Why do businesses internationalize: A case study of Zara's entry into the Indian market

Why do business
internationalize

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
Background of company.........................................................................................................3
How Zara has utilized their labour in India............................................................................5
Sustainability and Supply chain.............................................................................................5
How Zara have used their knowledge, power and capabilities with India to source workers7
How factory supply in India...................................................................................................8
How Zara is employing local labour......................................................................................9
Why Zara has gone to India?................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Internationalisation is a process of producing, sourcing, selling and delivering the goods
and services from more than one country. There are various benefits which can be gained by
organisation while establishing business at international level such as it helps in availing access
of better talent, brings innovation, improve the performance and growth, increase profitability
and also enhance customer base. Company generally internationalise their business to boost its
sale and profitability. They globalise their expansion in order to grow and expand business
operations (Saraswat, 2018). By entering into new market, company can generate more revenue,
avail investment opportunities, compete for new sales, reduce cost and recruit new talent.
Through internationalisation, organisation can attract new customers in new market and increase
their market influence. This project is based on why company internationalise their business in
new market. The chosen organisation for this project is Zara, it is a retail brand that deals in
varieties of products such as clothing, shoes, accessories, perfumes, swimwear and beauty
products. Zara has internationalised their business in Indian Market in order to attract Indian
people and improve its performance and growth in new market.
Background of company
Zara is a Spanish clothing brand which was founded by Amancio Ortega in 1975. In the
first store of Zara, the products are featured at low price and also it is highly popular due to high
ended clothing fashion. Later, the founder has changed the manufacturing, design and
distribution process of brand in order to adapt new trend and remain trendy in market. Zara also
have its online presence in market which makes easier for customers to buy the product without
going to outlet (Dadwal, 2017). The brand is also engaging in global expansion due to which
they have created a strong presence on different cities and countries such as South Korea, Russia,
Mexico, Belgium, Greece, Indonesia, South Africa, Peru and many others. The target market of
Zara is customers of 18-35 aged. When the products are designed, it takes approx 10-15 days to
reach to stores. The brand has also faced various controversies such as exploitation and child
labour, allegations of anti-semitism, labour practices, copyright infringement and political
controversies in China. Zara has also expanded their business sin Indian Market in order to create
strong customer base and increase its growth.
Internationalization effects on local labour in India

According to (Belousova, 2019), Though internationalization is rising in the economy and labour
market which has helped workers in adjusting to the changing trends and world instead of
erecting protectionist measures. Internalization is effectively contributing in increasing
integration among labour markets and helps in bridging the gap between workers in developing
and advanced economies, especially with the spread of new technology. Internalization also
plays a very important role in increasing the domestic income inequality. Labour markets has
increased the around the world in the last two decades which helps in achieving more growth and
productivity in the Indian market. The advancement of technological processes, especially in the
communication and information sector has had a great impact on the share of the labour in the
unskilled sector. With the effect of internalization in India has created a great opportunities for
Zara to access high technology, capital flows, cheaper imports, human capital and large export
markets. Internalization helps the company in increasing their employee turnover rate which
helps in integrating more employment opportunities for gaining competitive advantage over
other rival companies. Internalization helps the company in designing products in an innovative
and creative way that it may be readily available for consuming across different countries. This
process is used by the company for expanding their global footprint in international market by
understanding the tastes and preferences of the customers. When the company internationalize
their products and services in the international market helps in increasing the knowledge and
skills of labours for achieving growth in the market. This also helps in producing their products
and services on the cross boarder for easy migration of goods and services in the market (Jacobs,
2020). Zara produces good quality products to their customers which helps in gaining their trust
and loyalty which makes them stick to the particular brand. For increasing the profitability and
productivity of the company, they sale products in the Indian market which results in better
employee satisfaction. Zara has used their labour in an efficient and effective manner as they
provide growth opportunities to the working staff to show their knowledge and skills towards
achieving success in the Indian market. The company provides effective training and
development programs in order to improve their skills and working efficiency for learning some
new concepts in order to develop employees knowledge. Zara provides extra wages and money
to the local labour so that they can fulfil their basic needs and demands as India is quite cheap as
compared to other countries.