Zara Fast Fashion
1. What does it take to succeed in the global apparel industry? Is that different from what it takes a regional player to succeed? 2. What elements of Zara’s value chain help/hurt its ability to grow? Do you think Zara should grow 3. How would you advise Salgado to proceed on the issue of upgrading Zara’s POS systems?
Intro
- Inditex (Industria de Diseño Textil) of Spain, the owner of Zara and five other apparel retailing chains
* Global Apparel Chain
- Characterized as a prototypical example of a buyer-driven global chain, in which profits derived from "unique combinations of high-value research, design, sales, marketing, and financial services that allow retailers, branded marketers, and branded manufacturers to act as strategic brokers in linking overseas factories" with markets.
Buyer-Driven
Global Chains
(e.g., Apparel) | Producer-Driven
Global Chains
(e.g., Automobiles) | Upstream Structure | Fragmented, locally owned, dispersed and often tiered production | Global oligopolies | Downstream Structure | Relatively concentrated intermediaries | Relatively fragmented intermediaries | Key Cross-Border Links | Retailers, branded marketers and branded manufacturers | Producers | Rent Concentration | Downstream | Upstream | Types of Rents | Relational | Technology | | Trade policy | Organizational | | Brand name | | Typical Industries | Labor-intensive consumer products | Capital- and technology-intensive products |
* Production
- These large cross-border flows of apparel reflected cheaper labor and inputs—partly because of cascading labor efficiencies-in developing countries
- Despite extensive investments in substituting capital for labor, apparel production remained highly labor-intensive so that even relatively large "manufacturers" in developed countries outsourced labor-intensive production steps (e.g., sewing) to lower-cost labor sources nearby.
* Cross Border Intermediation
- Trading companies
Intro
- Inditex (Industria de Diseño Textil) of Spain, the owner of Zara and five other apparel retailing chains
* Global Apparel Chain
- Characterized as a prototypical example of a buyer-driven global chain, in which profits derived from "unique combinations of high-value research, design, sales, marketing, and financial services that allow retailers, branded marketers, and branded manufacturers to act as strategic brokers in linking overseas factories" with markets.
Buyer-Driven
Global Chains
(e.g., Apparel) | Producer-Driven
Global Chains
(e.g., Automobiles) | Upstream Structure | Fragmented, locally owned, dispersed and often tiered production | Global oligopolies | Downstream Structure | Relatively concentrated intermediaries | Relatively fragmented intermediaries | Key Cross-Border Links | Retailers, branded marketers and branded manufacturers | Producers | Rent Concentration | Downstream | Upstream | Types of Rents | Relational | Technology | | Trade policy | Organizational | | Brand name | | Typical Industries | Labor-intensive consumer products | Capital- and technology-intensive products |
* Production
- These large cross-border flows of apparel reflected cheaper labor and inputs—partly because of cascading labor efficiencies-in developing countries
- Despite extensive investments in substituting capital for labor, apparel production remained highly labor-intensive so that even relatively large "manufacturers" in developed countries outsourced labor-intensive production steps (e.g., sewing) to lower-cost labor sources nearby.
* Cross Border Intermediation
- Trading companies