Zara and H&M

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Date: 24/10 2008

Table of contents

Introductionp. 3
Company presentationp. 3
Generic strategiesp. 3 & 4
Growth strategiesp. 4 & 5
Pest analysisp. 5 & 6
Value chainp. 6 & 7
SWOT analysisp. 7 & 8
Price / quality Gridp. 8
Company presentationp. 9
Generic strategiesp. 9
Growth strategiesp. 10
PEST analysisp. 10 & 11
Value chainp. 11 & 12
SWOT analysisp. 12
Zara and H&M
Comparison of the 4 P’sp. 13
Porters 5 forcesp. 14
Comparison of the value chainp. 15
Group reflectionEnclosed

* Introduction
We have been given an assignment, where we have been divided into groups. In our group we have analyzed two companies, namely Zara and H&M. These two companies are both very big companies within clothing. The fashion business is very tough, and we will explain to you what we believe the two companies does well in this hard business, and why this is good. We have been giving time to solve the assignment in some of our classes with Gitte and Peter, the rest we have made at home. After we have analyzed the two companies we will compare their 4 P’s and their value chain, likewise we also will make a five forces analysis. Z A R A

* Company profile – Zara
Zara is a very big clothing chain from Spain. The chain was founded in 1975 by Mr. Ortega, and it now has more than 1.000 stores in approximately 63 countries – so it is a very big chain. However Zara has its biggest market in Spain, where they have 364 stores in total. They sell fashion clothes of a fairly good quality to reasonable prices – this also means that they have a broad target group, which we believe to be from kids to adults younger than 50, both men and women. Over the years Zara has expanded their product line heavily, so now they also sell accessories, cosmetics, furniture and perfumes. They have made a whole new store called Zara Home where they are selling furniture’s; we will however focus on their clothing. The founder of Zara is naturally very wealthy, in fact he is the richest man in Spain, and the second richest within the business of fashion. Also Zara’s stores are very big, most of them are between 800 and 1.000 square meters – which makes room for a lot of fashion clothing. Inditex, the mother company of Zara has many stores under them, but it is worth mentioning that Zara stands for 77 % of Inditex’ overall sales, which is very impressive, and their plan for the future is to continue expanding and growing bigger and bigger. Zara clothing is sold worldwide, and not long ago the first store opened on Strøget in Copenhagen. * Generic strategies

Generic strategies is a marketing tool invented by Michael Porter. It is very popular and many companies use it. The generic strategy tells about the product(s) and its target group(s). Beneath you will see the generic strategies model. | Low cost| Unique product / high cost|

Broad target group| Overall cost leadership| Differentiation| Narrow target group| Niche – Cost focus| Niche – Differentiation focus|

As seen above we believe that Zara uses the overall cost leadership strategy. Zara’s target group is very broad but their prices are also fairly low, this is why they use the overall cost leadership strategy. To a certain extend you could also say that Zara uses the differentiation strategy. This is because they have very beautiful products which are a bit more expensive than their closest competitors. But also because they have so many different products - they have everything from clothes to furniture’s. But mainly we are certain that they use the overall cost leadership strategy. * Growth strategies

Ansoffs growth strategy is a well known toll within marketing. The strategy is used by marketers who have objectives for growth, and Ansoffs matrix offers different strategic choices to achieve the...
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