Zara Case Write-Up
Zara was founded in 1963, by Amancio Ortega Goana. He started the company because he wanted to improve the manufacturing and retail aspects of fashion and to reduce the cost of the apparel chain. He opened the first stores in Spain, and slowly over the decades started to expand to different countries. Zara headquarters is in Arteixo, Spain, with their distribution center close by. Inditex, the holding company that owns Zara, has a business model, which states, “Global specialty retailer that designed, manufactured, and sold apparel, footwear, and accessories for women, men, and children”, and Zara’s business model is to be, “medium quality clothing at affordable prices”. Zara has five hundred and seven stores that account for seventy two percent of Inditex total capital. Zara’s biggest competitors are the US company, Gap, the Sweden company, Hennes and Mauritz, and the Italian company, Benetton. Out of all the completion Gap is the largest company but had a negative net income in 2001, Hennes and Mauritz had the highest net income, Benetton has stores in the most countries, and Inditex had the biggest change in market value. Zara owns a few different manufactures that produce their higher quality, popular products; they only outsource cheaper, standard clothing. Zara markets their products to infants all the way up to forty five year old males and females.
While doing the environmental scan of Zara, I found the company strengths are the short cycle time that reduces working capital integrity allowing them to commit to a fashion line much later in the season, compared to competitors. Also they position their stores in diverse location with high foot traffic areas. Their vision is to provide quality, high fashion apparel for an affordable price. Zara’s weaknesses are that there is a low entry to barrier to enter the fashion industry, customers are constantly changing demand, and products are easily duplicated by other...
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