IBM 416 Lecture Notes - Lecture 7: Inditex, Emerging Markets, Management Consulting

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Article 2: Zara, Spain’s most successful brand, is trying to go global (Alberto)
· Why is a freshly cut jacket is like fresh fish?Fresh fish, like a freshly cut jacket in the latest colour, sells quickly
and at a high price. Yesterday's catch must be discounted and may not sell at all
· What are the world’s two biggest clothes makers? Inditex and H&M
· What is the main reason of Zara’s success in Europe? Zara’s ability to keep up with fashion trends as quickly as
they develop is one of their major advantages. Because their supply chain is more compact and remains close to the point
of sale, the speed at which new clothing can be produced outpaces all other competitors, giving them the market to
themselves for a short while as their competitors play catch up.
· What are the two challenges that Zara is facing? Can it go global? And will its “fast-fashion” model be copied, or
bettered, by others?
· Where does Zara make their production? Spain, Portugal, and Morocco
· Why should Zara look for new markets? As the article stated, the European sales have stagnated after a long
incline and if Zara wants to become a global superpower in the world of fashion, it must expand to uncharted markets that
may lead to lucrative business opportunities. If it does not, it may find itself becoming a lukewarm brand on a steady
decline, while losing market share to competitors H&M and others.
· Why Zara struggled in the U.S.? The sales in America have not been as high as Zara desires. This is because the
trendy, slim fit clothes offered by Zara are not congruent with the current fashion tastes of the majority of Americans
outside of the major cities.
· How do the customer tastes differ among Europe, U.S., and China? In Europe and China, women prefer tightly
fitted clothes, as opposed to America, where most people preferred looser clothing. Men in Europe also enjoy a tight fit.
The Chinese and Europeans both prefer similar looking clothes, but the Chinese market leans more towards pastel colors
vs the more strong colors of the European tastes.
· What should Zara do to be successful in the U.S.? Even though Zara is known as a European brand, it could
benefit from adjusting its style of clothing to suit the American demand more effectively. Perhaps if they provide different
types of fights to accommodate the roomier fit that some American people prefer, as well as investing directly in
manufacturing shops in the United States, Canada, or Mexico to maintain the quick ability to produce fresh, fashionable
clothing. Hiring more designers in the United States could also vastly improve the quality of the clothes offered.
· Why did Zara buy a store in Manhattan for $324m? Zara bought that store to create an image for itself. They
want to be perceived as a fashionable, chic trend setter. They bought it to have a store that matches their brand and
reinforces their positioning.
· What are the challenges of Chinese market for Zara? Due to the fact that China is so far from where the Zara
clothes are manufactured, the cost of exporting these goods to China inherently makes them more expensive to the end
users. Because of this, Zara must make a decision whether to adjust its prices and image or to cement itself a more
expensive, higher quality alternative to consumers. Fighting the competition in China is just one challenge, however, as
the government also has the ability to interfere. As the article stated, the Chinese government critized Zara as being made
of poor quality. The fact that the Chinese government may be doing this to help the home-grown firms and inhibit foreign
competition could develop into a problem if it continues.
· What is the genius of Mr Ortega's model? The genius is that it allows for Zara to stay ahead of its competitors in
terms of fashion trends and provide its customers with high quality, accessible clothes.
· How are the competitors responding to Zara? H&M is very close to Zara is competing directly with them. Gap,
on the other hand, is not able to readjust to change their business model, as it would mean a revamp of the entire corporate
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