Internationalisation Model Adopted by Zara : Case Study

Zara case study
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Q1. The best theory that representative of Zara's internationalization........................................4
Q2. Evaluation of the competitive strategy of the three world market leaders...........................5
Q3. The advantages and disadvantages of Zara's (Inditex) multi brand store strategy...............7
Q4. Extent to which Zara has been successful in meeting the risk of cannibalization ...............8
Q5. The advantages and disadvantages of going into a joint venture with Tata in India..........10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Zara is a fashion retail chain which offers clothing and accessories for female. The
organization is based in Artexio, Galicia. It is a part of Inditex group. This fashion retail store is
accessible for everyone, as they offer good quality products at low prices which are affordable
for everyone. Zara’s mission is to be internationally sustainable firm of Inditex Company
(Ghauri and Cateora, 2014). Zara gives rise to fast growing fashion by processing its product of
six month in just two weeks. It unitedly focuses on production, distribution as well as selling its
fashion product at their own store and this becomes complete prototype business for fashion and
retail industry.
The present report is based on a case study of Zara. In this it research about ,the best
theory that represents the internationalisation model adopted by Zara and the competitive
strategy in the three world market leaders in fashion retail chain and these strategy will help
Zara in the global retailing fashion world. This assignment also includes the strategy adopted by
parent company I.e Inditex advantages and disadvantages occurred by adopting these tactics.
Lastly, it includes how successful Zara has been meeting the risk of cannibalisation and there
merits, demerits.
MAIN BODY
Q1. The best theory that representative of Zara's internationalization
As per the case study, the best theory that represents Zara's internationalisation is Uppsala
model. This help Zara in reaching the international market by adopting this model. This model
explains about how companies can be internationalised in the foreign market so that they can
increased their activities. The features of this model in that, firstly it helps in gaining experience
from the domestic market so that we can stand out in this competitive market and then go in
the foreign market to challenged competitive international brands. In this model, they follow
steps so that they can be internationally recognised (Bell and Cooper 2015). The firm firtly target
the geographically those countries which are near and also culturally near to them and slowly it
captures the market at far distant countries. The firm can start its business in traditional manner
and gradually uses the intensive method according to the needs and wants of the consumer in the
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marketplace. The following strategy can be adopted by Zara to be competitive in the
internationalisation market these are as explained below:
Prices are decided not on the basis of cost incurred in the process of production but on the
basis of the consumer demand and supply in the market. Zara adopted the strategy that it will
know his consumer wants and preference and then the will be designed and supplied at the
retailer store. If the fashion accessories are not sold within one week then the product will be
removed from the store and replaced by new ones (Hånell and et. al., 2014). The basis of the
trend will be identified according to the taste of consumer and then price gets decided. Keeping
all these views in mind the zara plan about its product. If the consumer once get satisfied and the
product sold in the market and through those product profit earned will be used for the
expansion of the business in overseas and other places from where the raw materials are
received.
Another strategy executed by Zara is to go on an international level and get recognised in
the overseas market. In this respect, company advertise their fashion accessories and clothing
with the help of opening multi stores chain around various nations (Carroll, 2014). So that they
can execute new trend, fashion demand according to the need and taste and preferences of
different user. So that they can increase their goodwill and capture the attention of the consumer.
Last but not the least, Zara is looking forward to accomplish its production in a flexible
manner so that it cut and fold its strategies according to the scenario. The Zara fashion clothing
company open its stores in a joint venture in the foreign market so that they can be international
recognised to reach at greater heights. As joint venture with the existing and reputed firm can
increase the value of the company that help in been internationally recognised in the market.
Q2. Evaluation of the competitive strategy of the three world market leaders
Competitive advantage is a business concept which describes characteristics and traits
which allows an organisation to perform well against its rivals. Whereas, competitive strategies
are the method in which the business enterprise achieve a competitive advantage in the market
(Hudzik, 2014.). The three main competitor of world market leaders are: Zara, H&M and Gap
Inc. Zara competitive strategy is to produce its product within two week ,.Zara offer latest
fashion to the consumer at reasonable prices which can be purchase by all ages in the market.
The company also produced new products time to time to be competitive in the foreign market.
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