Zara Recommendations

Recommendations:

(1) Zara has the potential for sustainable growth due to their unique business model and operation strategies which enables them to face the challenges of the apparel industry. By using special entry strategies they can exploit untapped markets such as Germany and Eastern Europe (Goransson.S et al,2007). As their centralized distribution system located in Spain, it will be easy for the company to support its existing system and new proximities or stores in regions closely based to its main centres (Gallaugher, 2008). For instance, they have already entered the Italian market through joint ventures and successfully operating the largest Zara store in Milan without any major advertisement. So the company should continue to own flagship and critical stores while franchising or joint-venturing other where there are barriers to direct entry or financial risks (Ghemawat and Nueno, 2003 ).

(2) Zara should put more emphasis on expansion in the US market. Introducing a main distribution centre in the US will facilitate the company to decrease logistic costs and time consumption which will help to maintain its system of fast fashion and the economies of scale (Anonymous, 2008). They should strategically build a distribution centre, where the manufacturing can be done on a low cost basis and with less value added production for standard clothes (e.g. Mexico or Caribbean), which will help them to minimize their productions costs. They should consider a combination of two supply chains by keeping the purchase of raw materials centrally in Europe but instead of going through Spain, the materials can be shipped directly to America for manufacturing and distribution. The rest of their model can stay centralized and just provide the necessary support for the American based manufacturing and distribution (Christopher. M, 2009). By utilizing this concept, the company will operate more efficient in the US market while reducing its total costs at the same...