Analysis of Problems affecting Zara
Oct 20, 2013
MEMORANDUM
To: Senior Executives, Inditex
From: FT 75782136
Subject: Analysis of Problems affecting Zara
Date: 2003
Summary
Zara is the flagship retail brand of Inditex group and represented 78% of the total revenue generated in the year 1999. The Inditex group has 1080 stores worldwide out of which 64.1% stores in Spain contributed 48% of revenues and the remaining 35.9% stores located in foreign markets contributed 52% revenues in the Year 2001. Out of all the labels of Inditex, Zara has been the major contributor of revenue and has 449 stores worldwide followed by Pull & Bear,
Massimo Dutti, Bershka, Stradivarius and Oysho.
Analysis of Problems
Vertically Integrated Business model, zero inventories, low priced fashion manufactured and distributed at high speed, and leading operations technology are some of the key features that differentiates Zara from its competitors. The strategies followed by Zara have been proved successful till now but will it be able to follow the same strategies to expand its business globally is the major challenge in front of the company.
The operations of Zara are vertically integrated and 80% of the manufacturing is carried out by the company in the factories in Spain and Portugal. The product is then shipped from the
Oct 20, 2013
distribution center to the various stores in the world. With the growing international expansion, the demand of the products will increase manifolds resulting in more pressure on the existing distribution centers. Zara has been offering latest fashion at a medium price to the customers at a lightning speed in Europe but providing the same product to a customer in Asia or in South
America at a medium price might be a challenge for the company. Unlike its competitors who have outsourced their manufacturing operations to Asia to achieve low cost of production,
Inditex has set up its own manufacturing plant resulting in more efficiency in delivering a high
quality
MEMORANDUM
To: Senior Executives, Inditex
From: FT 75782136
Subject: Analysis of Problems affecting Zara
Date: 2003
Summary
Zara is the flagship retail brand of Inditex group and represented 78% of the total revenue generated in the year 1999. The Inditex group has 1080 stores worldwide out of which 64.1% stores in Spain contributed 48% of revenues and the remaining 35.9% stores located in foreign markets contributed 52% revenues in the Year 2001. Out of all the labels of Inditex, Zara has been the major contributor of revenue and has 449 stores worldwide followed by Pull & Bear,
Massimo Dutti, Bershka, Stradivarius and Oysho.
Analysis of Problems
Vertically Integrated Business model, zero inventories, low priced fashion manufactured and distributed at high speed, and leading operations technology are some of the key features that differentiates Zara from its competitors. The strategies followed by Zara have been proved successful till now but will it be able to follow the same strategies to expand its business globally is the major challenge in front of the company.
The operations of Zara are vertically integrated and 80% of the manufacturing is carried out by the company in the factories in Spain and Portugal. The product is then shipped from the
Oct 20, 2013
distribution center to the various stores in the world. With the growing international expansion, the demand of the products will increase manifolds resulting in more pressure on the existing distribution centers. Zara has been offering latest fashion at a medium price to the customers at a lightning speed in Europe but providing the same product to a customer in Asia or in South
America at a medium price might be a challenge for the company. Unlike its competitors who have outsourced their manufacturing operations to Asia to achieve low cost of production,
Inditex has set up its own manufacturing plant resulting in more efficiency in delivering a high
quality