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Zara Clothing Brand Analysis

Zara is a fashion company that deals with a line of various clothing and accessories that are known for their high fashion sense. The company is based in Spain Arteixo (Galicia). Founded in 1975, it has grown to become one of the world’s leading fashion houses known for its high-quality, quality branding.

Zara is currently owned and controlled as part of the world’s biggest apparel retailer company, Inditex, which manufactures more than eight hundred and forty million garments annually globally in more than 6300 retail shops. The company has established a presence in 85 countries and is looking to expand more, with an estimated annual growth of 500 new retail shops. Their trading environment is one that is faced with many hurdles, being that it is a worldwide company having to deal with so many different political, economic, social-cultural, technical, and demographic environments. In each country, Zara has had to adapt to the specific regulations that are in place. In doing so, however, the company has kept to its Mantra of `high fashion at a low price.` Its strategy to reach a more profitable demographic has been to locate its stores as close as possible to other high-end fashion stores like Chanel, Hermes, and Cartier. This was the customer who visited those stores and was likely to visit Zara, too.

Zara is a global company that will engage in imports and exports all in its bid to achieve its objective, which is to sell as much apparel as it can. Many apparel companies ought to outsource their productions to other countries like China, Bangladesh, and Vietnam, but Zara has stuck to its guns and is doing most of its production in factories in Europe, mainly Spain, Turkey, and Portugal. The biggest factory is still in Galicia, Spain, where most of its production is done. The clothes that are once produced are exported to many countries all around the world in many of their stores. Zara then exports to countries like Saudi Arabia, the United States, China, and the United Kingdom.

Zara has taken the route of franchising with many partners. This means the partners will buy into the Zara brand and be able to trade with Zara products, and both partners share in the profit. The international integration sense of the Zara brand is achieved by its spread in many countries and having a controlled product that is controlled by the company and then exported to the various markets in which it is present.

The company has some drawbacks, however, with the tariffs that it has to pay for export to other countries, import to the country, and tax on the income, among other taxes paid to the government, like licensing.

Trading barriers, in some instances, have been a great challenge. Some of these trade barriers are high taxes. In some countries, they prefer that companies produce within the country rather than import ready goods. To achieve this, they may impose high import taxes, increase the licensing fee, or even establish quotas. Other governments, on the other hand, have been trying to get Zara to produce within their borders and not to outsource. They have employed strategies like low taxes on production companies. These companies manufacture and employ many people, and if a government like Vietnam, for instance, has reduced the tax payable by companies like this. This was because many people were employed, and the country became a hub for business. Other strategies like reduced bottlenecks, favorable fiscal and monetary policies, import incentive schemes, and provision of industrial sheds have made Zara stick to the current manufacturing zones.

References

Appannaiah, P., & Reddy, D. (2010). Business Management. Himalaya Publishing House.
Zara Export Data Analysis | Market Analysis for Zara Export from India. (2018). Seair.co.in. Retrieved 11 March 2018, from https://www.seair.co.in/zara-export-data/analysis.aspx
Hamilton, L., & Webster, P. (2015). The international business environment. Oxford: Oxford University Press.
Mejías, A., Garrido, N., & Pardo, J. (2015). INDITEX, a model company in the implementation of sustainable human resource managementInternational Journal Of Engineering Management And Economics5(1/2), 59. http://dx.doi.org/10.1504/ijeme.2015.069896
Weiss, K. (2013). Building an import/export business. Hoboken, N.J.: Wiley.
Zara Export Data Analysis | Market Analysis for Zara Export from India. (2018). Seair.co.in. Retrieved 11 March 2018, from https://www.seair.co.in/zara-export-data/analysis.aspx

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