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Zara Uppsala

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The Uppsala model is the most accepted paradigm regarding internationalization process of the firms. This model is based on the behavioural theory of the firm (Cyert and March, 1963); inspired by Cyert and March (1963) and Penrose (1959), the model describes the internationalisation process as slow, sequential and gradual, since it represents the firm’s gradual establishment in, integration of, and knowledge about foreign market. Zara and the Inditex group have made use of certain steps to make sure that their firm maintained a competitive advantage in the business environment.
When a firm starts entering into foreign market, the first step or the stage chosen by the firm is to start export with the that country, as the firm has no knowedge, information of the resources in that country. In this stage the firm will gain no market experience. Initially, Zara followed the Uppsala Internationalization Model by first entering geographically close markets before advancing to more distant markets. For instance, Zara established a flagship store in a strategic location to build recognition and with the objective of obtaining market information and accumulating experience. The knowledge obtained would then guide Zara to open more stores in that nation (Lopez and Ying 2009). After obtain the experience that useful for operating locally, Zara added the number of its own stores in adjoining areas. This pattern of market expansion is called as “oil stain” by Inditex. The main reason that Zara are favorite in expending internationally by wholly-owned stores is because Zara believe that controlling a large part of supply chain which include own its own store is the only way to achieve the shortest lead time. In other words, Zara focuses on speed through control. Zara tend to have used franchising and joint venture method in the countries where this is a legal necessity and administrative barriers, otherwise, Zara will mainly focus on company-owned stores (Garcia, 2010)

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