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Drawing on the Resource Based View Literature, Evaluate Whether and How Zara Generates Sustainable Competitive Advantage.

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Drawing on the Resource Based View literature, evaluate whether and how Zara generates sustainable competitive advantage.

A firm is said to have competitive advantage when its profits exceed the average of its industry and that of its rivals (Grant, 1991). According to Grant (1991) the RBV sees organizations as a collection of resources which when combined forms organizational capabilities. The goal of every business strategy is to achieve a sustainable competitive advantage. According to Collis and Montgomery (2008) a firm’s resources are responsible for its better performance while working in a dynamic environment which academics term as resource based view of the firm (RBV). The RBV analysis assumes that both resources and capabilities are important for better performance and explains why some firms perform better than others in an industry. Using RBV as a framework this essay aims to examine how ZARA generates sustainable competitive advantage. (Opening is good, you have been able to introduce theory that would be discussed the essay).

“A fast fashion system combines quick response production capabilities with enhanced product design capabilities to both design latest products that capture the latest consumer trends and exploit minimal production lead times to match supply with uncertain demand” (Cachon and Swinney, 2011). Fast fashion is widely gaining recognition as being a key enabler for success for modern fashion retailers (Barnes and Lea-Greenwood, 2006). Fashion retailers such as ZARA, H&M and Benetton have adopted this strategy in order to enhance its business system and gain competitive advantage. ZARA was established in 1975 and is the flagship of Inditex (Industria de Disen˜o Textil) of Spain. In a relatively short span of time, ZARA became the largest and most internationalized of Inditex’s chains. At the end of 2001, it was operating in 507...

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