An insight into Zara as a Born Global
Zara was first established just outside of Spain in1988, in 1994 Zara expanded into France and Mexico (Bhardwaj et al, 2010). Zara is owned by the INIDEX group in which it contributes to 64.8 per cent of total company sales (Inidex annual report, 2011) which was a 10 per cent growth on the previous fiscal year. Zara now has over 1830 stores worldwide across 82 markets in 64 countries, with plans to move into Korea, Egypt, Ukraine and Montenegro and a further 80 store to open in Russia. This research paper identifies Zara as a born-global company and a global leader in fast fashion by firstly differentiating between a born global and gradual global company. Secondly we investigate three main internationalisation theories which will help us gain greater understanding into the success of Zara and finally importance in which the marco-environmental factors and marketing mix play in creating a company which is unique, controlled and adaptable to new markets. Zara as a born global
Understanding the difference between a gradual-global versus a born global fashion retailer is key to identifying Zara as a born global. Traditionally, firms gain knowledge over time about the marco-environmental factors and the level of investment in which they should commit to (Galvan-Sanchez, et al., 2010). Examples of companies that use the ‘gradual global process’ include Mark & Spencer and the GAP. Born-global’s, according to Bhardwaj et al, 2010 focus on early and rapid internationalization. Therefore we identify that the difference between a born global and a gradual global lies in the international process and three main theories; knowledge-sharing and entry mode, resource based, and physic distance. Let’s look at these internationalisation theories in more detail by first identify the difference between a born global and a gradual global approach. A Born global is assertive and perceives the world as one market place with utilising the local market as the core of the internationalisation process (Bhardwaj et al, 2010) whereas gradual global firms believe that domestic market is the core support and aversion and lack of knowledge results in slow learning process. Born-global maintain long-term relationships with intermediaries, are fully integrated and consider the marketplace as homogenous whereas gradual global are partially integrated and consider the marketplace as heterogeneous (Basu, et al., 2011).. Lastly a born-global believes psychic distance is irrelevant in the internationalisation process whereas gradual global assume that the firms entry into a new market is a function of psychic distance from prior experience (Bhardwaj et al, 2010). Knowledge sharing and entry mode
Knowledge sharing is the flow of information sharing within a company and is consider a major competitive advantage (Basu, et al., 2011). When a company expands into a foreign market forward knowledge flow is important (Galvan-Sanchez ,et al., 2010) as managerial experience and business structure can be communicated to newer stores from head-office. More importantly to this report lateral knowledge flow commutates vital marco-environmental information from the foreign market location back to headquarters for example Zara has three stores in Dubai in which they sell clothes predominately covering the shoulders and offer more conservative style to respect local culture (Bhardwaj et al, 2010). Communicating and integrating culture which include shared values and norms is vital in the strategy development process (Galvan-Sanchez, et al., 2010). According to Indiex 2011 annual report environmental factors also play a vital part in the success of their line limnetic difference with the stores located in the Northern Hemisphere, Zara has a team of designers who create specific fashion proposals for women, men and children. The latest trends are thus reflected in garments and textiles that are suitable for both...
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