The largest and most internationalized chain of Inditex.

Founder Amancio

OrtegaGaona

La Coruna, in 1975

“Medium quality fashion clothing at affordable prices”

1980 adjoining markets

2001 became international

Presenting By:Name: ID:Sadia Tasnim 072

626 030Jaker Jahan Shuvra 081 179

030Ahsan Al Bari 061 325 030 Rabita Binte Shams 072

588 030Al Amin Redwanur Rahman 081 162

030Rishad Ishtiaq Habib 053

043 530Iftehajul Islam 081

359 030

Legal system act on business

Political Environment

Cross Border Marketing • In our early discussion we notice that ZARA Fashion international clothing store in more than 32 countries. Each country has uniqe legal policy those affect to ZARA Fashion’s business strategy.

• In large number of 32 countries store ZARA fashin always pick the much flexible option and it can vary country to country.

Retailing• Retailing activity is quit local and there is no bullet system single retailing strategy whole over the world.

• World wide retailing has relatively globalize particularly the fashion segment.

• Retailing chain had been most successful in UK where US market remained major challenge.

• Retailing activity is quit local and there is no bullet system single retailing strategy whole over the world.

• World wide retailing has relatively globalize particularly the fashion segment.

• Retailing chain had been most successful in UK where US market remained major challenge.

Market Entry

• Enter country where relatively easy to enter.

• No legal boundaries or taxes.

International Partnership• In some country it’s a major barrier in foreign direct investment. In that case ZARA Fashion follow some affective policy to over come those legal policy.

•Franchises•Joint Venture

•50:50 Partnership

The social element those affect to ZARA Fashion’s business

Social Environment

Global Chain Shop• ZARA Fashion is cross border chain shop. So its social culture vary country to country.

• 507 stores around the word where is no similarity.

• Local employment• Labor cost is based on local payment rate

Social Culture ZARA Fashion enter always Hi-profiled country where low bisiness risk. So easily can say cuylture around business is so modern and consumer are also updated. Though it’s a competion market but very easy to lunch new product.

TechnologicalEnvironment

Technology>>> Use of technology from 1970’s

>>> Coping with the change

>>> Just in time manufacturing system.

>>> High-tech distribution system.

EconomicalEnvironment

Economical 507 stores around the world . 488400 square meters of selling area. $1050 million Company’s capital.

Economical Cont………During fiscal year 2001, 441 million on sales of 2477 million

Invested in manufacturing

LogisticITjust-in-time manufacturing system

Economical Cont………World Co’s net margins 2% of sales butZara’s net margins 10% of sales (fiscal year 2001)

largely because of selling, general, and administrative expenses that swallowed up about 40% of World Co’s revenues VS about 20% for Zara.

Company Background

•Zaras’ first store………

•Expanded Zara store………

•By the early 1980s,Ortega formulated a new type of design and distribution model.

•Zaras’ first store………

•Expanded Zara store………

•By the early 1980s,Ortega formulated a new type of design and distribution model.

Company Background Cont.

•Castellano, A computer expert joined Ortega in 1984.

In 1985, Castellano joined Inditex as the deputy Chairman of its board of directors.

•At the end of 2001, Zara became the most internationalized as well as the largest of Inditex’s chains

Key competitors The Gap Hennes and Mauritz Benetton

Founded in 1969 in San Francisco.

International expansion in 1987. US centric operation.

Key competitors The Gap Hennes and Mauritz Benetton

Founded in 1947 in Italy. Outsources all its products. More than 50% revenue is

earned from outside of home country.

Key competitors The Gap Hennes and Mauritz Benetton

Incorporated in 1965 in Italy . heavy investment and control

over production activities . products mostly sold by

licensing .

Business Structure…..

Raw materials

Logistic

Finance

Manufacturing plant

Expansion

Real estate

International

Foreign market selection criteria

• New country markets that resemble Spanish market

• Possess a minimum level of economic development

• Relatively easy to enter

Market Analysis• A commercial team from the

headquarters conduct both the macro and micro analysis of the market.

• Macro analysis is focused on local macro economic variables such as: tariffs, taxes, legal cost etc.

• Micro analysis is performed onsite and focused on variables such as demand, channels, store locations, competitors etc.

Market Entry• If the commercial team’s

evaluation becomes positive…then the next possible step would be to assess:

“HOW TO ENTER THE MARKET?”

Modes of market entry• Zara used three

modes of market entry internationally:– Company owned

stores (Spanish stores)

– Joint-ventures &– Franchises

Problems & Challenges• Most serious threat to Zara fashion is to

sustain its success and maintain its growth rate

• Expanding operations in different regions (America, Asia, Europe etc.), requires – Addressing different fashion trends at a time. (i.e. given

different sizes/ trends in different regions, – Pulling a new fashion cloth or apparel from one region

and putting it in other region is a challenging task itself

Problems & Challenges (Cont’d)• Zara also has the inability to penetrate American apparel

market. This may be due to the American taste differ from the European taste.

• Zara requires joint-ventures & acquisition of small chains to

scale up its operations. However– In a 50:50 joint venture, it is very difficult for Zara to impose

its business model to the other

• The company could not acquire large market shares in the domestic market

• Local retailers may follow Zara's formula to success and can emerge as big threat to its success.

RecommendationInvest in Internet

Retailing

Decentralization

New ways of cutting Cost

Expanding its local market share

Less expansive in developing countries

Conclusion Zara as a “bench marker” Zara and the fashion industry In order to sustain in the

leading position

Come up with new ideasCreate new ways of marketingNew production methods

Query….