1. How specifically do the distinctive features of Zara’s business model affect its operating economics?
The main concepts that can be taken away from Zara’s business model, which directly affect its operating economics, is low cost, high control, and quick turnaround. Zara is just one of six retail stores operated by, Inditex, the parent company. Inditex owns Comditel, a subsidiary, which manages the dyeing, patterning, and finishing of gray fabric and supplied finished fabric to external as well as in-house manufacturers. By owning this company, Zara is able to maintain low cost production while being able to finish fabric in a week. Zara has the ability to obtain its main raw materials as well as the final …show more content…
The simplicity of Zara’s production lines makes it easy for them to enter new markets. Along with their ability to track the consumers’ preferences, Zara will know which products work well in their new market and which products they need to remove. So overall, it can be said that Zara should successfully be able to adapt to new environments because of the advantages they hold in being a company that focuses on keeping costs to a minimum as well as their ability to react quickly to market demands. 4. What do you think of Zara’s past international strategy? In particular, comment on its past strategy for (product) market selection, its mode of entry, and its standardization of its marketing approach.
The international strategy that Zara used in the past contained in mixture of both standardization along with customization. In selecting and entering the new marketplace Zara used the standardized procedures. Some of these procedures included: (1) establishing a flagship store; (2) reporting and ordering procedures; and (3) expanding to countries with similar micro and macro economic conditions. Once a store was established in the new market, Zara was able to customize the type of store, supply items that were suitable for the new market, and position the brand accordingly.
Looking at the past market selections made by Zara, it is evident that they have been making good choices because they have not withdraw from a single market they have