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...

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Zara Case Study Pre-course Assignment | International Business INTRODUCTION TO THE CASE Zara is a retail chain company which operates in the fashion industry. It's owned by Indixt group in North West Spain. It holds the ownership of some world famous brands such as Massimo Dutti, Pull & Bear, Oysho, Uterqüe, Stradivarius and Bershka. The very first Zara shop was open in 1975 and their specialty is frequent innovation of new product lines. Also they decided not to outsource their production to low-cost countries which is a trend in the same industry. At the same time they followed up a special policy of investing on opening a new store instead of investing on advertising which ultimately causes them to spread their branch network and make their products available everywhere. Zara controls most of the steps on their supply chain. Also they get the customer feedbacks and respond to them in an impressive manner. Through this, they are maintaining a loyal and frequently aware customer base. INTERNATIONAL BUSINESS 1
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Pre-course Assignment | International Business CASE QUESTIONS Which theory is the best representative of Zara's internationalization? When considering about the internationalization theories, there are three main theories to be taken in to consideration. 1. The Uppsala internationalization model 2. The transaction cost analysis model 3. The network model The Uppsala Internationalization model In this model, a firm is willing to intensify their commitments towards the international market when they grow up by experience. When they grow up their experiences in their own territory, they are tend to spread their business in to nearby markets and then to the foreign markets which got similar features to their operating country. Those similar features will be the culture, language and political system. 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 via independent representatives (export modes). Stage 3: establishment of a foreign sales subsidiary. Stage 4: foreign production/manufacturing units. Zara's Internationalization Theory After Zara opened its first store in 1975 in Spain, Zara started to open up new stores in every high populated city in Spain. When they covered their territory, they started to search for international opportunities in 1988. They grow up by their experience, expanded in their country and then reached the foreign markets. They selected Portugal as their new destination as the culture and geography is almost same as Spain. While experiencing their first international experience, they had to change their business model accordingly. INTERNATIONAL BUSINESS 2
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Pre-course Assignment | International Business They identified the countries with less geographical and psychic distance, open up a new store in there and spreading all over in that country. They expanded to Northern Europe by opening a store in Paris, the capital of fashions. Mexico was geographically in distance by they found it closer in
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