Zara Essay

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Group Project - The Success of Zara Date: 9th Dec, 2011 1. Introduction Zara, being the flagship chain store of the Inditex group, was found in 1975 by Amancio Ortega and Rosalia Mera. Zara started its international expansion in 1980 by first step into Porto, Portugal. Later, it entered the United States in 1989 and France in 1990. Since 1990, the pace of international expansion has increased and reaching over 73 countries presence nowadays. Followings are some evidence showing Zara’s supreme success in the industry. Its glamorous performance motivated us to investigate the success secret of Zara, which are great lessons to learned from. Strong market presence Zara is present in 74 countries today with more than 1,900 stores. Most of the stores are wholly-owned, remaining are franchises where local legislation exert restriction. Following figure shows the existing and potential geographical presence of Zara: High Profit Growth Zara’ s profit dominated the total earning of Inditex Group. In line with its successful internationalization. Sales figures constantly increase, following table shows figures from 2005 to 2009 that illustrated significant turnover growth: Key Reasons for Zara’s success In this part, two key factors are extracted as the unique tools that differentiate Zara from its competitors and contribute to its great success. They are namely Strategic International Expansion and Internationalized Production Chain. 2.1 Strategic International Expansion It is known that entry mode to international markets could be a vital factor for businesses. Yet, not many companies have been adopting a thoroughly investigated expansion strategy like Zara. Three major strategies that selected by Zara to expand into different marke ts involve careful and comprehensive planning.

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