SOUTHEAST UNIVERSITY

Textile Engineering Department

Welcome to our presentation On Business strategy of ZARA

Submitted To:
Md.Sanuwar Rashid Lecturer Department Of Textile Engineering Southeast University

Submitted By:

Amit Biswas Id: 2010000400064 Batch: 13

Introduction
Zara is a Spanish clothing and accessible

retailer based in arteixo, galecia, and founded in 1975 by Amancio Ortego & Rosalia Mera. It is the flag ship chain store of the Inditex group; the fashion group also owns brands such as Massimo Dutti , Pull & Bear, Oysho, Uterque, Stradivarius and Bershka

Zara business system:

Zara business system can be divided into four steps-a).Designing b). Sourcing &manufacturing c).Distributing d).Retailing

a).Designing :

Zara designing section has three production line-for women, men, children had a creative team consisting of designer, sourcing specialist and product development personnel. Zara created two basic collections each year that wear phased in through the fall/winter and spring /summer season, starting in july and January .Zara designer attend different trade fair and ready to wear fashion show, and collect different brand catalogs. After that they worked with store manager to develop initial sketches. Designer then selected fabric at the same time they determine the relative price of that product would be sold and guiding the further development of sample. Sample are prepared and presented to the sourcing and product development of sample .Sample are presented to the sourcing and product development personnel to identify the product requirement whether item would be insourced or outsourced and set timeline to ensure the initial collection arrived in stores at the start of selling.

B). Sourcing and manufacturing: Zara source fabric, other inputs and finished products from external suppliers with the help of their purchasing office. Their one half of the purchased fabric was gray to facilate in season updating with maximum facilitate.Theydyeing, finishing, patterning this fabric by the conditel which is 100% owned subsidiary of inditex. About 40% finished garments manufactured internally.Approxiametly two third of the items were sourced from Europe and North Africa and one third from asia.Most fashionable item which is riskiest they produce in small lot internally or contract by supplier whose were located closely.More basic item that were price sensitive than time sensitive order to the outsourced supplier such as Asia.

Distribution
Approximately 75% of Zaras merchandise by weight was shipped by truck by a third-party delivery service, Portugal, France, Belgium, the United Kingdom, and parts of Germany.
The remaining 25% was shipped mainly by air via KLM and DHL from airports in Santiago de Compostela and porto in portugal. Products were typically delivered within 2436 hours to stores located in Europe and within 24 48 hours to stores located outside Europe.

Retailing
Zara aim to offer fresh assortment and accessories Shoes,bags,scarves,jewelry

and more recently,tioletaryies and cosmetics Relatively their price is low in above material.

Merchandising
Product lines were segmented into womens, mens, and childrens, with further segmentation of the womens line, age

targets. Zara spent only 0.3% of its revenue on media advertising, compared with 3%4% for most specialty retailers.

Zaras International Expansion

Zara was by far the most internationalized as well as the

largest of Inditexs chains. Overall, international operations accounted for 56% of Zaras stores and 61% of its sales in 2001. The profitability of Zaras operations was not disaggregated geographically but, according to top management, was roughly the same in (the rest of) Europe and the Americas as in Spain. Zaras international expansion is done by following some process i.e. Market selection, Market entry, Marketing ,Management, Growth option.

Market Selection
To get the opportunity of market entry in a country , a commercial

team from headquarters conducted both the macro and micro analysis.
Macro analysis focused on local macroeconomic variables and their

likely future evolution, particularly in terms of how they would affect the prospects for stores (e.g., tariffs, taxes, legal costs, salaries, and property prices/rents).
Micro analysis, performed onsite, focused on sector-specific
information about local demand, channels, available store locations,

and competitors.
The explicitly competitive information that was gathered included

data on levels of concentration, the formats that would compete most directly with Zara, and their potential political or legal ability to resist/ retard its entry, as well as local pricing levels.

Market Entry
Three different modes of market entry were used internationally:

company-owned stores, joint ventures, and franchises, In contrast to Spain, where all of Zaras stores were company-owned and managed.
Zara typically established company managed stores in key, high-

profile countries with high growth prospects and low business risk. Company-owned stores did, however, entail the greatest commitment of resources, including management time. As a result, Zara had used two other modes of market entry, franchises and joint ventures, in about half the countries it had entered since 1998. Overall, nearly one-third of the international stores of Inditexs other chains were franchised.
Zara used joint ventures in larger, more important markets where

there were barriers to direct entry, most often ones related to the difficulty of obtaining prime retail space in city centers.

Marketing
Zara would first open a flagship store in a major city and, after

developing some experience operating locally, add stores in adjoining areas.

Zaras promotion policies and product offerings varied less

internationally than did its prices or positioning.

product offerings catered to physical, cultural, or climate differences

(e.g., smaller sizes in Japan, special womens clothes in Arab countries, different seasonality in South America),
85%90% of the basic designs sold in Zara stores tended to be

common from country to country.

Management
Zaras international activities were organized primarily under a

holding company created in 1988, Zara Holding, B.V., of the Netherlands.

Country management teams typically consisted of a country general

manager, a real estate manager, a human resource manager, a commercial manager, and an administrative and financial manager. Such management teams sometimes served clusters of neighboring countries (e.g., Belgium and Luxembourg) if individual countries were too small.
Corporate as well as country managers ability to control local store

operations was enhanced by the use of standardized reporting systems

Compairation of business strategy

ZARA competes with other local retailers & some point of business competitions are follows: The Gap, largest retailer but
(1)Outsourced all production, but store operation U.S. centric.

(2)Supply chain that was too long, market saturation, imbalance among companys 3 store chains.

H&M high performing apparel retailer

(1)Outsourced all production. (2)Slightly lower price than Zara.

Benetton, emphasized brightly colored knitwear (1)Invested relatively heavily in production. (2)Licensees ran its stores.

Zara, largest & internationalized Inditexs chain(1)Establishment of just-in-time manufacturing system. (2)Advanced IT system to connect headquarter, supply, production & sales location. Strong business techniques establish their position with other famous retailers.

THANK YOU