Zara / Globalizing the Value Chain

Topics: Globalization, Zara, Retailing Pages: 5 (1164 words) Published: April 17, 2011
Table of contents

1Key figures about Zara1
2Exogenous factors during Zara’s foundation and globalization2 3The method of Zara2

Key figures about Zara
Zara, main subsidiary of the La Coruna (Spain) based Inditex Group Inc., was founded in 1975 and has become world’s largest clothing retailer in 2008 (Clark & Keeley, 2008). On the way to the top of the global retail industry it passed some decisive events that transformed the formerly founded pyjama and dressing gown making company into the world leader of fashion industry (see exhibit 1). Exhibit 1: Globalization of Zara stores

Spain - 1st Zara in A Coruña
Paris (France)
New York (USA)
Portugal - 1st Zara outside Spain in O Porto
Belgium & Sweden
Andorra, Austria, Denmark & Qatar
Finland, Switzerland, EL Salvador, the Domenican Republic & Singapore 2002
Slovenia, Slovekia, Russia & Malaysia
Monaco, Indonesia, the Philippines & Costa Rica
Serbia, mainland China and Tunesia
Croatia, Colombia, Guatemala & Oman
Korea, Ukraine, Montenegro, Honduras & Egypt
Morocco, Estonia, Latvia, Romania, Hungary, Lithuania Panama 2004

1000st Zara shop

Zara is now in 73 countries
Norway & Israel
UK, Turkey, Argentina, Venezuela, UAE, Japan, Kuweit & Lebanon 1998
The Netherlands, Germany, Poland, SA, Bahrain, Canada, Brazil, Chile & Uruguay 1999

Zara is now in 56 countries

Source: Author based on Inditex Group, 2010
As it can be seen from the graph above, Zara first focused primarily on the national market until 1988. In a next step it grew predominantly in Europe before expanding heavily all over the globe, reaching among others markets such as Montenegro, Syria or the Philippines. But what made Zara so successful in becoming a global player so fast? What have been the exogenous factors and what its globalization strategy? The first part shall shed some light on the generic economical settings that enabled Zara’s success before introducing Zara’s prior and current globalization strategy in a second part. Exogenous factors during Zara’s foundation and globalization In the world of corporations Zara actually can be seen as a very young company, being found only 35 years ago, therefore it can be said that it was “born” in a pretty much globalized world. Nevertheless from a globalization perspective, especially the last centuries have been an extraordinary changing environment. According to Jones (2010), the economy in this time has been characterized by liberalization and more stable governments. From a political perspective markets and resources globalized which enabled the access to cheap labor and new customers on the one hand but also increased competition on a global scale on the other hand. In the case of Zara, Spain just liberated itself from the Franco regime 1975 and slowly transferred into a democracy. Herefore the probably most momentous date constituted the accidence to the European Union in 1986. Referring to market and resources globalization, Zara focused on decreasing costs and increasing speed and efficiency in transportation and communication. This brings us to the next part, the strategy of Zara. The method of Zara

In general, the strategy of Zara can be seen as revolutionary in the retail business and honors Zara with the title of a “global shaper” (Leknes & Carr, 2004). This is strongly related to the globalization movements discussed above, even so Zara choose in the beginning a unique approach of globalization. As it can be seen in Exhibit 1, Zara internationalized pretty fast on the market side opening stores worldwide. Regarding this it profited from an enormous increase of their target group, middle class urban woman (and to a smaller extend man), especially in developing countries On the other hand, and...
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