Critically evaluate the comparative transnational effectiveness of Benetton and Zara
Critically evaluate the comparative transnational effectiveness of Benetton and Zara
Zara and Benetton are two of the most acknowledged clothing companies in the fast fashion industry. The different international business strategies they adopt result in different transnational effectiveness. To begin with, this essay will give a brief overview of the motivation, means and mentality of these two companies, and then compare how they sustain their competitive advantages through integration, responsiveness and flexibility. Next, it will highlight their evolving strategies and demonstrate the structures, worldwide learning and innovation models they adopt to support the strategies. Finally, the evolving global roles will be analyzed.
Motivation, Means and Mentality
As well-known leading clothing corporates, Zara and Benetton both choose to expand aboard. Although their motivations to internationalize are quite similar, their means and mentalities are different in many ways.
Basically, there are two kinds of motivations: traditional motivations and emerging motivations. The biggest traditional factor that drives Zara and Benetton to expand aboard is market-seeking. The former CEO of Inditex, Jose Maria Castellano, pointed out that the limited market growth potential in domestic market was the main driver for Zara to go aboard (Martinez, 1997). In 1988, Zara opened its first overseas store in Oporto, Portugal as the first step to occupy global market (Lopez and Fan, 2009). Nowadays it has expanded into 88 countries and has more than 6,500 shops worldwide (Ruddick, 2014). Like Zara, Benetton set up its first overseas retail store only one year after the opening of 3 domestic shops. In 2009, foreign market accounts for around half of Benetton’s overall sales (Palladino, 2010). Zara and Benetton’s global expansion is also driven by emerging motivations. They both capture global demand to achieve scale economies. Because Zara and Benetton competes in a fast fashion
Zara and Benetton are two of the most acknowledged clothing companies in the fast fashion industry. The different international business strategies they adopt result in different transnational effectiveness. To begin with, this essay will give a brief overview of the motivation, means and mentality of these two companies, and then compare how they sustain their competitive advantages through integration, responsiveness and flexibility. Next, it will highlight their evolving strategies and demonstrate the structures, worldwide learning and innovation models they adopt to support the strategies. Finally, the evolving global roles will be analyzed.
Motivation, Means and Mentality
As well-known leading clothing corporates, Zara and Benetton both choose to expand aboard. Although their motivations to internationalize are quite similar, their means and mentalities are different in many ways.
Basically, there are two kinds of motivations: traditional motivations and emerging motivations. The biggest traditional factor that drives Zara and Benetton to expand aboard is market-seeking. The former CEO of Inditex, Jose Maria Castellano, pointed out that the limited market growth potential in domestic market was the main driver for Zara to go aboard (Martinez, 1997). In 1988, Zara opened its first overseas store in Oporto, Portugal as the first step to occupy global market (Lopez and Fan, 2009). Nowadays it has expanded into 88 countries and has more than 6,500 shops worldwide (Ruddick, 2014). Like Zara, Benetton set up its first overseas retail store only one year after the opening of 3 domestic shops. In 2009, foreign market accounts for around half of Benetton’s overall sales (Palladino, 2010). Zara and Benetton’s global expansion is also driven by emerging motivations. They both capture global demand to achieve scale economies. Because Zara and Benetton competes in a fast fashion