Zara Business Strategy

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This chapter aims to study in detail, from every point of view, the features of the Spanish firm Zara. In particular we will focus on its strategy, which made it one of the companies more competitive globally and that made it successful.
4.1 ORIGINS
Zara is the flagship chain store of Inditex Group, owned by Spanish tycoon Amancio Ortega Gaona, that between 1963-1974 begins his career as a clothing manufacturer. The business grows steadily over the decade until Ortega owns several factories, which distribute their merchandise to other European countries. Inditex is one of the world’s largest fashion retailers, welcoming shoppers at its eight store formats Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe-
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When he had to invent a name to commercialize his products (always manufactured to low cost thanks to the thick appeal to the home job), Ortega thought to "Zorba" but in the register of the commercial societies Zorba already was a recorded mark, then conceived “Zara”. The group's success and its unique business model, based on innovation and flexibility, have made Inditex one of the biggest fashion retailers in the world. Its approach to fashion - creativity, quality design and rapid turnaround to adjust to changing market demands - has allowed us to expand internationally at a fast pace and has generated an excellent public response to our retailers' collections. The first…show more content…
Zara had historically looked for new country markets that resembled the Spanish market, had a minimum level of economic development, and would be relatively easy to enter. To study a specific entry opportunity, a commercial team from Headquarters conducted both the macro and micro analysis. Macro analysis focused on a local macroeconomic variables and their likely future evolution, particularly in terms of how they would affect the prospects for stores (tariffs, taxes, legal costs, salaries and property prices/rents). Micro analysis, performed onsite, focus end on sector-specific information about local demand, channels, available store locations, and competitors. The explicitly competitive information gathered included data on levels of concentration, the formats that would compete most directly with Zara, and their potential political or legal ability to resist/retard its entry, as well as local pricing levels. According to Castellano, Zara- unlike its competitors- focused more on market prices than on its own costs in forecasting its prices in a particular market. These forecasts were then overlaid on cost estimates, which incorporated considerations of distance, tariffs, taxes, and so forth, to see whether a potential market could reach profitability quickly enough (often within a year or two of opening the first store). The actual application of

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