Zara case study Essay Example | Topics and Well Written Essays - 3750 words

Zara case study - Essay Example erstanding the competitive environment is one of the most useful tools which help in determining the importance of activities taking place in organisation (Mclvor, 2005, p.122). Every organisation makes use of the competitive force to determine the activities. The competitive force also termed as Porters five forces constitute of bargaining power of suppliers, customers, threat of substitutes, threat of new entrant and rivalry among firms (Henry, 2008, p. 80). Bargaining power of supplier: The apparel industry usually has their own suppliers and as result they do not have to depend on external suppliers. In addition there are lot many suppliers available in the apparel industry making the bargaining power low. Also it is not possible for a given supplier to dominate the apparel industry which tends to negatively affect the suppliers power (Data Monitor, 2010, p.16). In case of Zara, the brand gets about 50% of its raw materials from Inditex group and so it does not depend heavily on the external suppliers. Zara however reduces the supplier’s power by working together with the vendors and implementing in the process to make the manufacturing process effective and cost cutting. Therefore maintaining good relationship with its vendors has also helped Zara to lower the power and tilt the games in favour of Zara. Bargaining power of Buyer: buyers are the individual consumers and his fact weakens the negotiation power of the buyer. Retailers differentiate themselves through different style and offers which is being offered by each brands. However in cases where the retailers cannot go for forward integration and as a result the retailers are obliged to offer the consumers with what they demands, strengthening the power of buyers. But in overall case the power remains from moderate to high (Data Monitor, 2010, p.15). The buyer’s power for Zara can be said to be moderate as the consumers are ready to pay a high price for its products. Threat of Substitutes: Garments