Inditex as Fashion Company Based in Spain - Case Study Example

Marketing Case Study Inditex (Zara) is major fashion company based in Spain. It has a few stores in theUS, however, expansion has posed to be a threat to the company’s process. The threat posed is by placing stores far from logistics and factories center in Europe. Jones, McCommick, & Dewing (2012) The Company usually selects the cities to open new stores in very carefully. In the United States, there are 45 stores only as opposed to several hundred in other countries. The reason is because the company believes that foreign brands have a history of miserably failing in the US. The United States of America is acknowledged to be a graveyard for European retailers. Everyone who goes there is believed to have struggled with comparisons to Laura Ashley’s shutting down and Benetton’s declining. The US is believed to be a complex market as shopping malls are located in the middle of nowhere while the real fashionistas live around the East and West coasts. In addition, everyone nowadays is dressing in Wal-Mart, the Gap and T. J. Maxx. If one is to open a successful fashion retail stores in the US, they would have to open at least 300 and focus all their energy into it to make it work. Another problem causing the inability of Inditex (Zara) to break the US market is a matter of size. For starters, the store is European which means it makes European style clothes. The clothes just would not fit in the US fashion where most of the clothes are for small bodied people. Therefore, Inditex would have to ask themselves why make production more complex? More money would have to go into producing new clothes that fit the US market. Inditex is a pioneer in the fashion industry essentially imitating the latest fashion trends and speed the cheaper imitated versions into stores. Badia (2009) Every one of their brands follow the Zara brand: trendy, decent but inexpensive products sold to people in beautiful, high-end stores. Zara has similar prices to the Gap with coats going for $200, T-shirts at $30 and sweaters for $70. Inditex now makes 840 million clothes every year and has around 5,900 stores located in 85 different countries. Arnarsson (2009) stated those numbers keep changing as in recent years, the company has already been opening more than one store a day or about 500 every year. Recently, there are around 4400 stores located in Europe and about 2000 Spain only. The company’s roots go back in 1963 when the railway worker’s son, Ortega, started a company making robes and housecoats in La Coruna. Oshea (2012) reveals he opened his first store in 1975 in his home town and named it Zorba. Ortega wanted to keep the manufacturing business in his home town, therefore, from when he started his business, his model for business was differed from the norm. A traditional company in the West for fashion of the ready-to-wear kind sends its clothes designs to factories that are independent in countries like India and China where there is low-cost labor. In turn, these clothes are shipped back to stores and stocked in the spring and fall, with smaller shipments being carried out throughout the year. The PEST analysis of the Inditex (Zara) shows that politically, the main strength of the company’s production is to give support to the organic sector especially in the agricultural level and assist in the country’s eventual economy. The organic carrot production helps the society earn an income as it has a long tradition of self-determination, self-help and volunteerism. Moreover, the production promotes the practices and philosophy that address the interests of consumers in terms of health and wellness, animal welfare and the environment. The organic crops producers, handlers and processors belong to a flexible organization that ensures they meet the needs of their members and facilitate steady communication within the community. The government support emphasizes on the promotion of supplying goods that can account for great factor in the carrot production industry that increases the size and expansion of the production in the long run. Producers of new organic carrots continue to emerge to meet to the ever-evolving needs of the consumer and together, use the marketing systems to consumers directly. The organic sector contains multiple channels for marketing that include delivery of produce in boxes, packing plants, farmers; market, distributors and product brokers. On the economic side of the PEST analysis, there are some deficiencies in the infrastructure of the production of organic carrots that may impede achieving future goals. The resistance or ignorance of the society may come to affect the marketing of the organic carrots inside the market and to the customer as it is often inconsistent with organic production principles. The agricultural sector lacks sufficient knowledge in the production and has a limited knowledge of organic processing. The other factor affecting the organic production is the agricultural issues that tend not to be discussed by the larger institutions of agriculture. Another factor is the lack of attention and research taking place in the local government. Yet another problem is a challenge brought about by the continuous production that might not be satisfied due to changes in the weather patterns or soil degradation proving lack of research and support extended to the organic farmers, especially in the transition phase from traditional to organic systems. The issue surrounding product quality, production capacity and consistency presents future demand for organic carrots greatly affecting the ability for producers to supply products. Socially, the company has opportunities that identify areas that organic products the likes of carrots can perform according to the focus of the consumer. The organic production attracts the consumers and creates more on procurement of foods grown locally and associates local products with organic ones. The production of organic carrots is socially responsible for supporting fair labor practices which aid both large producers and small scale farmers. Also, there is an upcoming pattern of social consciousness among consumers that make the introduction of organic carrots to the market very promising. The gained advantage is due to a rise in public awareness of organic agriculture, an increase in support and consumer’s fear for pesticides, and stories in the press reminding the public that pesticides have adverse effects on health. Due to this, organic carrot production is within pest management line that could benefit producers of organic carrots. On the other hand, the main challenge on the producers’ group can be addressed through programs that teach appropriate organic production and promotes adding strengths to the producer service industry. The technological side of Zara’s PEST analysis indicates that there threats involved in the organic production of carrots. One such threat is the perception that methods of organic farming will provide insufficient food to feed the world. Another threat is the perception that organic products are not safe as traditionally produced food. The last threat is misinformation brought about by people ignorant to the organic sector and its representation. All three threats attract incompetency in the production of organic carrots. The company has managed to achieve an international brand. The company opens a new store on a daily basis. The expanding markets have now made people with different skills and countries with favorable terms consider investing in the company. Zara needs a strong management and leadership team of skilled individuals. The founder of Inditex has achieved tremendous success in expanding the organization and implementing decisions successfully. The main problem now is ways to enter new market and how to target new potential customers. A strong team of human resource managers is required if the company enters new markets in order to make lower costs of products. A consistent and continuous representation of the perspective of the company in the market is required to balance the market image. Diversity in workforce, if not handled in a proper manner, may eventually lead to complete wastage of resources and shutter the company’s image. Penetrating new markets for increased captured markets causes supply management issues as the company has not created many centers of distribution. Dawson, Larke, & Mukoyama (2006) state that quality management of both processes and products will be difficult and development of eco friendly sale points may greatly increase costs. Zara has recently enjoyed competitive leadership in fashion. So far, implemented strategies by the company provided a firm base to the company. The introduction of change in strategies is a very difficult process to conduct, however, to succeed in business and cope with today’s expanding markets, the company has to introduce new strategies and objectives. Dess (2012) argues no single strategy can help serve the purpose. Like before, the company has to decide an implementable strategy for the future. It has been recommended that all the decisions cannot be implemented in one single step. However, acting and waiting for the response of the act is recommended. Further decisions in the more actions to be taken are advised. A detailed scenario can be done before finalizing any decision made because the fashion market changes on a frequent basis that rough estimates may lead to results that are very undesirable. References ARNARSSON, E. (2009). Strategic and financial valuation of Inditex. BADÍA, E. (2009). Zara and her sisters: the story of the worlds largest clothing retailer. Basingstoke, Palgrave Macmillan. BALMER, J. M. T., & GREYSER, S. A. (2003). Revealing the corporation: perspectives on identity, image, reputation, corporate branding, and corporate-level marketing: an anthology. London, Routledge. BERNSTEIN RESEARCH. (2008). Inditex best-in-class mass-fashion retailer. Business Source Complete. 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