Zara Fashion :: essays research papers

ZARA Fashion1)With which of the world-wide competitors listed in the case is it most interesting to compare Inditexs pecuniary results? Why? What do comparisons indicate about Inditexs relative operational economics? Its relative capital efficiency? Note that while the electronic version of Exhibit 6 automates some of the comparisons, you will probably requirement to dig further into them?The four companies shown above have very distinguishable business pretendings. Inditex owned overmuch of the intersection and most of its stores. Inditex is thus a vertically integrated company. This made Inditex gain a rivalrous advantage, which is immobile response to the market requirements. On the other hand, The bed cover and H&M have a different business model. They owned most of the stores, barely outsourced all the production. Benetton had a third business model. It invested heavily in the production, exactly licensees ran its stores. The most interesting company to compare Ind itex is The Gap. Although The Gap has much high revenues than Inditex (almost five times Inditex), it incurred a net loss, as opposed to Inditex, which achieved a 23%, return in investment. This is due to the extremely high be of good sold for The Gap. This could be caused -at least partially- by the complete outsourcing of the production. They do not have enough control over the production speak tos. Although The Gap has larger market share than Inditex and has equity almost double that of Inditex, Inditex is much more profitable.2) 2) How specifically do the distinctive features of Zaras business model affect its operating economics? Specifically, compare Zara with an average retailer with confusable posted prices. In convenient to assume that on average, retail exchange prices are about twice as high as manufacturers exchange prices.Zara sources fabric, other inputs, and finished products from external suppliers. It has purchasing offices in Barcelona and Hong Kong. This gi ves Zara a competitive advantage towards the costs of goods sold, as it can purchase from both atomic number 63 and Asia according to prices. Buying more from China in the future dexterity reduce even more the costs of goods sold.Inditex fully owns Comditel that managed dyeing, patterning and finishing of color in fabric of Inditexs chains, and supplied finished fabric to external as hearty as in-house manufacturers. This gave Zara further competitive advantage, in terms of both cost and control.Inditex also fully owned 20 factories for internal manufacture. These factories apply just-in-time production (JIT). Again, this gave Zara further competitive advantage, in terms of both cost and control.