Task 1: Zara Fashion wants to enter into Bangladesh market through establishment of some chain stores.

You have been recruited as the country director of Zara. You know that there are five modes of entry into
the foreign market. Which entry modes you want to use for Bangladesh and why do you want to use that
mode?

Answer: Zara is an extremely renowned brand, known for its latest designs and is among the top
100 best global brands in 2020. It uses the unusual strategy of zero advertising and instead
invests the revenue in opening new stores across the world. Zara is popular amongst old and
young generations too because it is really an affordable fashion. It is crystal clear that Zara is
successfully living up to the standard of its two winning retail trends firstly, it is fashionable and
secondly it is low in price thus resulting in a very effective mixture out of it.

The first store of Zara was opened in a central street in Spain in 1977 by Amancio Ortega who
also owns, other brands such as Massimo Dutti, Pull and Bear and many others. Spain is the
headquarter of Zara. Zara have opened 95 stores around the world in quarter 1 of year 2009
alone, bringing the total to 4359 stores in 73 countries worldwide.

The Louis Vuitton fashion director Daniel Piette also described Zara as “possibly the most
innovative and devastating retailer in the world.” They control most of the steps in the supply
chain and also it designs, produces and supplies itself.

Taking into consideration the amount of competition and the need for sustainability in the human
race, running a business or a brand is not an easy task. With existing big brands and busy
markets around the world, it takes more than what is required to make a name for oneself and to
succeed in it. Proper management and marketing strategies are required along with the detailed
knowledge of the economy and the earning and spending of the locality or the country’s GDP
(Gross Domestic Product) which measures the country’s economy and their ability to spend and
grow should be known before taking a leap and spreading the arms around the world. This essay
discusses about which mode of entry strategy Zara adapted to enter into the Indian and Chinese
market and whether the strategy proved to be beneficial for the company and the benefits /
disadvantage sit is going tackling and lastly it also analyses in which country it is doing better
and why.

Zara adopts a ‘Fast Fashion’ supply chain model. The latest fashions are supplied from design to
delivery in just 2 weeks, compared to the 6 month industry average. They operate a vertical
supply chain, so they themselves undertake everything from design, manufacture, sourcing and
distribution. This allows them total control over the business, and leaves them less vulnerable to
accusations of unethical practices such as sweatshop labor.

Entry Strategy

While Zara owns a majority of its stores in Spain, the international expansion has adopted three
different entry modes: Own subsidiaries, Joint ventures and Franchising.

According to the Indian policy on foreign direct investment (FDI), Zara teamed up with the Tata
Group, India, to form a joint enterprise in February 2009. Inditex has a share of fifty one percent
of this collaboration while Tata’s subsidiary Trent Limited holds forty nine percent. Owing to
several issues the Corporation undergoes, their extension of the store will stay slow, with just
one additional store open Zara is the following Spanish Retailer to come into India, after Mango,
even though Mango adopted the contract route to enter into the Indian market.