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we rank a low rate of 1 out of four with larger weight of 12%.c.Brand image closely tagged to competitorsAs mentioned earlier, the problem in apparel industry is that it is very easy to copyeach other’s designs. This weakness is one of the toughest to deal with. Beside Zara,there are a lot of other brands that reach the international market that also build anexclusive image for them self. Therefore sometimes public cannot differentiateproduct from Zara and their competitors. In other words, it is going to be easy forthem to switch from one brand to another. Moreover, this will affect people’s
27judgment that all the brands that in the same level as Zara is actually the same orsimilar in term of types and products, or in other words, no clear differentiationbetween those brands. As a player in this industry, Zara needs to obtain consumerloyalty; therefore, we rank this weakness as their major weakness with rating 1 out of4. However, the weight of this factor is not that high since in apparel industry, despitethe existence of problems in the designs differentiation, a brand can develop a strategyto build consumers’ loyalty, just like what Inditex is trying so hard to do to its brands,including Zara. d.Lack of MarketingZara is lack of marketing such as promotion and advertisement. In Indonesia it isvery rare to see Zara logo and advertisement outside the store and in public area. Infact, Zara in different countries also does not have that much of advertisement. Theyonly depend on the strong brand image that they already have. This can be a toughweakness if the competitors keep on increasing their marketing strategy, especially inemerging countries. From all the strengths and weaknesses we come out with the result of 2.35. This is an averageresult from a perfect score of 4. So we can conclude that their effectiveness in utilizing theirstrengths to cover the weaknesses is satisfactory enough. 4.3 Financial AnalysisLIQUIDITY RATIOCurrent ratio defined as how much power does the current asset can cover currentliabilities. The result shows that both in 2011 and 2012 the current ratio is above 1,which is good for the company as their asset have more power to cover the liabilitiesfrom their assets.20122011Quick Ratio1.45891.436620122011Current Ratio1.51801.5104
28Quick ratio basically has the same indication like current ratio. But quick ratio onlylooks from the company’s quick asset. So inventory is not included in the formula.The result shows that the quick asset of the company still could cover the liabilitiesthat they have. LEVERAGE RATIO4.4 This ratio is to find out howmuch from the total asset that financed by the total debt. The higher the result willcause a higher financial risk. A healthy company should have a low debt to total assetratio because they need a more flexible finances. Debt financing could lower thedegree of flexibility. Zara in both 2012 and 2011 had a low result on this ratio, whichmeans only asmall amount of thetotal asset thatfinanced by the debts.