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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.


2.1.1 Wholly Owned Subsidiary

Wholly owned subsidiary is the entry mode that involves the...

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