Zaras Business Model Case Study Example | Topics and Well Written Essays - 1250 words - 1

Zaras Business Model - Case Study Example This paper illustrates that establishing Zara’s Fast fashion apparel chains in Galicia (Spain) was a noble idea as the case study pointed that by late 1990s, only US exceeded Western Europe in terms of total retail sales where chains accounted for about 85% and 70% of the total sales respectively. Latin America, East Asia, and Eastern Europe accounted for about half while the rest contributed less than 10% mostly coming from the poor markets. Any sensible business would focus on market expansion and consolidation within its current region as Zara did if the market had the right purchasing power and favorable cost for the various means of production. Galicia was one of the poorest regions in Spain with about 17% unemployment rate compared to a national level of 14%. This meant that labor was available cheaply. In addition, its rich tradition in textile and their non-discriminatory behavior provided a good opportunity for Inditex to develop and learn the tricks of developing tre ndier fashions that would suit high-end markets like Italy. However, the poor vertical integration in the textile value chain and poor communication networks meant the company had to invest heavily eating into its profits which erodes the gains. This made it sensible for the company to focus on other regions in Europe to maintain its competitiveness. Zara had an organized market entry strategy where it identified markets in Europe that resembled the Spanish market. Choice of product market selection is influenced by product, market and marketing factors. This was done by a team of commercial experts who analyzed the micro and macro variables and the future prospects to influence apparel retail chain with profitable gains. In addition, Zara’s designers tracked closely the trends in consumer preferences and made products to match the changes. Normally, when companies identify new markets with similar consumer behavior, tastes, preferences, and purchasing power, it becomes easie r to penetrate such markets. This assertion is supported by the case study which indicates studies that showed the different countries in Europe and their market behavior in relation to apparels.   Ã‚