Sara External Environmental Analysis

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Zara External Environmental Analysis The apparel industry is a buyer driven, fast moving and highly profitable industry. Therefore it is highly important for a company that it understands its internal as well as external environment and always a keep a track of what is going around them. In order to fully utilize its resources, capitalize on its opportunities and remove potential threats Zara needs to be aware of its external environment (Dutta, 2003). One of the key elements of the industry is the importance of its imports and exports in the production stages. Zara is highly efficient in its production It is known for delivering new fashions and put them in the stores in around two weeks completing all the stages from designing to putting it in the stores. As the market is heavily labor intensive despite continually advancing technology, labor costs are a major issue for any apparel manufacturer. (Barletta & Hartman, 2006) Consideration needs to be taken on the part of Zara when deciding whether to outsource labor-intensive tasks to benefit from the cost advantages associated with it. 50% of the products Zara sells are manufactured in Spain, 26% in the rest of Europe, and 24% in Asian and African countries and the rest of the world. So while some competitors outsource all production to Asia, Zara makes its most fashionable items—half of all its merchandise—at a dozen company-owned factories in Spain and Portugal, particularly in Galicia and northern Portugal where labor is somewhat cheaper than in most of Western Europe. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia and Turkey (Business Week, 2006) Zara production system is highly efficient. The designers continually track customer preferences and place orders with the suppliers instantly. All internal and external production of Zara

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