Zara Case Study

3473 Words 14 Pages
Register to read the introduction… As mentioned above, unlike most of its competitors that outsource their production to factories around the world, Zara has approximately 80% of its production carried out in Europe, with its various business elements such as the design and production centers in close proximity to each other, around its headquarter in La Coruña, Spain. Purchases: Zara purchases materials from external suppliers. It has purchasing offices in Barcelona and Hong Kong which gives Zara the competitive advantage towards the cost of goods sold as it can purchase from the region with lower prices. About half of the fabrics are purchased in grey to allow for flexibility in manufacturing a variety of colors and patterns, and by owning Comditel, a subsidiary to Inditex responsible for dyeing, patterning, and finishing the fabrics, Zara can always provide the necessary fabrics to the new styles of its products. As explained by Jose Maria Castella, Inditex’s executive, “We have the ability to scrap an entire production line if it is not selling. We can dye collection in new colors and we can create a new fashion line in …show more content…
Characteristics or behavior of consumers, for example the people in France are more fashionable and quality oriented while the people in Germany are more price sensitive, and income per capita are also important considerations. By carefully considering these elements and following a systematic procedure to insure extensive market testing before expanding its operations, Zara so far hasn't retreated from any selected markets.
Market entry: the related considerations include economics factors, government regulations, and entry barriers. More specifically, the economic factors include macroeconomic factors such as tax, political condition, and export tariff, and the microeconomic factors which include local competitors, demand, and location of stores. Zara adopted three modes of market entry- joint venture, franchise, and company-owned stores that depended on local factors. However, Zara would always make sure it has the most control to its stores no matter what forms they

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