Identifying, Analyzing and Critiquing the Internationalization Strategy and Activities of Zara Store - Research Proposal Example

Identifying, Analysing and Critiquing the Internationalization Strategy and Activities of Zara Store and Its Efforts to Enter and Establish Itself inChina Table of Contents Table of Contents 1 1. Working Title: 2 2. Introduction 3 3. Key Research Question(s) 3 4. Literature Review 4 5. Methodology 6 6. Research Planning 7 7. Time Scale 8 8. Discussion of Ethical Implications 8 References 9 1. Working Title: “Identifying, Analysing and Critiquing the Internationalization Strategy and Activities of Zara Store and Its Efforts to Enter and Establish Itself in China” 2. Introduction In case of economics, internationalization strategy defines the process through which international enterprises involve to extension in international business. Over the years, many economists have researched on international activities and have presented several views on internationalization (Grünig and Morschett, 2011; Ryan, 2011). On the contrary, emerging economy is define as an economy where strong growth can be seen identically and apart from that trend of international trade has been also observed in an increasing manner (Balcells, 2010). Zara is a Spanish retail store, which was established in the year 1974. It belongs to The Inditex Group’s one of the largest distribution group in Spain. Over the years, it has extended its business in more than hundred countries. According to the observation, it has been apparently identified that Zara has specifically captured a larger market in Asia and Europe. The company operates its business in clothing and shows products. Besides, clothing segment, it also offers bags for ladies. Zara has renowned itself in global market through effective marketing communication tool and prime location wise promotional activities on mass media platform. At the same time, it has maintained its competitive advantages in international market with the competitors like Hennes & Mauritz AB (H&M) and MANGO among others (Zara, 2010). 3. Key Research Question(s) The aim of this proposed research is to evaluate and critique the Internationalization Strategy and activities of Zara Store and its Efforts to penetrate and Establish Itself in Chinese market. For achieving the research aim, the proposed study will entail answering core and supporting research questions. Correspondingly, the core research question that would be addressed though the proposed study is being framed below: “Does Zara undertake appropriate choice of entering mode strategy while entering in China?” In order to successfully answer the core research question, two supporting questions are being framed, which include: “Does Zara succeeded in attracting Chinese consumers’ towards its product?” “Does Zara is able to attain the competitive advantages in the Chinese apparel market?” 4. Literature Review According to Joy & et. al. (2012), new trend of fashion has been seen in international market, which refers to a low cost clothing intention among the consumers’ that has been known as a “fast fashion” trend. This fast fashion trend has been claimed to cater the needs of youth consumers’ to experience luxury fashion at a reasonable cost. Thus, this trend has affected global market with a lightning speed (Joy, & et. al., 2012). Zara has been also using this trend since more than one decade. In the year 2006 Zara had launched its first store in Chinese market. Within the span of five years the enterprise had extended its business across China. According to a report, it has found that during 2010 Zara was operating more than fifty stores in Chinese market (International Trade Centre, 2011). As per the observation, it has been identified that during the entrance of the Chinese market Zara has targeted the youth consumers’ segment. Through its retail store the company emphasised on selling large volume of products. At the same time, the company has also chosen educated and higher income based consumers’. Consequently, Zara has captured the Chinese market with its cheap luxury products along with affordable cost. Moreover, it has been also observed during the marketing activities in Chinese market the company has not been relied on its own countries supply chain, rather it has outsourced its products from China and Turkey for maintaining regularity in terms of supply (Joy, & et. al., 2012; Lynn, & et. al., n.d.). In case of internationalization, Zara has used “fast fashion” strategy for entering the Chinese retail market. In accordance with IBS Case Development Centre (2013), Zara has used just in time approach during its production purpose and it has also aimed on low cost product supply in Chinese market rather than U.S. market. Apart from this the company has also emphasised on advertising before entering the Chinese market (IBS Case Development Centre, 2013). According to the observation, it has found that most of the multinational enterprises use different strategies during the entry phase in international market. Even Zara has used several strategies for different countries. In case of most of the European and South American countries the company has used own subsidiary strategy, which is most expensive and also is high level risk involved in this internationalization strategy. In addition with that Zara has also used joint venture strategy with the German firm Otto Versand at the time of capturing the larger markets in Europe. Apart from this, the company has also utilized franchising approach in case of lost sales forecasted countries such as Saudi Arabia, Kuwait, and Malaysia (Lopez, & Fan, 2009; Cabré Garcia, 2010). However, Zara during entering into the Chinese market was directly focused on establishing its own subsidiaries,. In accordance with Mike Peng (2013), Zara has succeeded domestically, which has taken the organisation to win internationally (Peng, 2013). Apart from this, Joy & et. al. (2012) stated that Zara stores have shifted its supply chain in Chinese market for better distribution and inventory management. As it was observed, three weeks have been needed for bringing material from European market through shipping transportation, whereas it takes around five days from Chinese or Turkey market. According to an analysis, it has found that Zara has outsourced 13% of its materials from Chinese market (Joy, & et. al., 2012). In addition it can be asserted that Zara store has recognized Chinese apparel market as rapidly growing. It has been observed that Zara has especially concentrated on Chinese market with several unique strategies (A.T. Kearney, 2013). In accordance with Kurt Salmon (2012), several factors have put China in the spotlight of Internationalisation. Since last decade, it has been observed that several western brands have shown their interest on Chinese market because of the fact that China is one of the emerging economies of global market. Moreover, it has been also identified by the economic experts that due to demographical development, China has been on top of the preference list of the multinationals. Finally, over the years it has been also observed that quite easily multinationals access on Chinese market (Salman, 2012). Consequently, it can be asserted that for entering the Chines market Zara has implemented social media and it has also maintained government regulations before advertising in social media (Wang, n. d.). Moreover, Zara has also established e-commerce platform across the high potential markets such as China, Canada and Russia. As per the Best global brands report the company now offers online facilities in 21 countries around the world (Interbrand, 2013). 5. Methodology The proposed research will be a qualitative study. The qualitative research method has been chosen for the proposed study as the research primarily relies on the review of literature. Moreover, qualitative method is conventionally considered as an appropriate method for conducting research study related with the business organizations (Roshan & Deeptee, 2009). As data collection method secondary sources such as peer reviewed journals, articles and books will be used. Besides, company’s online websites along with other relevant business reports pertaining to its marketing strategy in China will be used. Additionally, it is vital that the data collected are carefully analysed using appropriate tools and techniques. Correspondingly, the data complied will be analysed through grounded theory analysis tool. The grounded theory is being chosen as the analysis tool for the proposed research as it is considered to be simple and it is also quite easy to interpret and generalize the data compiled through the use of the grounded theory (Kolb, 2012). 6. Research Planning The proposed research aims at evaluating and critiquing the internationalization Strategy and activities of Zara Store and its efforts to penetrate and establish itself in Chinese market In order to meet the objectives of the proposed research literature review will be conducted and the grounded theory will be applied. The flow chart of the research strategy is being depicted below: 7. Time Scale Activities Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Submission of Research Proposal             Approval from Supervisor             Conducting Literature Review             Collection of Data             Conducting Data Analysis             Determining Findings             Conducting Discussion             Conclusion           Proof Reading Final Submission of Dissertation             8. Discussion of Ethical Implications It is vital to place significant consideration on ethical issue, while conducting research study. Notably, it is often very difficult to generalize qualitative data. In order to ensure effective generalization of the data collected due consideration will be placed, while interpreting the data. Moreover, the validity and the reliability of the research study largely rely on the accuracy of the data collected from secondary sources. Thus, for ensuring precision of the study, priority will be given during the data collection. Responsively, lately published and updated journals, articles and books will be reviewed. References A.T. Kearney, 2013. Winning China’s Apparel Market. Stages of Development for Select Major Apparel Categories, pp. 1-10. Balcells, R. T., 2010. Catalonia: An Emerging Economy: the Most Cost-effective Ports in the Mediterranean Sea. Sussex Academic Press. Cabré Garcia, J. M., 2010. Zara and Benetton: Comparison of Two Business Models. Organización de Empresas, Vol. 1, Iss. 1, p. 40. Interbrand, 2013. Best Global Brands 2013. Libraries. [Online] Available at: http://www.interbrand.com/Libraries/Branding_Studies/Best_Global_Brands_2013.sflb.ashx [Accessed on May 06, 2014]. Grünig, R. & Morschett, D., 2011. Developing International Strategies: Going and Being International for Medium-sized Companies. Springer. IBS Case Development Centre, 2013. Strategy- 1. H&M vs Zara: Competitive, pp. 8-9. International Trade Centre, 2011. The Chinese Market for Clothing. Zara in China, pp. 61-63. Joy, A. & et. al., 2012. Fast Fashion, Sustainability, and the Ethical Appeal of Luxury Brands. University of Notre Dame, pp. 273-295. Kolb, S. M., 2012. Grounded Theory and the Constant Comparative Method: valid Research Strategies for Educators. Journal of Emerging Trends in Educational Research and Policy studies, Vol. 3, No. 1, pp. 83-86. Lynn, H. & et. al., No. date. H&M vs. Zara Comparing Marketing Strategies. Current Marketing Strategy. [Online] Available at: http://dianajoines.files.wordpress.com/2009/09/final-term-paper-hm-vs-zara-marketing-strategies.pdf [Accessed on May 06, 2014]. Lopez, C. & Fan, Y., 2009. Internationalisation of the Spanish Fashion Brand Zara. Journal of Fashion Marketing and Management, Vol. 13, Iss. 2, pp. 279-296. Peng, M., 2013. Global Strategy. Cengage Learning. Roshan, B. & Deeptee, P. R., 2009. Justifications for qualitative research in organizations: A Step Forward. The Journal of Online Education, pp. 1-7. Ryan, J., 2011. Chinas Higher Education Reform and Internationalisation. Taylor & Francis. Salman, K., 2012. Entering China – Still A Big Opportunity When Doing It Right!. Retail Insights, pp. 2-8. Wang, X., No. date. Zara Synopsis. Summary of Strategies. [Online] Available at: http://www.sfu.ca/~sheppard/478/syn/1123/Synopsis6.pdf [Accessed on May 06, 2014]. Zara, 2010. Our Mission Statement. Environmental policy. [Online] Available at: http://www.zara.cn/cn/en/company/our-mission-statement-c18001.html [Accessed on May 06, 2014]. Read More