1. Which theory is the best representative of Zara’s (Index’s) internationalization?
Zara has applied the Uppsala internationalization model to their strategy, and even more than that. This theory shows that international activities require both general knowledge and market-specific knowledge. Therefore, the more understanding the company has in a specific market, the more value and succeed they can create. That is also exactly what Zara applied to their internationalization strategy during their first stage. After the maturity of Spanish market, Zara chose Portugal as an attractive and familiar market because of its geographical and cultural proximity to Spain. Zara tried to take advantages of the similarity in culture and knowledge from the markets with the minimum level of psychic distance.
In Zara case, after reaching the maturity in international experiences, this firm came to the leapfrog stage, when they tried to extend to other markets without proximity of culture or geography. It is the reason why Zara is supposed to achieve more than the Uppsala internationalization model could help them do. They knew how to apply this theory with its criticism flexibly and wisely.
On the very first period of this stage, Zara’s management was ethnocentric orientation in order to take advantages of transferring the knowledge of transaction from one country to the others. But right after that, they met several remarkable challenges when entering some specific markets due to the cultural differences. Therefore, Zara changed their management to geocentric orientation flexibly, which still replicated the home market but also allowed the local adoption in some stores abroad. Combing with this strategy, Zara also uses another pattern of expansion one called “oil stain”. When penetrating in a new market, Zara opens one first store called flagship one in order to research that market and acquire expertise, then they will expand more stores after having a well