It was in 1975, almost forty years ago when Zara, a small unknown Spanish apparel firm began its operations in La Coruna, a small seaside town located along the northwest Spanish coastline, approximately 300 miles from Madrid. Now the once small local apparel manufacturer has evolved into a flagship international group (The Inditex Group), the parent of eight global retail chains, including Zara, Bershka, Massimo, Dutti, Stradivarius, and Oysho with a combined annual revenue of close to $21 billion in 2012, making its founder, Amancio Artego, one of the world’s wealthiest individuals.
The aforementioned success is due in part to the group’s servicing the global fashion and apparel networks through its radical business model driven by an underlying strategy known as “do what you do best and outsource the rest” (Daniels, Radebaugh, & Sullivan, 2014). This strategy, coupled with a complete rethinking of the traditional production cycle and initiating a process known as disruptive innovations, drastically cutting the time it would traditionally take to produce a garment commercially from six months to six weeks.
Problem Statement According to Rick Horwitch, vice president of strategy and solutions business development at Bureau VERITAS Consumer Products and Services, “rising labor, material, energy and input cost; an increasing activist regulatory environment; and rapidly changing consumer buying patterns” are forcing retailers to adjust to the new normal of speed efficiency and cost management (Barrie, 2014).
Developing the optimal business model that can efficiently and effectively support the expansion of non-proprietary production processes, as well as attracting and retaining competent talent is one of the most important decision challenge faced by Multinational Enterprises (MNE) in the twenty- first century as they explore strategies to increase revenues and profit, reduce
References: Daniels, J., Radebaugh, L., & Sullivan, D. (2014). Globalization and international business. In International business: Environments and operations (Fifteenth ed., p. 7). Upper Saddle River, N.J.: Pearson Education Leonie Barrie. (2014, January 16). Retrieved November 20, 2014, from http://www.just-style.com/management-briefing/celebrities/apparel-industry-challenges_id120331/