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International Expansion Plan: ZARA in U.A.E - Essay Example

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Summary
ZARA is a Spanish clothing brand and known for its unique design textures and clothing styles all around the world. ZARA has its stores in most of the countries in world where it satisfies a large audience of branded clothing and style lovers. …
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International Expansion Plan: ZARA in U.A.E

Download file to see previous pages... Recently, the clothing Giant has decided to expand its business size and open its first store in the lucrative markets of United Arab Emirates. The company has decided to open its first franchise in the world’s one of the most attractive tourist attraction and shoppers’ paradise, Dubai. In the coming pages, the focus will be on reviewing possible marketing strategies and adopting one of them to launch the business in Dubai and making this venture a success story. This expansion plan will also provide a brief overview of the business conditions, demand and opportunity for fashionable clothing in the competitive market of this Middle Eastern state. ZARA is currently operating at more than 100 locations with 1,516 stores running successfully. Amancio Ortega and Rosalia Mera formed the company in 1975. ZARA is the flagship clothing chain owned by Inditex group. Inditex also owns fashion-clothing brands Massimo Dutti, Pull and Bear, Oysho, Uterque, Stradivarius and Bershka. The clothing giant serves each market segment of the clothing business, including men, women and children (ZARA 2012). Macro Environment of UAE’s Fashion Industry Despite of the struggling economy and surges shown by luxury market in UAE, fashion industry has shown upward trend where major fashion labels expanding either within their national borders or internationally (Mesbah 2010). ZARA itself has penetrated its existence in other global markets by opening new outlets. Although market’s purchasing power has been limited due to financial crunch but ZARA and other fashion brands have shown great potential to survive this wave and attract more customers, which is evident from the soaring profits of ZARA and other fashion brands in UAE. Arab Emirates’ fashion industry is now worth around $ 21 billions a year in which ZARA’s expected contribution is around $ 100 million by 2015 (Asia Rooms 2012). PEST Analysis Political Environment The political environment of United Arab Emirates is considered to be one of the most stable in the world. The political structure is headed by the dynasty, which is handling the authoritarian powers from decades. The confederation consists of seven independent emirates. Dubai is the largest emirate and produces the largest share of revenues for the confederation. Dubai is a free port and considered to be practicing the most liberal trade policies. There are no duties or financial taxation requirements imposed on the business personals to conduct their business practices in the emirate. Barriers to export and ease of access of foreign markets into the local market is relatively easy due to the investor friendly policies of the government. Beside these financial benefits, Jebel Ali is also an investors’ heaven where furnished offices, warehouses, showrooms and stores can be found easily. Jebel Ali is a free economic zone located in the suburbs of Dubai. The legal framework for business in Dubai allows up to 100% ownership rights to professional companies and their subsidiaries (UAE Interact 2012). Economic Environment Dubai has a sound economic structure where the major contributing industries are tourism, real estate, financial services and oil and gas exploration. The economic structure of Dubai allows businesses to not to pay direct taxes on their profits and income. Custom duties are as low as 4% and the investors enjoy exemptions from trade barriers, foreign exchange controls and restriction of quotas on the trade of commodities (Gvernment of Dubai 2012). Social Environment The social lifestyle of Dubai is rich and diversified due to the presence of large numbers of expatriate and tourists. It is ...Download file to see next pagesRead More
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