feedbacks
and resolve queries of potential customers.
Key quality issues
Basically, Zara is not having any sort of quality related issues but their products holds
very high prices, which can be considered as a weak point for this business company.
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