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MSc Management
Global Strategy and Sustainability
Coursework Assessment Brief
Harjeet kaur
student idBP0280872
Content
 Global Entry Strategies of Zara International: An Introduction
 The International Fashion Industry: An Assessment of the External Environment
 Zara: A brief history of the business and the main principles
 Internationalisation of Zara
 Advantages and Disadvantages of Zara's Competitive Strategy Compared to Global
Competitors
 Multi-brand store strategy
 Zara's three global revenue strategies
 Global Entry Strategies of Zara International: Conclusion
 List of sources
Zara's three global revenue strategies
The choice of entry mode depends largely on the host market environment. In the case of Zara, it
can be observed that the possible threats and risks are considered in its revenue mode strategy
when the organisation implements different options to enter other countries. Zara's revenue
methods include direct investment in nearby markets and franchises or joint ventures in distant
markets.
Most aggressively expanding international retailers prefer to establish a "wholly owned subsidiary"
as a model for entering foreign markets (Park and Stern quiet 2008, p. 282). This entry method
ensures a high degree of ownership and control in the company. Another benefit of direct affiliate
investment is better information management. The model of full ownership is more suitable for
countries with a similar cultural background, because the appearance of unexpected threats to
business is minimal in this case.
Intermediate stages (franchise and joint venture) are suitable for markets with a clear cultural and
economic background. First, such income is beneficial because it reduces the company's need to
invest (Park and Stern quiet 2008). When entering a distant market, traders face many new
challenges, and reducing invested resources helps to avoid losses due to lack of control over
unknown situations in a foreign market. In this regard, Zara's decision to adopt a joint venture format
to enter the Indian market is prudent and appropriate. The partnership with the Tata’s group will be
useful because this company has a long history and the necessary experience that the Index group
has not yet had. However, brand synergy risk is associated with partnership co-ownership. However,
Zara's risks are justified because the partnership with the Data Group will help the company more
effectively meet the needs of Indian customers.

Introduction
Before the middle of the 19th century, most clothes were made to order. It was made by hand for
private individuals, either for home production or to the order of seamstresses and tailors. At the
beginning of the 20th century - thanks to new technologies such as the sewing machine, the rise of
global capitalism and the development of the factory production system, and the spread of stores
such as department stores, clothing became increasingly common. ready for sale in standard sizes
for mass production. Although the fashion industry first developed in Europe and America, it is now
an international and highly globalised industry, where clothing is often designed in one country,
manufactured in another, and sold around the world. For example, an American fashion company
could source fabrics from China and produce garments in Vietnam, finish them in Italy, and ship them
to a warehouse in the United States for international distribution to retail stores. The fashion
industry has long been one of the largest employers. However, due to the increase in labor costs, it
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has moved from developed countries to developing countries, especially China and African countries
[1]. The fashion industry employs people from a variety of professions, from skilled labor to fashion
designers, programmers, lawyers, accountants, copywriters, social media managers and project
managers. Manufacturing is only a fraction of the modern fashion industry as it is a very complex
industry involving fashion and market research, brand licensing/intellectual property, design,
material technology, product manufacturing, marketing and finally distribution.
Components of the fashion industry
The fashion industry consists of four parts:
a) Production of raw materials, mainly filers, textiles, leather and fur. b) Production of fashion goods
by designers, manufacturers, entrepreneurs and others. c) Marketing in the form of advertising and
sales promotion. d) wholesale/retail and electronic commerce. These levels consist of several
separate but interdependent sectors. These sectors are textile design and production, fashion design
and production, fashion retail, marketing and sales, fashion shows and media and marketing. Every
industry is committed to meeting consumer demand so that designers, manufacturers, retailers and
marketing companies can operate profitably

 The global fashion industry relies on ever-changing trends that keep consumers up-to-date
with the latest clothes. However, this means that the product has a short shelf life, forcing
manufacturers, designers and retailers to adhere to strict production and distribution
schedules. It also gives influencers, such as celebrities, a key role in successful marketing and
promotions. In the global market, the fashion industry is very competitive. Although
manufacturing takes place in developing countries in Asia and Africa due to cheap labor,
China is gaining a majority share by offering quality products at lower prices. The fashion
industry is no longer solely dependent on retail stores, with the addition of online retail
options that allow shoppers to shop online. Marketing and advertising is also expanding
with the growth of media trends such as social networks and technologies such as mobile
devices and smart apps that enable shopping anywhere. Product branding is an important
part of recognition and customer loyalty. The market segment promoted by designers and
models is one of the most visible. It also presents greater challenges to lesser-known
product lines [
 Fashion industry business models
The fashion industry is dynamic in the sense that fashion trends and styles are constantly changing.
Every fashion company reacts differently to fashion trends, clothing distribution and sales to
customers. Most companies choose to follow the latest fashion trends, while new entrants tend to
emphasise quality over quantity to achieve a more sustainable and long-term approach. These
differences are usually illustrated by two business models that have emerged in the fashion industry
in recent years, namely fast fashion and slow fashion. According to Fletcher, fast fashion is time-
based, while slow fashion is more quality-based.
 Advantages and Disadvantages of Zara's Competitive Strategy Compared to Global
Competitors

Business environment is a marketing term and refers to the factors and forces that affect a
company's ability to create and maintain successful relationships with current and potential
customers. The business environment is also known as the marketing environment [14]. Marketing
environment factors can be internal (within the organisation) or external (outside the organisation).
External factors can be further divided into micro- and macro-environmental factors.
The internal environment of the organisation [15,16]
The internal environment is therefore the personnel relationship and the functioning of internal
departments such as administration, finance, research and development, procurement, business and
accounting. All these departments influence marketing decisions. For example, R&D may provide
input on product capabilities, and accounting accepts the financial side of marketing plans and
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budgets to incorporate such inputs. To maintain strong customer relationships, marketing managers
must ensure that the product is delivered to customers within the required time frame. The
management of the internal environment depends on the culture of the company. If the company
cannot control the factors of the internal environment, it will not be able to compete in the market.

 Multi-brand store strategy

Microenvironment
The micro-marketing environment includes all factors that are closely related to the company's
operations and affect the day-to-day operations. Therefore, companies should conduct a complete
analysis of their microenvironment before deciding on a business strategy. The micro environmental
factors shown in Figure 3 include customers, employees, suppliers, dealers and distributors,
shareholders, competitors, government and the general public. Companies cannot always control
microenvironmental factors, but they should try to control them along with internal and macro-
environmental factors
Although the fast fashion model has developed, slow fashion is gaining ground due to environmental
issues and social values related to business ethics. Business environment is an alternative term for
business marketing. Among the three factors, the macro factors known as PESTEL are purely external
and must be understood and carefully studied by the fashion industry to operate their business
ethically and environmentally for sustainable development. Technology plays a big role in the
marketing of fashion products, but it is also a threat to competition. Therefore, creating an ethical
brand image and offering eco-friendly products has become essential for the survival of the global
fashion industry.
Social Factors: These factors include population growth, age distribution, health awareness, career
attitudes etc. These factors are of particular interest because they have a direct impact on how the
fashion industry understands customers. The fashion industry is one sector that can be most affected
by the effects of socio-cultural trends [26]. For example, the world population has been aging for
decades [18]. Such a demographic shift can only threaten teen clothing manufacturers as
competition for their shrinking segment intensifies. However, there may be an opportunity for new
or more flexible established fashion retailers. They can focus on more mature customers and offer
suitable sizes and simpler designs from high quality durable materials. Another social trend is that
customers are increasingly concerned about their health, which is also confirmed by the continuous
increase in individual health costs [27]. This can lead to increased customer interest in the materials
used, their origin and processing methods, which requires greater transparency and responsibility
from fashion companies. In this regard, more and more customers have become "green" and support
the sustainable and ethical activities of companies [7,10]. In addition, the fashion tastes and trends
of teenagers and young people today are very varied and diverse and are influenced by celebrities
and the media [23]. The "hipster trend" is a recent example, and companies may have to decide
whether to follow such temporary fads or whether their business is stable enough to stick to
conventional channels. However, the media not only spread trends to customers, but also inform
about scandals and negative publicity about bad corporate social responsibility (CSR) practices, such
as child labor, sweatshops or inhumane working conditions. One example was the 2013 incident at
Rana Plaza, Bangladesh, a factory that produced clothes for chains such as Primary, where more than
1,100 workers were killed when a dilapidated building collapsed on top of them [28]. As a result,
changes in customer behaviour and attitudes towards fashion companies increase the need for
increased reporting on working conditions and wages and audit processes to ensure fairer
treatment of workers. Technical factors
1. The fashion industry has always been subject to technological change and this has affected
the production, delivery and delivery of clothes to customers. The emergence of the
Internet and improvements in communication technology facilitated and accelerated the
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flow of information about new trends and brands from the customer to the retailer, allowing
companies to respond more quickly to the latest market impulses [29]. In turn, champions
have increased customer demands because the media constantly updates them with the
latest fashion styles [23]. A similar improvement in information transfer and communication
can be seen among retailers, wholesalers and manufacturers who benefit from more
efficient distribution and communication channels [30]. In addition, the cheap advertising
and marketing opportunities of merchants through social media platforms or the company's
website attract consumers to buy fashion products [23]. Innovations such as matrix coding,
product co-creation and online shopping have made fashion decision making and shopping
easier and more convenient for customers [31,32]. Despite technical improvements, the
clothing industry is still quite labor intensive and automation is limited due to frequent
changes in design, textiles and demand.
ZARA's international expansion as it is clearly divided into three phases.
Reluctance - Between 1975 and 1988, it focused on expanding its domestic market. The maturity of
the Spanish market led ZARA to seek opportunities for business growth through foreign markets.
Cautious - Between 1988 and 1997, they took a more cautious approach, entering about one country
a year. In the new international environment, ZARA enters a geographically and culturally close
market that was similar to the Spanish market. For example, in 1990, ZARA started operations in
France, Paris as a geographical neighbour and fashion capital. In addition, Mexico was added in
1992; although geographically distant, but culturally close to Spain. Ambition - Experiential learning
encouraged the retailer to be even more ambitious in international projects. As ZARA gains more
international experiences, overcomes the psychological barrier; they have taken an aggressive and
rapid global expansion since 1998. This has happened regardless of cultural or geographical
proximity. For example, in 1998-1999, stores were opened in 16 countries. These countries include
Canada, Great Britain, the Middle East, Japan and many others with very different customs and
cultures.
Conclusion: Zara's success is a testament to its ability to transform the fashion industry with a unique
combination of agile supply chain management, a responsive design-to-sales cycle and customer-
centric retail strategies.

Reference
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