The Success of Zara - Essay Example

Zara, together with the other five chains under the umbrella of Inditex are involved in various business industries such as manufacturing, textile, real estate, and finance among others (Ghemawat and Nueno 7). Despite being under the same umbrella of Inditex, each chain operates independently, a factor that has contributed to Zara’s massive success in comparison to the other chains. With an expansion strategy from the firm’s founder, Amancio Ortega Gaona, Zara has been able to open new stores in the past years with the first opened in an upmarket shopping street in La Coruna, in 1975, in Spain, Zara’s home base (7). The expansion has, however, seen it go international with other store being opened beyond the Spanish boundaries from which it has been able to expand substantively especially in logistics and IT (9).

            Zara has been able to beat its competitors in the market by making customer preference their priority, enabling the production of distinctive products that meet the customers’ needs. In a strategy named ‘vertical integration,’ Zara observes the current trends in the fashion industry and works towards the production of products that are considered the next trend in the fashion industry. Ideally, this has been the greatest success orientation for Zara. In addition to expansive marketing, Inditex, as an umbrella organization through its supply chains including Zara, has established an effective and able management team that runs each of the chains with the utmost objective in achieving success (6). This aspect has as well contributed immensely towards the overall success of Inditex and its chain units. Despite the successful orientation that Inditex has been to experience in the past years, difficult times are looming in the new future for this firm considering that a majority of the stores under it are working on expansive strategies that would see them acquire new market bases. This could be disastrous to Inditex considering that each of the chains operates on an independent basis.

            Other than the expansion of the subsidiary chains, Inditex faces another challenge that of home-based operation mechanism. It is evident that bigger markets for the fashion products that Inditex deals in are out of Spain, yet Inditex has concentrated it's it operations just within Spain, unlike its supply chains that have expanded significantly out of Spain into other potential markets globally (6). This is an aspect that if not properly checked could result in the downfall of Inditex despite the efforts it has put in sustaining successful operations. However, despite the challenges that face Inditex, it is evident that it is still very successful in comparison to its three major competitors by realizing a higher net income as well as provision of employment opportunities to more individuals.

            Going by the success so far realized by Zara, it is evident that it can still do better and achieve greater success in the future. In order to achieve this, Zara could work out on production mechanics having realized that production costs are cheaper in Europe as compared to Spain. This could substantively increase the profit margins in the future.