Zara Five Forces Analysis

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The role of market orientation on company performance through the development of sustainable competitive advantage: the Inditex-Zara case Andres Mazaira  University of Vigo, Oureuse, Spain E. Gonzalez  University of Vigo, Oureuse, Spain Ruth Avendano Ä University of Vigo, Oureuse, Spain Keywords

Market orientation, Competitive advantage, Clothing industry, Organizational culture

Abstract

This paper has been developed as a part of research seeking to verify the effects of organisational culture in general, and market orientation in particular, on the behaviour and results of managerial organisations. The difference with other existing work on the same subject is that this work uses the case method to bring managerial reality into closer contact with the university environment. This report contains the first of the case studies carried out in the context of this research, and examines Zara, a strategic unit in the Inditex group, which is shown to be a paradigmatic example of the development of market orientation in a company, as a basis for the company's performance and competitive advantages.

A study of business realities is crucial to bridge the distance between university studies and the business world and enable the student to realise that the subjects under discussion are not abstract, ideal concepts, but a reflection of reality (Munuera and Rodrõguez, 2000, p. 15). Â

This case study is a reflection of this intention to bring the two worlds closer together, and uses the case method as an approach to the business world. Although this method is more often used in teaching than in research, we agree with literature (Hartley, 1994; Yin, 1994; Bonache, 1999; Perez, 1999; Gummesson, 2000) on its  validity as a research strategy, especially for the study of organisational culture and its effects. The aim of this paper is to apply the case method to a study of market orientation as a characteristic culture in managerial organisations, and the effects of its implementation on the company's behaviour and results. The present paper discusses the influence of market orientation on managerial organisations through analysis of the Inditex group, with emphasis on Zara. Companyspecific literature has been used, including other case studies on the group, interviews, press and Internet articles, and reports by financial analysts[1]. Specific questionnaires were sent out to members of different departments of the store chains which compose the group, and in-depth interviews were carried out with Mr Fernando Aguiar[2], a company executive and university lecturer.

1. The Inditex group and the clothing sector
Marketing Intelligence & Planning 21/4 [2003] 220-229 # MCB UP Limited [ISSN 0263-4503] [DOI 10.1108/02634500310480103]

Founded 38 years ago, the Inditex group is now part of a select group of companies The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister

worldwide whose success and personality have achieved an outstanding position in the media and in scientific debate in academia[3]. When the company was launched on the stock exchange, it published a complete company information brochure[4] which defines the main activity of Inditex (the acronym for Industria de Diseno Textil, SA) Ä and its subsidiaries as the design, manufacture, distribution and sale of clothes, footwear and accessories for men, women and children, including cosmetics and leather goods. Additionally, some of the companies in the group carry out different activities; for instance, construction activities or estate agency, as a complement to the Inditex group's main activity. Table I shows the companies (Spanish and other) making up the Inditex group. Inditex is an international fashion manufacture and distribution group (see Table II) with five store chains, Zara, Pull & Bear, Massimo Dutti, Bershka and Stradivarius. These are managed as separate strategic business units. On 31 January...
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