Group 1@Raleigh: Zara, success or failure?

Zara is a Spanish clothing retail group. It is hold by Inditex SA and is one of the most profitable company of this group. The headquarters of Zara are based in La Coruña, Spain, where the first store were opened in 1975. Since this date, they have been expanded operations into 45 countries with more than 2000 stores located in more than 400 cities in Europe, Americas, Asia and Africa.

The business model of Zara can be divided in 3 basics components: concept, capabilities, and value drivers. The main strategy of Zara is to maintain design, production, and distribution processes. It allows the company to respond quickly to customers’ demands.

Indeed, Zara is making its high-fashion clothes in Spain and in nearby Portugal and Morocco. This is obviously more expensive than if it was done cost in China, but a short, flexible supply chain allows the firm to respond quickly to changes in customer taste. Also they sell the vast majority of its outfits at full price rather than at a discount. Its decision to stay close to home has become its main source of competitive advantage.

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This firm is an exemple of a firm illustrating the paradoxical effect of new technologies on offshoring. Indeed, Zara was a pioneers of the use of new technologies in the textile sector. It allows Zara to have a rotation of its stock much more rapidly; and this stock is renewed every two weeks. This strategy allows Zara to play with the customer: they will have to buy clothes immediately otherwise they might not find it again.

Globally the offshoring strategy of Zara is quite limited, but this limitation is the strategy itself. There is no need for companies to go full offshoring, they have to manage their ressources with their political strategies and find an equilibrium between these two, as Zara did.

Nevertheless, the success story of Zara offshoring strategy has to be questioned. Indeed, the spanish firm has faced some huge scandals: one of the biggest is the “labor slave” in Brazil. In 30 of its factories in Brazil, Zara has been found to exploit its workers. The investigation TV show “A Liga” has highlighted Bolivian laborers working in inhuman conditions. The security requirements were not met at all (for instance, an extinguisher was found outdated, and potentially not operational at all). They only earned $569 per month, for long workings days of 12 hours.

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Zara opted for an ostrich-like approach, and declared they were not aware of these problems. They argue the factories’ behavior was totally in contradiction to the Inditex criteria. Saying themselves not responsible, they asked publicly the factories to conform to the rules. Finally, they informed that they were going to set up an auditing department to be sure it won’t happen again in the future.

Sources:

http://www.123helpme.com/view.asp?id=97642

http://daniellock.com/strategy/outsourcing-at-home-or-abroad/

Offshoring Information Technology: Sourcing and Outsourcing to a Global workforce, By Erran Carmel, Paul Tjia

http://www.forbes.com/sites/andersonantunes/2011/08/17/zara-accused-of-alleged-slave-labor-in-brazil/

Group 1 – MSc IB – Raleigh: How globalization will affect us throughout our professional career?

First of all, we need to define the globalization: a process of interaction and integration among the people, companies, and governments of different nations, driven by international trade and investment and aided by information technology.

Globalization can be seen as an opportunity, but also as a threat. We should seize this opportunity instead of being its victims.

As International Business students born in the 90s, in a globalized world, we’re actors as well as consumers of this phenomenon. We have to face and deal with it, as it’s an inevitable process.

Also, wherever we’ll work, even in France, we’ll have to work hand-in-hand with the rest of the world and use the business language: English. There is clearly an anglicization of the business world language. Moreover, we’ll have to adapt ourselves to different cultures we’ll meet in our daily lives, as one doesn’t do business in the same way facing a Chinese or a Russian.

Otherwise, one advantage of globalization is a potential access to the world market. If we want to create a new business, we could benefit of the world market as a whole, and have access to a huge consumer basis. Borders are not limits anymore. Nevertheless, we will have to deal with accrued competition.

Thomas Friedman stated that “the world is flat”, traducing the disappearance of border between countries and people. This is clearly what we can see with NTIC, however it could be a problem as a bad reputation will find echoes on the world wide web in seconds, as well as a financial crisis will easily expand on the world wild web. We’ll have to assess risks and anticipate threats associated with multifaceted situations.

All in all, globalization is a moving phenomenon. Our challenge will be to adapt ourselves to this high-speed evolving rhythm, and not become out fashioned.

 

Group 1 – MSc IB – Raleigh : How energies structure geopolitics?

I) How did we become so dependant to energies?

a.   Brief overview of the energy’s history
b.   The mass production and an efficient use of energies
c.   The emergence of the consumer society: waste of resources

II) How energies have become a strategic leverage?

a.   Energies: a concealed reason for conflicts
b.   The use of energies as a negotiation weapon
c.   Energies and the race to the power

III) What will be the challenges in the energy market?

a.   The necessity of focusing on breaking-through energies
b.   A global governance will be required…
c.   …but might be difficult to enforce due to the evolving landscape