Zara_Case_Study_Pre-course_Assignment_In.docx - Zara Case Study Pre-course Assignment | International Business INTRODUCTION TO THE CASE Zara is a retail
Zara_Case_Study_Pre-course_Assignment_In.docx - Zara Case...
Zara Case StudyPre-course Assignment | International BusinessINTRODUCTION TO THE CASEZara is a retail chain company which operates in the fashion industry. It'sowned by Indixt group in North West Spain. It holds the ownership of someworld famous brands such as Massimo Dutti, Pull & Bear, Oysho, Uterqüe,Stradivarius and Bershka. The very first Zara shop was open in 1975 andtheir specialty is frequent innovation of new product lines. Also theydecided not to outsource their production to low-cost countries which is atrend in the same industry. At the same time they followed up a specialpolicy of investing on opening a new store instead of investing onadvertising which ultimately causes them to spread their branch networkand make their products available everywhere.Zara controls most of the steps on their supply chain. Also they get thecustomer feedbacks and respond to them in an impressive manner.Through this, they are maintaining a loyal and frequently aware customerbase.INTERNATIONAL BUSINESS1
Pre-course Assignment | International BusinessCASE QUESTIONSWhich theory is the best representative of Zara's internationalization?When considering about the internationalization theories, there are threemain theories to be taken in to consideration.1. The Uppsala internationalization model 2. The transaction cost analysismodel 3. The network modelThe Uppsala Internationalization model In this model, a firm is willing tointensify their commitments towards the international market when theygrow up by experience. When they grow up their experiences in their ownterritory, they are tend to spread their business in to nearby markets andthen to the foreign markets which got similar features to their operatingcountry. Those similar features will be the culture, language and politicalsystem. There are three stages in this Uppsala Internationalization model.These steps shows how a company moves to an international market.Stage 1: no regular export activities (sporadic export). Stage 2: export viaindependent representatives (export modes). Stage 3: establishment of aforeign sales subsidiary. Stage 4: foreign production/manufacturing units.Zara's Internationalization Theory After Zara opened its first store in 1975 inSpain, Zara started to open up new stores in every high populated city inSpain. When they covered their territory, they started to search forinternational opportunities in 1988. They grow up by their experience,expanded in their country and then reached the foreign markets. Theyselected Portugal as their new destination as the culture and geography isalmost same as Spain. While experiencing their first internationalexperience, they had to change their business model accordingly.INTERNATIONAL BUSINESS2
Pre-course Assignment | International BusinessThey identified the countries with less geographical and psychic distance,open up a new store in there and spreading all over in that country. Theyexpanded to Northern Europe by opening a store in Paris, the capital offashions. Mexico was geographically in distance by they found it closer in