Zara Case Study

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BSc Economics and Business Administration Mini Project The ZARA Case Study in Economics and The Organisation of Economic Activity Contents Introduction 4 Describe the Value Chain of Inditex 5 From Agency Theory view, describe the incentives structure for the store managers 10 From Transaction Costs Economics view, discuss if it makes sense to outsource work to “captive” suppliers. What would be the alternatives, and how do you evaluate them? 12 In relation to the fashion sector in Europe, does Inditex posses a competitive advantage? Use the VRIO framework as the basis of your discussion 16 List of sources 19 Introduction Inditex is an eight-brand group of the world’s largest fashion retailers with its headquarters located in La Coruna, in Spain. Founder and majority owner of the company is Amancio Ortega, famous Spanish entrepreneur. Chairman and CEO of the company is Pablo Isla Alvarez de Tejera. Inditex’s corporate culture is based on close communication between the customers and the employees. Today company has more than 100.000 employees worldwide. The largest brand of Inditex is Zara, which runs three independent product lines for women, men and children where most of the accent is stressed on women’s garment. Each of the lines is managed by separate team which consists of Diression de Tiendas (DTs). DT’s collaborate with commercials, country managers, HR managers and headquarters. We can freely say that Zara is a pioneer in fast fashion industry. The customer is at the heart of their unique business model, which includes design, production, distribution and sales through their extensive retail network. The Zara case study is an interesting example on how one company can be successful on the market. The dynamics of the company and its adapting ability show how important is the right thing regarding market’s needs. Zara

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