What are the current issues facing Zara and what you would recommend for future success of the firm?
Current Issues Facing Zara:
1. Expectations of a high growth rate; after IPO of May 2001 there was a growth in the stock prices of 50%.
2. The current competitors are the Gap, Hennes & Mauritz, and Benetton. The Gap and H&M owned stores but outsourced production. Benetton had invested in production but licensees ran the stores. The Gap outsourced production and its stores were US based. Expansion led to reverses. H&M focused on one country, built a distribution center in each country, had lower prices than Zara. Did extensive advertising and employed fewer designers.
3. Zara has a low presence in the local market. Only 4% of the market in Spain and Inditex had 6% of the market share in Spain. H&M from Sweden may enter Spanish market.
4. The largest Zara store in Europe was opened in Milan in a joint venture with Percassi.
5. Zara owned production and the stores. It had 507 stores around the world. Fashion sensitive garments were manufactured internally. ...
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