Airline and Zara

Topics: Airline, Low-cost carrier, European Low Fares Airline Association Pages: 9 (2445 words) Published: July 7, 2012
Zara is one of the largest international fashion companies. It belongs to Inditex, one of the world’s largest distribution groups. According to its official website, Zara treated the customer as the heart of unique business model.

Ryanair is one of the world’s favorite airlines operating over 1,500 flights per day from 51 bases on 1,500 low fare routes across 28 countries, connecting over 168 destinations.

Zara and Ryanair have been a great success in their own industry. Both of them are famous in their low cost comparing to its major competitors. This research is going to investigate the position of the two companies and recommendations are made to both companies to further improve their strategic position in the market.

SWOT Analysis
ZARA has well known for its fast and low cost fashionable clothing. The success is built from its huge design team and information system linked the designers with the suppliers. ZARA has a more than 200 designers for its product development. They have to identify trends in fashion industry and design accordingly. Moreover, there is an effective information sharing system between Zara’s headquarter, its shops and its suppliers. In this way, all the three parties can gain the information, manage the inventory and make payment.

ZARA faced a huge sum of money on compensation of plagiarism. However, consumers seem to favor the ZARA because of its high imitation ability of brand-name products.

China has a growing economy and more and more its citizens purchase stylish yet quality clothing. Moreover, the mainland market is more open to the foreign brand which means that China offers large growth potentials for the foreign brand names including Zara.

The increasing competition in the fashion industry is obviously the major threat. Moreover, the low-cost stylish market may face the competition from the online individual stores, which offers a niche source of clothes for customers.

PESTEL Analysis
The key pull factors that explain the success of Zara is internationalization. It includes Spain’s entry into the European Union, the globalization and economies of scales, and the abolition of barriers to export as well as the development of information between different countries. All these help to push Zara’s model to a greater success by exploring new customers in different countries and regions with a relative lower searching and reaching cost (Lopez & Fan, 2009). Indian Market:

With the increase of their disposable personal income, people began to pursue a high quality and comfortable clothing. This development has well offered the growth opportunity for Zara. Moreover, the increases in income make people more aware of their outlook and prefer customization rather than mass production of clothing. ZARA’s position "small, variety, cheap" guarantees its success.

An increasing number of people pay more attention to fashion but not all can afford it. The designers of ZARA notice the fashion of the market and adopt the design fast with lower cost.

The advanced system of design and supply makes Zara’s delivery within 6-7 weeks instead of 6 months of its competitors (Ghemawat & Nueno, 2006). Moreover, Zara has only 20 suppliers which provide 70% of the supplies. The other companies have by average more than 200 different suppliers. In this way, Zara can control and communicate with their supplier better. At the same time, Zara has its own distribution centre with a close communication with individual shops. It can complete an order to deliver to Europe after 24 hours and to US and Asia after 48 hours (Tokatli, 2007). With the shorter delivery time, every shop can receive deliveries from distribution centre fast. It helps to lower the inventory and so the turnaround within the shop is higher (Lopez & Fan, 2009) (Ghemawat & Nueno, 2006). Environmental

Zara has emphasized on the...
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