Zara's Global Value Chain Strategy

Sub objective 2: Defining and assessing of Zara’s global competitive stance, investigating the firm’s features and assessment of appropriateness of value chain structure.

According to Magretta (2002) business model is a system that links every part of business together, however, every business will meet their competitors sooner or maybe later, and to deal with all possible problems in the reality is a job for strategy. There are two important points for any business to operate that are position in the market, as well as a competitive advantage in the industry. In general, to form the competitive advantage has lots of elements, from competitors, business model, resources, competitive positing, etc. Inditex group put Zara in fast fashion of apparel retail, and uses Vertical Integration in their business, form production line to retail.
1. High degree of vertical integration
There are 50 % of products in Zara made in their own 22 factories in Spain (Ferdows, K., Lewis, M., & Machuca, J. A. D., 2003) other production contracted

(Ferdows, K., Lewis, M., & Machuca, J. A. D., 2003) According that, it is clear that Zara always choose prime location for their retail store, in general to rent a store in the expensive location will increase their operating cost, however, the truth is Zara reduce their advertising cost to 0 - 0.3%, the advertising cost is much lower than other brands which are usually between 3% to 4%. (Craig, Jones, Nieto, Business of Fashion Case Study Competition, 2004) Indiex group believe that spend more budge in the store is more important as well as more efficacy to do a better marketing than spend money on the advertise. Here can use Michael Porter's Five Forces Model to analysis and identify the competition of Zara and to find their position in fast fashion of the appear retail industry. Look at appendix