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ZARA
Zara is the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega. The
first Zara store opened in 1975 at A Coruna, Spain. Its first store featured low-priced lookalike
products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega
started opening more Zara stores in Spain.
During the 1980s, Ortega started changing the design, manufacturing and distribution
process to reduce lead times and react to new trends in a quicker way, in what he called "instant
fashions" or “fast fashion”. The company based its improvements in the use of information
technologies and using groups of designers instead of individuals.
In 1988, the company started its international expansion through Porto, Portugal. In 1989
they entered the United States and in 1990 France. This international expansion was increased in
the 1990s, with Mexico (1992), Greece (1993), Belgium and Sweden (1994), etc. until the
current presence in over 70 countries. Zara stores are company-owned, except where local
legislation forbids foreigner-owned businesses. In those cases, Zara franchises the stores.
Question 1
As completely as possible, sketch the supply chain for Zara from raw materials to
consumer purchase.
Design cuts fabric sewing ironing wrapping
selling transportation
Zara is a vertically integrated retailer. Unlike similar apparel retailers, Zara controls most of the
steps on the supply-chain: It designs, produces, and distributes itself.
Firstly, Zara designs the apparels itself, and sends the design draft to cut fabric in-house.
After that, they will be sent to the local co-operatives for sewing. When items return to Zara’s
facilities, they are ironed by an assembly line of workers. After complete ironing, they are
wrapped in plastic and transported on conveyor belts to a group of giant warehouses. Finally,
they would be sold at the stores.
Question 2
Discuss the concepts of horizontal and vertical conflict as they relate to Zara.

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Horizontal conflicts referred to the conflict between competitors of the same marketing channel,
resulting in oversaturation of the target population area and extreme competition. In the case
study, Zara competes with other retailers like Sweden’s Hennes & Mauritz(H&M), Britain’s Top
Shop, Spain’s Mango and other big retailers to send the designs to the local co-operatives for
sewing. They are operating in the same marketing area that is local co-operatives that is only
available in hundreds. This will make the smaller competitors be at an extreme disadvantage.
Vertical conflicts means that the conflict occurring between two or more different hierarchical
members of a Channel of Distribution. For example, a retail distributor may refuse to carry a
manufacturer's product because of low sales, further decreasing the manufacturer's total sales.
Thus, Zara should maintain a good relationship with its distributors in order to expand its
business and increases the profit.
Question 3
Which type of vertical marketing system does Zara employ?. List all the benefits that Zara
receives by having adopted this system.
Zara makes use of Corporate Vertical Marketing System (VMS). A Corporate VMS is a vertical
marketing system that combines successive stages of production and distribution under single
ownership for which channel leadership is established through common ownership. Zara
successfully integrate design, production, distribution, and retailing and which has turned it into
the world’s fastest-growing fashion retailer.
The Corporate Vertical Marketing System provides the company with the effective channel
leadership. Hence, avoiding conflicts emerge from different channels. Amancio Ortega, the
founder of Zara’s clothing chain designed a system in which he could control every aspect of the
supply chain, from design, and production to distribution and retailing. Thus, the company
manages all design, warehousing, distribution, and logistics functions by itself instead of relying
to outside partners. This in turn, makes Zara to emerge as a unified system which the whole team
can work together responsively. Not only that the company has the control over the entire
distribution chain, they even outsource their own raw materials. Statistically, Zara makes 40
percent of its own fabrics and produces more than half of its own clothes rather than relying on
the slow-moving suppliers.
Vertical integration, a distinctive feature of Zara’s business model, has allowed the company to
react swiftly with the latest trend in the fashion industry. It means that Zara has the advantage to
be a fast-fashion leader. Fast at Zara means that it can take a product from concept through
design, manufacturing, and store shelf placement in as little as two weeks, much quicker than
any of its fast fashion competitors. Zara’s team consisted of more than 300 designers who deals
with the design process. The store managers and sales staff updated the headquarters every day
about the moving stock and provided inputs regarding the new lines, colors, styles and fabrics
that customers are demanding. For instance, if a customer is asking for a rounded neck on a vest

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ZARA Zara is the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega. The first Zara store opened in 1975 at A Coruna, Spain. Its first store featured low-priced lookalike products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega started opening more Zara stores in Spain. During the 1980s, Ortega started changing the design, manufacturing and distribution process to reduce lead times and react to new trends in a quicker way, in what he called "instant fashions" or "fast fashion". The company based its improvements in the use of information technologies and using groups of designers instead of individuals. In 1988, the company started its international expansion through Porto, Portugal. In 1989 they entered the United States and in 1990 France. This international expansion was increased in the 1990s, with Mexico (1992), Greece (1993), Belgium and Sweden (1994), etc. until the current presence in over 70 countries. Zara stores are company-owned, except where local legislation forbids foreigner-owned businesses. In those cases, Zara franchises the stores. Question 1 As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase. Design cuts fabric sewing ironing wrapping selling transportation Zara is a vertically integrated retailer. Unlike similar apparel retailers, Zara controls most of the steps on the suppl ...
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