Zara's Plan to Expand Internationally

Zara's plan to expand internationally on one hand and its

standardized production line and strategy limited to current

geographical base in Europe on the other hand could be a

possible threat of failure to Zara. There are visible differences in

cultural, social, political conditions across different countries

and the difference in tastes, liking, and fashion across regions

can also pose a threat of failure to Zara. This vulnerability that

faces Zara when it enters international markets can cause Zara

to succumb in face of stiff competitors and its alleged

"diseconomies of scale". To enter international markets, Zara

needs to deliver its apparels in-time, at competitive prices,

customized for local market, and short-lead time.

Another threat of failure that lingers Zara is their inability to

develop a strong supply chain in the Americas. The U.S apparel

market covers 29% of the world's market. Their current strategy

in Europe has given them success and ability to grow. Outside

Europe however, Zara lacks the essence of strong internal

production and distribution facility, producing in small batches,

and delivering in short-lead times in international markets.

To add to that, changes in foreign currency market can also be a

possible threat. Production costs may increase if Euro becomes

stronger against Dollar, leading higher costs of apparels to final

consumer.

Another threat to Zara is direct competition. H&M, The Gap,

Benetton are all looking at international markets to enhance

their growth opportunities. H&M comes closest to Zara in terms

of price and fashion sense. It is also commendable to note

H&M's strategy of entering one international market at a time

and designing clothes based on international tastes. H&M has

also is in the process of building distribution centers in their

international