Zara Incorporation as a Business - Essay Example

Download file to see previous pages... The discourse would discuss the reasons why Zara’s business model could be disruptive to the apparel industry. Likewise, the essay would also describe how Zara’s business model is different from the others from a risk management perspective and why is this so important to Zara’s success. Amancio Ortega, considered the richest man in Spain, founded Zara in 1975 in La Coruna, Galicia, Spain. As revealed in the Zara CaseQuest (Doiron: Introduction, n.d.), “Zara is one of the most successful apparel manufacturing and retail business in the world today. They are not the biggest, but their profit margins and growth rates are industry leading” (par. 3). The task was explicitly stated as identifying what business is Zara in. To enable to accurately respond, one needs to follow the identified process with twelve distinct learning tasks, including expounding on the disruptive business model; the apparel industry business model (with Gap, as the proxy for players within the industry); the customer characteristics of Zara; the unique customer behaviors and behavior drivers; and finally Zara’s core competencies and its distinct business model to assist in responding to the task.
As a retail chain of Inditex, Zara’s major competitors were revealed as Gap, H&M, and Benetton (as shown in Exhibit 4 of the Case) (McAffee, Dessain, & Sjoman, 2007, p. 15). The case analysis would examine the business model of the apparel industry with Gap as the predominant player. Using comparative financial performance, the following bar chart would reveal the comparative performance of these firms using net operating revenues and net income within the apparel industry from 2001 to 2002: Figure 1: Inditex and Key Competitors: Net Operating Revenues in Millions for 2001 and 2002 Source of Financial Data: (McAffee, Dessain, & Sjoman, 2007, p. 15) Figure 2: Inditex and Key Competitors: Net Profits in Millions for 2001 and 2002 Source of Financial Data: (McAffee, Dessain, & Sjoman, 2007, p. 15) It can be deduced from the column charts that despite Gap’s reflecting dominance and leadership in terms of net operating revenues for both 2001 and 2002, one could observe that net income reflected in 2002 for both Inditex (Zara) and Gap are closely comparative; indicating their stiff competition despite differences in applications of business models. After reading the instructions and process outlined in the Zara CaseQuest (Doiron, n.d.), the paper is hereby presented to describe both the business model for the industry and the business model for Zara. The discourse would discuss the reasons why Zara’s business model could be disruptive to the apparel industry. Likewise, the essay would also describe how Zara’s business model is different from the others from a risk management perspective and why is this so important to Zara’s success. Zara’s Business Model Zara is a retail chain of Inditex, a multinational clothing retailer and manufacturer headquartered in La Coruna, Spain, that was founded in 1975 and designs and manufactures clothes for women, men and children according to customers’ desires. Zara eminently applies a disruptive business model, a theory originally adopted by Clayton Christensen from the concept of disruptive innovation. In Christensen’s official website, disruptive innova ...Download file to see next pagesRead More