International Strategy Uterque
Abstract: This paper is about the strategy adaptation to entry in Brazil market. It includes the study of the current international strategy of Uterque, the same successful business model as logistic and design leader that Inditex group. In addition, the analyses of the Brazilian market justifies the selection of implementing country. Table of Contents |1. Introduction |…… 3 | | | | |2.
Theoretical approach |…… 5 | | | | |3. Business Model and International Strategy |…… 8 | |3. 1 Uterque’s Business Model |…… 9 | |3. Uterque’s international strategy |…… 10 | | | | |4. Market and Strategy Analysis |…… 14 | | | | |4. Industry conditions (Where) |…… 14 | |4. 2 Timing Advantage (when to enter) |…… 18 | |4. 3 Governance Advantage (How) |…… 18 | | | | |5.
Conclusion and recommendations |…… 19 | |APPENDICES | | |REFERENCES | | 1. Introduction Uterque is the latest launched Inditex Group retailer, sells accessories, fashion extras and bags that began its business in Spanish market in 2008; then Uterque became in an international firm to entering to 15 high levels markets in European.
Purpose To examine the challenges Uterque is facing entering the distant Brazilian market using a modified version of its highly successful business model, originally developed and specialized for nearby European markets. Aims The main aims of this research can be divided in two aspects: 1. To study the current international strategy of Uterque to understand if is possible to use the same strategy in Brazil: using same standard business model in design and production parts. 2.
To justify the selection of implementing country and to adapt or modify the current strategy to Brazilian conditions: downstream distribution, retailing parts, choice of entry mode. With the aim to decide if it is feasible entering in Brazil with the same strategy used nowadays, we are going to develop first of all a theoretical approach about the concepts we need to know and to relate with this specific case, and after that we will see a brief market research with its following way to enter by many analysis such as PEST, PORTER 5 FORCES and SWOT.
Main strategic problem company In the following paper it will be seen if the current managed to solve problems in Europe using its competitive advantage and if this current strategy is able to entering in the chosen new market area. In addition, it is going to be explained the derivate problems that could appear using the same model in the Brazilian market such as distance logistic and distribution problems and the powerful competitors. Distance logistic and distribution problems
Currently, Uterque and the whole firm with its differential advantage it is one of the most powerful clothing retailers in the world, with a good reputation and well-known brand image it is present all around the world. However, the most concentration of the stores are in the same area (Europe) because its logistics model suppose that to achieve getting new accessories in less time than its competitors, Inditex has located the majority of its factories close the distribution plant. So, with this logistics model could be more expensive being expanded so far away.
Competitors In our case, we have different competitors than other Inditex Group ones because it is the most specialized brand of the holding. Uterque design, produce and distribute only accessories and bags, consequently the normally competitors of Inditex group brands (H&M, GAP or Mango), are not direct competitors for the brand. The closers Uterque competitors are all those multi-brand accessories and bags stores that are present in the Brazilian market. It will be studied which is the best choice of entry mode in the Brazilian market.
This point is associated with competitors because Uterque has a differentiation with its competitors because it belongs to a well-known and powerful international firm and it is giving the choice to find a big assortment of quality accessories and bags in the same place and of the same brand: the most specialized and expensive brand of the firm. 2. Theoretical approach TCE MODEL (Transactions cost economics model) provides us with the possibility to measure the performance of companies and the companies’ way to manage them to exploit their competitive advantage and to adapt to local institutional and industry conditions in foreign markets.
As we mentioned in the introduction, Uterque is the newest brand of the big holding Inditex, and at the same time, it is the less expanded brand of it. For this reason, we want to determinate if it is possible that this company will be successful like its partners in an interesting new market how the Brazilian one is. So, in order to expand Uterque brand into new markets exploiting its competitive advantage, the differentiation, we are also going to consider its value chain and the government view with the aim to know which is the optimal model to entry in and if it is feasible. pic] With the aim to know if its actual business model has to be modified in the chosen country market and it could be successful it is need to take a look at the actual value chain of the company. Value-chain was popularized by Michael Porter and the analysis looks at every step a business goes through, from raw materials to the eventual end-user. The goal is to deliver maximum value for the least possible total cost. Following, Uterque’s value chain: [pic]
The value chain begin with the Market Research analysis which helps the company to know what, where and to for those who to produce. After that, take place the designers task that are responsible to design the accessories for the new collections. The designers have to be always in contact with the inventory who says the quantity that has to be produced and the availability of the material. When the design and the inventory have done their job, the producers make Uterque accessories and there are distributed to the different stores.
Furthermore, all the elements of the value chain are coordinate by a managing information system with an order information flow, an improving inventory system and also a product distribution system. Looking at this value chain, the main problem we can find it is that knowing that the parts of the value chain are usually centralized, they are placed normally close to the central company in Spain and distributed from there, and it may be more expensive and slower than if the value chain elements were located in a different way.
On the other hand, depending on the objectives that company has, it will follow one different strategy, although it is very common to use a combination of different strategies to move abroad, and particular ones depending on the country the company is moving into. Inditex Group has always wanted to have the main control in all its operations since its main strategy is the wholly owned subsidiary formula, although in the last few years this policy has changed and some other strategies have been developed, such as joint ventures and franchising. Entry Mode |Advantages |Disadvantages | |Direct Export |Economies of scale in production concentrated in home | | |(own subsidiary) |country. |High transportation costs for bulky products. | | |Better control over distribution. |Marketing distance from customers. | | | |Trade barriers and protectionism. | |Franchising |Low development costs. | | |Low risk in overseas expansion. |Little control over technology and marketing. | | | |May create competitors. | | | |Inability to engage in global coordination. | | |Maintain Uniformity and achieve system wide. |Excessive Bureaucracy and rigidity for the franchises. | | |Adaptation to Changing markets. The company gets the franchises to move in the same | | |Common Identity to preserve the trademarks, integrity |direction. | | |and value. | | | |The franchise could provide a spark or | | | |entrepreneurship. | | In the case of wholly owned subsidiary, using this strategy, the firm establishes an entity in a foreign country, paying all the costs incurred.
To establish a wholly owned foreign subsidiary, an enterprise may acquire an existing company in the foreign country or build one from scratch, the so? called green field investment. The specific advantages of this kind of model for Uterque are that the corporation preserves absolute control and supremacy over the operation. Also since they do not have to discuss with a partner, enterprises have more flexibility to adapt faster to market demand, profits need not to be distribute with anyone outside the company and the company is able to protect trade secrets.
In the other hand, the specific disadvantages are that there could be a creation of bad atmosphere because profits are not shared with local people, the Government administrators in many countries tend to view wholly owned foreign investment in their nations as negative operations and the risk is greater since the company is alone and new in the country. In the case of franchising, in this strategy the contractor provides a standard package of products, systems and management services; grants permission to use a certain product, including a special name of trademark.
Under franchising arrangements, the parent company retains a fair degree of authority; the franchisee has to follow the rules and policies of the corporation as for example on about the distribution of the cloths inside the store or the furniture to use. One of the main reasons why companies use this formula is to minimize the risk of entering into another country. Through this strategy, they are able to be known in the country whilst they are reducing the risk of entering on their one to the minimum.
Finally, in the case of using plural form (both models at the simultaneously – own stores + franchising), in a plural form, two or more organizational arrangements possess a synergism when used simultaneously. For example, rather than specializing, many chains contain a large proportion of both franchised and company-owned stores. By franchising some stores while they own others, franchise systems can achieve dynamic efficiency that would be impossible in a homogenous system. Chains value their franchisees because franchisees exercise initiative.
However, unless a chain includes a sufficiently high proportion of company stores, it lacks proper incentives to evaluate innovations efficiently. Therefore, despite the dynamism of franchises, a chain must maintain a certain proportion of company stores. As we have explained in the introduction of this paper, this brand is already in many countries but it has the aim to expand in more countries in the world, such as the other brands of the Inditex Group. The third aspect to study is the framework of the country we want to enter and if it has favourable characteristics to develop a successfully business there.
In this part of the paper we are going to use many research macroeconomics and microeconomics methods such as PEST Analysis, Porter’s 5 Forces and the SWOT Analysis. |PEST |Scan of the external macro-environment in which the firm operates can be expressed in terms | | |of: political, economic, social and technological factors. | |PORTER’s 5 Forces |Provide a framework that models an industry as being influenced by five forces.
The | | |strategic business manager seeking to developing an edge over rival firms can use this model| | |understand the industry in which firm operates. These five forces are: Barriers to Entry, | | |threat of substitutes, power of buyers, Power of suppliers and the degree of rivalry. | |SWOT Analysis |Strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and | | |Threats involved in a project or in a business venture.
It involves specifying the objective| | |of the business venture or project and identifying the internal and external factors that | | |are favourable and unfavourable to achieve that objective. | Uterque in its young life, always has succeed in its market enters, therefore we are going to use its partners market enters experiences with the objective to analyse the case in the best way. 1. Uterque Business Model and International Strategy
The Company Inditex Group is a conglomerate of companies with an important number of companies all around the world, trading in the USA, Mexico, France, the Netherlands, Belgium, Luxembourg, Italy, Germany, Greece, Portugal, Andorra, UK, Israel, China, Cyprus, Malta, Sweden, Norway, Japan, Turkey, Canada, Argentina, Uruguay, Chile and Spain. Its main brands and stores are: Zara, Pull & Bear, Massimo Dutti, Kiddy’s Class, Brettos, Lefties, Stradivarius, Uterque and Deep Blue Jeans. 1
Every brand is focused on different targets, for example, Massimo Dutti is focused on young men and women who look for quality, Pull & Bear is developed for youngers who prefer a casual way of dressing rather than the formal schemes of Massimo Dutti. History In 1973 Amancio Ortega Gaona, Inditex Group president, created a company specialized in producing dressing gowns and underwear. Sometimes, after he started building the whole holding. During the 70’s and the 80’s he surrounded by cloth? designers who used to travel to the main catwalks in Europe, where they can copy the most original ideas.
The big growth of the company happened in the 90’s, when the Group increased the supply with new brands. Uterque is the latest Inditex Group retailer, sells accessories, fashion extras and a carefully chosen selection of good-quality fabric and leather garments. Its collections are 100-percent designed by the Uterque creative team; mix the latest catwalk trends with the retailer’s unique merchandise. 2 1 (Appendices) Zara Fast Fashion. Harvard Business School. 21st Dec. 2006 2 Webpage: http://www. inditex. com/es
The firm was launched in 2008. The appearance of the stores, 68 in 15 countries, is elegant and sophisticated. Interiors are designed to be functional and offer shoppers the last word in comfort. This firm is oriented to women of 25-45 years old, urban lifestyle, Upper middle to middle socio-economic class with cultural interests. 3. 1 Uterque’s Business Model It’s a vertically integrated group, with up-to-date equipment fabric dyeing and processing, cutting and garment finishing. By retaining control over the dyeing and processing areas.
Inditex has fabric-processing capacity available “on demand” to provide the correct fabrics for news styles. It also does not own the labour-intensive process of garment stitching, but controls it through a network of subcontracted workshops in Spain and Portugal. This firm business model is based in the differentiation. With a well-managed logistics, they are is the basic component of Inditex differentiation model and allows them to move quickly when it comes to giving their customers what they want, and accounts for a sizeable chunk of their investments.
Agility and speed-to-market are vital elements of the Inditex vision of the fashion business. • Vertical integration Helping to reduce the “bullwhip effect”—the tendency for fluctuations in final demand to get amplified as they were transmitted back up the supply chain. Uterque was able to originate a design and have finished goods in stores within five weeks in the case of entirely new designs, and two weeks for modifications of existing products. The short cycle time reduced working capital intensity and facilitated continuous manufacture of new merchandise. Sourcing & Manufacturing Uterque sourced fabric, other inputs, and finished products from external suppliers. The garments that were manufactured in-house, cut garments were sent out to about 450 workshops, located primarily in Galicia and across the border in northern Portugal, that performed the labor-intensive, scale-insensitive activity of sewing. These workshops were generally small operations, averaging about 20–30 employees (although a few employed more than 100 people apiece), which specialized by product type. • Distribution
Like each of Inditex’s chains, Uterque had its own centralized distribution system. For example Zara’s system consisted of an approximately 400,000-square-meter facility located in Arteixo and much smaller satellite centers in Argentina, Brazil, and Mexico that consolidated shipments from Arteixo. Inditex’s director of logistics regarded the warehouse as a place to move merchandise rather than to store it. According to her, “The vast majority of clothes are in here only a few hours,” and none ever stayed at the distribution center for more than three days.
The product is distributed by air via KLM and DHL from airports in Santiago de Compostela and Porto in Portugal. Products were typically delivered within 24–36 hours to stores located in Europe and within 24–48 hours to stores located outside Europe. Air shipment was more expensive, but not prohibitively so. Inditex has a historical success at scaling up its distribution system, observers speculated that the centralized logistics model might ultimately be subject to diseconomies of scale. 3 • Retailing
Uterque aimed to offer designer-style garments and accessories (bags, accessories and jewelry) for medium-high prices in sophisticated stores in prime locations. 3 Zara Fast Fashion. Harvard Business School. 21st Dec. 2006 3. 2 Uterque’s international strategy Uterque in Spain has company-owned and managed; three different modes of market entry were used internationally in other brands of the company: company-owned stores, joint ventures, and franchises. Firms can be classified into four different categories according to the motivations that make them moving overseas: Market seeking, Efficiency seeking and Strategic Asset seeking. Market seeking Corporations search for better opportunities to enter and expand in other markets, due to their experience and advantages that they can offer to these markets. This motivation can arise due to several different aspects and circumstances; as for instance since the customers are gone or the home market is saturated, the company moves abroad to retain business, or because production costs are cheaper in a foreign country than in the home country, or even due to a change of host government policies.
Or, as in the case of Inditex Group, due to it has become crucial for the company the physical presence in foreign countries, they have to make sure that their brand names are familiar to these target markets. • Efficiency seeking The aim is to gain an advantage from operating in more than one economy, so they can profit from all the economies where the company is trading and at the same time, the company minimizes the potential risks that might arise, therefore, for example, Inditex Group follows different strategies depending on the market they are operating in (Franchising in Israel, Joint Venture in Germany… • Strategies Depending on the objectives that company has, it will follow one different strategy, although it is very common to use a combination of different strategies to move abroad, and particular ones depending on the country the company is moving into. Inditex Group has always wanted to have the main control in all its operations since its main strategy is the wholly owned subsidiary formula, although in the last few years this policy has changed and some other strategies have been developed, such as joint ventures and franchising. 4. Market and Strategic Analysis 4. International Strategy Analysis – Country Framework In this part we are going to know if Uterque’s strategic Assets enough are valuable, rare, and inimitable by three different aspects: How, when, where. Industry conditions (Where) • competitive five forces 4 |RIVALRY | |Barriers to Entry | | | |Threat of entry to the apparel industry is medium.
Scope economies play the moderate role, | | |capital requirements for entry vary, distribution channels are available, threat of retaliation| | |is medium and government legislations in our case (Brazil) play only a moderate role. On the | | |other hand market experience and differentiation play the vital role. | |Threat of substitutes |Threat of product-for-product substitution on this market is very high.
It comes from other | | |apparel retailers, designer accessories and tailor houses. Substitution by need is unlikely. | |Power of buyers |Power of buyers on the market is moderate because there are many small buyers, retailers | | |differentiate and are of big size, alternative sources of supply available, material cost is | | |low (buyers are rather paying for brands), and cost of switching is almost zero. |Power of suppliers |Power of suppliers on this market is moderate (high because there is limited amount of | | |suppliers, switching costs are high, suppliers’ brands are not usually powerful. | |Degree of rivalry |The degree of rivalry is high because there are a lot of competitors although, by the other | | |hand the power of the firm (Inditex) is so high for the reason it is well-known around the | | |world thanks to its partner Zara and the entire Inditex group. 4 Porter ‘Five forces’ After this porter’s five forces we could say that the industry conditions are especially favorable but at the same time the power of the firm is enough strong how to entry in a new market. To answer the other factors of the location advantage we are going to use a PEST Analysis about the chosen market. 5 Political Factors Brazil is a federal republic with 26 states and a federal district. The 1988 constitution grants broad powers to the federal government, made up of executive, legislative, and judicial branches.
The president holds office for four years, with the right to re-election for an additional four-year term, and appoints his own cabinet. The current president of Brazil Lula has made economic growth and poverty alleviation top priorities. At present the government says that Exports and Imports promotion is a main component in plans to generate growth and reduce what is seen as a vulnerability to international financial market crisis, and they want to incentivize that. Economic Factors
The trade openness of Brazilian economy it is situated by an 18% of the GDP. Nowadays it is one of the countries in Latin-America with a higher potential growth. However, data from the Central Bank says that Brazil has one of the closest economies in the world; it has a duty mean tax of 8. 7%, being the most protectionist state in Latin-America and Caribe. In clothing, if the importer country is not from MERCASUR (Spain is not) has a duty of 35%. 5 Pest analyses. Peng, Mike. Global Strategic Management. nd edition. South-Western Cengage Learning In addition, for having trade with Brazil there are also non-tariff barriers such as import licenses, technical and sanitarian regulations, quality standards and shipping restrictions. Social Factors With its estimated 201 million inhabitants, Brazil has the largest population in Latin America and ranks fifth in the world. Brazil’s high spending on apparel items and strong clothing imports (According to a 2008 study from global management consulting firm A.
T. Kearney) — along with its consumers’ preference for the latest fashions — make the country the most attractive emerging market destination for apparel retailers. Brazil’s clothing market is growing at more than 7 percent annually and is estimated at $37. 2 billion. The country is young, with more than 60 percent of population below the age of 29, and its consumers spend $402 annually on apparel — six times more than the average Chinese consumer.
Brazilian consumers use credit for apparel purchases far more frequently than in other emerging markets. In addition, small, local retailers make up more than 60 percent of a highly fragmented domestic retail apparel market. Technological Factors The main technological factor that could affect the entrance of Uterquein Brazil could be the logistic infrastructures and research. Logistics infrastructures: The transport infrastructure system in Brazil is composed by the following modals: road, rail, maritime, pipeline and air.
In Brazil 61. 1% of the cargo transported inside the country make use of the road system; in second place is the railway with 20. 7%; in third place is the maritime with 13. 6%; the pipeline system basically used to transport oil, gasoline, diesel, alcohol, natural gas and others, with 4. 2%. The air system is the less used with 0. 4%. Brazilian infrastructure system faces many challenges. Some of them relate to unpaved roads, obsolete and non-integrated railways and maritime systems, as well as a problematic air system.
In the area of research, European policy has a significant impact on as it seeks to integrate Brazilian researchers into research teams from the Union. Ongoing negotiations with Brazil would allow the research costs to be shared in the fields of technological innovation, increased productivity and competitiveness, and import-export diversity. After that in the following table we can see the main positives and negatives factors of entering into the Brazilian market by a microenvironment and microenvironment perspective. SWOT Analysis (Brazil) |Microenvironment | |Strengths |Weaknesses | | | | |Quality and Design: last fashion not high. Centralized distribution in Spain sometimes could be a | | |disadvantage when the company wants to expand in countries | |Vertical Integration: the company controls all the value chain,|which are far away from Spain because it could be more | |integrating the main processes and outsourcing the less |expensive and slow. | |important ones. | | |Staff Policy: Sometimes the store assistant policy job is not | |Just in time: the firm produces the clothes which are going to |motivating; low salaries, long working days, etc. | |being sold and distributes them fast to stores by a good | | |logistics system. That entails a high product rotation and not | | |having stocks. | | | | |Strong financial system: it is a solid and profitable company. | | |The sales and the gross margin are high and the shares of the | | |holding (Inditex) are well appreciated. | | | | |Good brand reputation of the brand and the firm facilitates the| | |entrance in new markets and the recruitment of good | | |professionals. | | | | |The company has the latest use of TIC. | | | | |Macroenvironment | |Opportunities |Threats | | | | |There are a lot of consumers with the preference for the latest|It is needed getting import licenses. | |fashions in Brazil. | | | |There exist high technical regulations. | |Brazil is the first trade partner of Spain in South America, so| | |Spain has a good business reputation there. |There exist high sanitarian regulations. | | | |Interest in personal image is increasing and also in fashion, | | |including young people, men and pregnant women, so people |It is need to pass quality standards. | |spends more money in buying in fashion. | | | |There are many shipping restrictions. | |The Unification Sizes Law favors Zara to stay in different | | |countries around the world. |Bad Infrastructures Systems. | | | |
After that brief about the macro-environment and micro –environment (PEST Analysis and SWOT Analysis) of Brazil retailers we could determinate that the technological and economic factors are not so favorable but, in spite of is even an interesting market because there exist a great potential consumer and the government is trying to improve business and importations in his country. As we could see, Institutional conditions are enough favorable and cross-country differences exist depending the other countries where the company operates, which are so different each other, therefore is not a problem for the company. Timing Advantage (when to enter) The time to entry in this new market is not so important than if Uterque was a unique product or service. The problem is that this is a whole brand entering in a new geographical market but it is not a new product, there are various competitors selling similar products but under the name of another brand.
For this reason we do not have advantages or disadvantages because be a late mover. 4. 2 International Strategy: Governance Advantage (How)- strategies to move abroad Depending on the objectives that company has, it will follow one different strategy, although it is very common to use a combination of different strategies to move abroad, and particular ones depending on the country the company is moving into. Inditex Group normally use to have the main control in all its operations since its main strategy is the wholly owned subsidiary formula, although in, the last years this policy has changed and some other strategies have been developed, such as joint ventures and franchising.
Before study the different choice that Uterque has to entry in the chosen new market, we should know that many older brands of the firm, with more experience in entering in different markets had originally expanded internationally through company-owned stores and typically established company managed stores in key, high-profile countries with high growth prospects and low business risk. Company-owned stores did, however, entail the greatest commitment of resources, including management time. As a result, Uterque partners had used two other modes of market entry, franchises and joint ventures, this second one less often. After that, now in this part we are going to determinate the best way to entry in this new market. In the theory about entry models in the previous part we can see what involves each model and the general advantages and disadvantages of each model normally used by the company.
We think that the optimal form to entry into the Brazilian market is the plural form. It is evident that using both it may be created synergies if the two parts work together and there are and equilibrate number of each kind of models. In addition, Uterque is new in this market, so currently there is not any store there. For this reason, we consider entering firstly, implanting own subsidiaries and after that, if there is success, the company could be expanded in this market implanting franchises at the same time. Examples of successful market entry At the moment Uterque only has expanded its market through own stores but do not exist other antecedents about entry models in foreign markets.
For this reason, we will analyze different options that Inditex group (in general) has used to expanding it since the brands to form Inditex share some features strategic. • Latin American market In 1998 Inditex Group entered into the Latin American market. This entrance started in Argentina, where the first outlet was opened in April 1998 in Buenos Aires due to Argentinean preferences in cloths are very similar to the European ones. The investment could not be more profitable, and this outlet is nowadays one of the most prosperous world? wide. 6 Uruguay was their next target; although it is the less populated country in South America, it was a very tempting market due to it was the first foreign investment in the textile sector of this country.
They have also opened new stores in Chile, the most developed country in the continent, and the Group is also present in Brazil, the largest market in the continent, and in Venezuela and Mexico too. 6 Expansion Newspaper, 29? 06? 1998 • Joint venture with Benetton Inditex decided to establish a commercial alliance with the Benetton Group in March 1997, with the main aim of starting trading in the Italian market 7 Benetton is one of the most important textile distributor’s world? wide, it is established in 120 countries and it has 7000 franchises. It was the first time in the Inditex Group recent history, that they sought a foreign partner to share the Group’s international expansion.
Both companies signed a contract in which they compromise to build a new mixed company for the Italian market through a joint venture. 8 The main reason why the company did not carry on with its policy of working on its own in its international expansion, was that they were looking for a partner with enough knowledge in Italy but in two years, the Inditex? Benetton joint venture was ended. This does not mean that Inditex Group is no longer interested in the Italian market due to its similarities to the Spanish one, and they are looking for another way of entering. 9 • Other Joint Ventures In 1998 Inditex Group started an alliance with the German textile giant Otto Versand to start its expansion in Northern Europe and especially in Germany.
In August 1999, Inditex has started a new joint venture with the Canadian firm Reitmans, on which they resolved to create a new society, mostly participated by Inditex Group, with the aim of open stores in Canada. The first outlets will be opened during this year in Montreal, Toronto and Vancouver, using the stores that Marks and Spencer has left due to its withdrawal from this market. 10 7 Expansion Newspaper, 19? 03? 1999 8 Webpage: www. excelsior. com 9 El Mundo Newspaper, 30? 01? 1999 10 Canadian News Wire • Franchising Inditex has used the franchising formula in Israel due to the special characteristics of the country; Israel is seen as a risky country due to the problems between Jews and Palestinians; although this risk, the store of Israel is very profitable. 11 3.
International Strategy – Changes in the Value Chain As we could see in the theoretical approach, the current value chain may be a problem or maybe a cause to having a smaller benefit margin and having a slower logistics process that the company could have with many challenges in the value chain. Our proposal it is decentralized many parts of the value chain is that the company build decentralized distribution and production in each region Uterque want to expand to, in our case, South America, to highly penetrate new market and tend to decrease the complexity process. [pic] In spite of, this challenge in the value chain would be better for a more geographical expanded company.
For this reason this decentralized value proposal may be shared with many parent companies with are located in the same markets such as Zara. 11 Webpage: www. galeon. hispavista. com, 16? 03? 1998 5. Conclusion and recommendations Our proposal it is to keep a part of value chain like design and the first production but it is necessary to change some aspects of the European Strategy to entry in Brazil. Firstly, decentralized distribution and latest production in each region. In addition, we recommendate Uterque that to learn of experience of Inditex firms which is expand in Brazil and if is possible to will deal with Zara for example to establish alliances between the same brand and to win knowledge about the new market.
However, we think that Uterque should entry to Brazilian market with a combinate model through to own stores and franchisies. Alternative strategies for entering the Brazilian market … Adapt to local needs: … References Newspapers: El Mundo Expansion Actualidad Economica El Correo Gallego Websites: www. excelsior. com (Financial Section) www. newswire. ca (Canadian News Wire) www. galeon. hispavista. com (Financial Section) http://www. esocrates. com/content/paul/SFPA. html http://www. inditex. com/es http://www. winred. com http://www. esocrates. com/content/paul/SFPA. html http://sw? mos. insead. edu. sg/workshop3/Papers/JettGeorge. pdf. Strategies for change: logical incrementalism.
James Brian Quinn Homewood, Ill. : R. D. Irwin, 1980. Strategies for change: logical incrementalism. James Brian Quinn Homewood, Ill. : R. D. Irwin, 1980. http://www. winred. com ‘Amancio Ortega. De cero a Zara’. Jesus Salgado y Xavier R. Blanco. La esfera de los libros. 17? 02? 2004 ‘Amancio Ortega. De cero a Zara’. Jesus Salgado y Xavier R. Blanco. La esfera de los libros. 17? 02? 2004 http://www. inditex. com/es Zara: El modelo de negocio de Inditex: Fernando Fabrega. Morandi. 06/2004 Articles and publications Zara Fast Fashion. Harvard Business School. 21st Dec. 2006. Peng, Mike. Global Strategic Management. 2nd edition. South-Western Cengage Learning
