Zara Business Plan

Topics: Inditex, Porter generic strategies, Economics Pages: 4 (1154 words) Published: April 24, 2013

During the past 20 years, the textile industry has been facing major changes. China mainly embodies these changes. But other factors have to be taken in account such as the augmentation of costs and the apparition of new competitors. That being said, a ready-to-wear chain distinguishes itself through its original strategy and its lightning growth: Zara. This apparel retailer belongs to the group Inditex, which also owns for example brands such as Massimo Dutti and Bershka. The company’s headquarters are in Corunna (Spain), and was founded in 1975 by Amancio Ortega. The concept of Zara’s stores is to propose a wide range of clothes as well as underwear, accessories and shoes –and even recently, interior decoration with Zara Home. Stores can be compared to luxury shops in terms of lightening, display of collection and items. These collections are frequently renewed -about every two to three weeks, unlike most ready to wear brands following seasonal trends. Zara evolves in the sector of the textile industry, and more precisely on the big chains of clothing segments. How does a firm such as Zara, performing in such a competitive market, succeeded in distinguishing itself from the other competitors?

Internal analysis

Zara aims for the global market of large retailer fashion. Its generic strategy is either low cost leadership, or differentiation.
On the one hand, Zara banks on innovation: items are introduced in store weekly, and the company put emphasis on its brand. Those elements refer to a differentiation strategy. On the other hand, even if items are frequently renewed, Zara organise its production and distribution in order to obtain the lowest production cost possible. In the shops, there is no stock (neither in their distribution centres). Sold items are copies of branded ones with cheap prices. Thus such things could refer to a low cost leadership. Low cost leadership is about producing in large quantities, assessing to the most...
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