Analysis of how zara governs its business model

Essay by sarahmurawskiUniversity, Bachelor'sB, April 2013

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Analysis of how 'Zara' governs its Business model

The fundamental concept of a business model is the way in which a firm derives economic value from the goods or services offered, which is ultimately how it makes profit. One response to generalize the concept is 'How you plan to make money' (M.Lewis 2000) this simple definition can then be applied to any business or organization. When a company derives a business model a large number of critical factors from the employees to the beneficiaries, it is not derived from one business characteristic but a mix of them all. Furthermore the business model is not static and is ever changing in order for businesses to keep a competitive advantage they must adapt this alongside the economy and the dynamic marketplace. Current issues are forever on the rise, as recognised by the CEO of Marks and Spencers Stuart Rose ' Companies must radically change business models to cope with climate change' (The Guardian 2012).

The success of any business model is however is not solely reliable on adaption and planning it is ultimately down to the hands of the user.

An example of a business model that has remained sustainable for over 30 years is that of retail chain, Zara. Zara is the most successful brand to come from the parent company and Spanish retail group, Inditex SA. With the introduction of a unique and lucrative business model with the first Zara store opening in 1975 in La Coruna Spain, the brand has now not only taken Britain by storm but is now global with stores in over 400 cities, making the mastermind and founder behind the business model Amancio Ortega the worlds 3rd richest man (Bloomberg's Billionaires Index 2012). Although expanding now over 4 continents the initial fashion philosophy has remained...