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Zara Case - Essay Example

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Zara is a company that was founded by Amancio Ortega who by the year 2003, was rated as the largest shareholder and the richest man in Spain. Zara is the largest clothing company of the Spanish Inditex Group. With time, the company founder came to realize that manufacturing and retail needed to be closely associated with apparel industry where the demand of the consumer was very hard to predict or forecast…
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Download file to see previous pages This realization made him open the first Zara store in La Coruna in 1975 (The economist, 2001). With time, Zara Company decided to manufacture clothes for men, women, children and sportswear. In this expansion move, the company concentrated on women’s fashion clothes. The company expanded rapidly in the fashion and industry in 1980s in Spain. This expansion made the Zara group think internationally by opening stores in Portugal in 1988, USA in 1989, Sweden in 1994, Milan 2001 and Mexico in 1994 (The Economist, 2001). Zara’s competitors in the fashion and industry were amazed at how the company was rapidly expanding both locally and internationally. It is important to note that all these stores were opened under the company’s brand but when the ventured into the Asian market, the company’s managers had different views of the market in that they decided to exercise the concept of Franchising. For instance, in Malaysia, Kuwait and Saudi Arabia, the company operates as B2B Company. Zara did virtually no advertising unlike its international clothing competitor such as Gap, Benetton and H&M. Instead, the company places only two ads to promote its yearly sales and announce the opening of new store. This decision has led Zara to realize 0.3% average revenue instead of 4%. Zara store managers have no discretion about the look and the feeling of their stores (Wikipedia, n.d). Zara does not aim to produce classic clothes that are always in style instead the company intended to have its clothes to have fairly short life spans both in stores and customers wardrobe. In the year 2003, Inditex operated 1,558 stores in more than 40 countries of which 550 were part of Zara chain stores. The company has 90,000 employees of which 80% are female while the rest are male. Currently, Inditex is the biggest and fastest growing retailer while Zara is the biggest leading retail innovator in the world and that has established its place in the fashion industry by offering not only apparel and accessories for women fashion but also for children and men. More so, Zara Company had provided and established a unique environment for shopping by altering the manner others companies such as Gap and H&M store appear. The company changes its layouts oftenly to incorporate artwork. Zara has realized how to expand and make profit due to its capability to face the apparel challenges in the market. This paper aims to discuss the businesses model and key elements of disruptive busineses, identify distinctive competencies of disruptive companies and discuss competitive advantages of disruptive companies. Disruptive business model Disruptive innovation is a creation that aids establish a new market and value network, and it usually goes on to disrupt the an existing market and value network by replacing or displacing an earlier technology. Disruptive model is used by a company to improve a product in manner that the market does not expect by designing for different segment of consumers in the new market and afterwards by lowering the prices in the current or existing market. Businesses that adapt and applies disruptive model usually have a competitive advantage over its competitors in the market (Wikipedia, n.d). For instance, companies such as Dell and Zara have this model in order to remain in front of their competitors. Dell has survived the bust and now looks better for it since in one of the worst PC industry history, dell has gained enough share to become the leading PC seller in the world. Dell has survived the market in that it has been connecting the customers to the suppliers by adopting ...Download file to see next pagesRead More
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