Zara Case Study

Q1. For the Global Apparel industry, analyse global opportunities and threats and outline Zaras strategies for leveraging opportunities dealing with threats and risks.

Ans.

The global fashion apparel industry is one of the most important sectors of the economy in terms of investment, revenue, trade and employment generation all over the world. Apparel industry has short product life cycles, tremendous product variety, volatile and unpredictable demand, long and inflexible supply processes. The industry has been in a transition over the last 20 years. Some of the its major contributors are:

• Significant consolidation in retail

• Increasing use of electronic commerce in retail, and

• Wholesale trade

The global apparel market is a consumer-driven industry. Also, globalization and new

technologies have allowed consumers to have more access to fashion. As a result, consumers are

changing, competition is fierce, and companies are evolving to meet these demands.

Major Manufacturers and their Market Share:

In 2006, the largest apparel manufacturers and exporters were countries from the Asia-Pacific region which included countries like China, Hong Kong, Phillipines, Malaysia, Indonesia, Bangladesh, Srilanka, Pakistan, Thailand and India. The other major apparel manufacturing nations were USA, Italy, Germany and Mexico.

Figure : Country-wise Market Share

Global Trade Volume and Trends:

As the apparel manufacturing industry has become more labour intensive and requires less capital investment, its concentration is shifting more towards the developing countries and even constituting large amount of their exports. This can be analyzed by the fact that the apparel production in industrialized countries decreased between 1980 and 1996, where as the production increased in developing countries during the same period. Similar trend was seen in exports, the apparel exports of developing countries increased six times between 1980 and 1997, and that of...