Zara Case Study

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in demand. It has a flat organization; they have responsible people, dedicated people, and people who have understood this type of work from the outset.

6. Was Galicia/Spain fertile for the emergence of an apparel retailing powerhouse?

No. Galicia/Spain was not a fertile ground for the emergence of an apparel retailing powerhouse. This is due to the fact that this region was considered the third poorest of Spain independent regions, with high unemployment rate, poor communication links in addition to the heavy reliance on agriculture and fishing.

7. How well does ZARA’s advantage travel globally?

Zara has done incredibly well in Europe with its largest European store in Milan, Italy. Europe is considered to be more fashion-forward compared to the rest of the world. North America and Asia were the next logical retail locations, but both regions already had too many retailers and they were also considered less fashion-forward than Europe and the regions also demanded larger sizes on average than Europe. North America and Asia also “exhibited considerable internal variation.” The Asian market was harder to break into than the North American market. South America had a smaller market and they were also “subject to profitability pressures” that were likely to continue. The Middle East was also considered to be “more profitable on average, but even smaller.” Zara’s international success can be attributed to its ability to be patient and expand in respect to its own limitations. Firstly, they did not try to spread themselves too thin by attempting to immediately expand to “hot spots,” but rather to one country per year until they were able to accumulate funds and commit time to growing venues. The surge of store openings between the years 1998 and 1999 is what set them apart from its competitors. The management described this type of expansion as “oil stain”, which means to start in one major area and then spread to smaller neighboring areas. Overall, Zara’s administration was very strategic in the way they opened new firms in countries in terms of ownership – ranging from company-owned franchises and joint ventures. Essentially, Zara’s management did not take huge risks, but rather made sure to keep familiarity and relatively easy markets in mind when expanding internationally

8. What do you think of ZARA’s international strategy? Evaluate, in particular, its strategy for (product) market selection, its mode of entry, and its standardization of its marketing approach?

9. What is the best way to grow the ZARA chain? How, specifically, do you see prospects in the Italian market? And more broadly, what do you think about the strategy of focusing on Europe versus making a major commitment to a second region?

The best way to grow the ZARA chain is to penetrate into the new markets that haven’t been tried yet. I see huge prospects of expanding into Italian market because Zara has already huge experience in Europe and is capable of entering this market without the need to make major changes to its operations. Also Italians are very fashion conscious and shop more frequently than the average European.

10. What other strategic recommendations would you make to Inditex CEO Jose Maria Castello?

If I were to give some recommendations to upgrade their operating system, I would suggest to set up outlet malls to carry obsolete/unsold inventories from all of Inditex brands. I believe that by doing so will reduce any unnecessary loss from manufacturing factories and create more business values to the brand to the next level.