Zara

Assignment 1

1.- Discuss the degree of globalization of the textile industry and how this global scope has changed over time.

In this assignment we are going to examine the textile firm“Zara”. Zara, a Spanish-based chain

owned by Inditex, is a retailer who has taken a new approach in the industry. With their unique

strategy, Zara has the competitive advantage to be sustainable. Inorder to maintain that advantage

and growth they must confront certain challenges that face traditional retailers in the apparel

industry.

We can afirm that the degree of globalization ofthe textile industry is high, because, there is a

high interdependence in the competitive position of firms competing in the industry in different

countries, the main competittors have a highpercentage of world market and there is a high level of

intra industry and inter firm trade. But it would be disingenuous to deem globalization of the textile

and apparel industries a recentphenomenon. Indeed, international trade in apparel and textile goes

back to the first half of the nineteenth century when, American vessels carried Indian (and later

American) cotton toBritain.

The movement of apparel and textile products between nations arises from the comparative factor

costs and productivities for labor, capital and other inputs between nations and their impacton

product costs, as modified by transportation, insurance, and related costs.

Nowadays the companies are following almost the same objectives, but there are many different

things, thesystem of bilateral agreements on quotas for textiles that has been in place for decades

came to an end in 2005, and China joined in 2006. But before of this significant change the sizedistribution of firms indicates the existence of quite strong processes of concentration between

1990 and 2000 concentration has increased quite markedly as a result of the unprecedented recent...