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Globalization, Zara and H&M

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Essay

Introduction

The targeted industry on which the effect of globalization will be studied is the garment industry, and the two companies which we will study in this regard are Zara and H&M. All the top garment industries notability Zara and H&M are doing a fine job in the garments industry as they have adopted well-defined quality standards. There is a diverse research made on the garments and fabric business as they do change with respect to the trends and fashion. Both H&M and Zara are strategically safe players and they have all what it takes to be the front runner in the market. Their stores are in the different areas of the world and most specifically in the main and posh markets. Globalization brings about your extension associated with overseas ethnical, financial, along with political actions (Boudreaux, 2008). As folks, concepts, understanding, along with merchandise proceed more readily around the globe, your experiences of men and women worldwide be related.

Demographics, Trends, Technology, Risk Management and Quality regarding these two chosen companies will be discussed further on. Considering all these factors, we will analyze its impact on clothing industry and will see how globalization affects the industry and these two companies. Then the conclusion will be presented at the end concluding the impact of globalization on the clothing industry as well as on Zara and H&M.

Demographics Garments industry is also related to a fact that they are produced where they are required by the customers. For an instance, sweaters and jackets are mostly required by those locations where winters in the major season in the year. Europe and Canada are simple examples where there is mostly cold and snowfall. So products have to be categorized according to the place and locations. Asia and some other parts of the world are usually warm and some are humid, so clothing brands have to keep these important facts in the mind while launching their products in a particular area. The two of the biggest industries Zara and H&M are much aware of this fact and their recent success is evident sign of their sophisticated and intelligent demographic movement. Majority of the people that attract towards these two brands are actually those ones who love to wear according to the fashion. These two brands are top fashion wears that typically focus on youth and young or middle aged people. Zara’s brands are relatively cheap then H&M ones and the sales revenues of Zara are also good. Zara has 4,350 stores worldwide, of which 327 are in Spain. Of all the stores, there are 1121 in Europe, 218 in America and 424 in Asia and the rest of the world. Began with its parent company Inditex, Zara operates 4,350 stores worldwide with the brands such as Bershka, Pull and Bear, Massimo Dutti, Zara Home, Stradivarius, Oysho and Uterque. Amanico Ortega Gaona, CEO, founder, and Spain’s richest man founded Zara in 1975 (Docstoc, 2009). English football star sir David Beckham is one of the brand ambassadors of Zara fashion wear. H & M stores were already opened in the cities of Denmark, Germany, Norway, UK, Americas, Spain, Dubai, Kuwait, Shanghai, Hong Kong and Tokyo till 2009. The first store in the Russian market opened in 2009, just in Moscow. In 2010, it opened its first stores in South Korea, Israel and Turkey (H & M, 2013). On March 2010, H&M opened its first store in South America, in the city of Santiago de Chile, unlike other openings in the world, will be used as a test market, launching a collection created for the country: Chile Unique Collection was intended as a celebration of the entrance to the South American market. They deal with winter, summer, fashion, party wears to sports and casual ones. Their suits are also famous and many of the showbiz channels such as “MTV” and “V channel” has contracts with them and uses their clothes. Their clothes also vary by location and traditions in different parts of the world. At 2011 they opened their first store at Romania and at 2012 they opened another store in Bulgaria, Latvia (About H&M, 2013). American Sensational female singer Lady Gaga is one of the brand ambassadors of H&M.

Trends With the passage of time, things are been changing and this is same with the garments. People do need a change with respect to the weather conditions so that they could feel themselves in comfort. Each season has its own fashion and it is the demand of the time to make changes in the dressing and clothing. There are many brands that are doing a great job in making garments as per the requirements of the seasons. Brands like H&M and Zara are one of the best examples that do come up with the latest designs and fashion. Such brands do follow a strategic management to distribute their garments in the market. There is a technical strategy that is supposed to be adopted by such brands so that it could be reached to the local customer. Complete distribution of the garments has to be made into practice so that a local person can buy the product and maximum sales could be done resulting in great revenue (NYTimes, 2012). According to the weather, both Zara and H&M are continuously launching the decent, fancy, and leisure variety to satisfy the market need. But definitely, Zara has the edge, as are quick and fast to launch their new product. They are famous for launching product in two weeks. They have hired top European fashion designers and they are continuously in link with the current market situation. They are properly linked with the latest fashion trends, ins and outs in clothing industry. Whereas, H&M also has very decent professionals to carry the task, but they are slow in introducing the latest trend in the market as compared to Zara. Moreover, their dresses are comparatively expensive than Zara. Considering these two brands, they are making their name globally because they are present in almost all the big markets of the world. They know the needs and trends of every nation as they are positively affected by globalization.

The Strategic Management The locations of the stores have to be somewhere where there is the maximum population or we can say that the place where crowd is always moving around. It will give the benefit to the brand that majority of the people will have a reach to the store and they can have any product they want to. It is one of the best approaches to the locations of the store in order to have the maximum revenue from the public. There are some of the management models that are really helpful in developing the strategies of business. As the means-end style gives a structure that enables entrepreneurs to employ a suggestions hook for you to carryout consumer research in addition to develop a company technique concurrently. In the process, workable alternate advertising and marketing of the garments may be designed in addition to tested. They design their clothes in the way that the risk of overstocking is approximately nil. Initially the launches the first varieties to Europe and Americas, then go for Australia and after that introduce it to China, Hong Kong and Middle East. Some special varieties such as woolen clothes are for the special northern and cool areas.

Technology There are promotional pages of H&M and Zara on the Face book, Twitter and on other social networks by which people will be always getting to know about the company’s profile and their latest products. There are blogs specifically written for the garments and clothing as it has all the plus points of the industry. These non-traditional technological methods for promoting are of great use. The actual collection between regular and nontraditional marketing has recently also been confused mainly because one will find numerous brand-new marketing platforms which come out and about every day. Earlier, there seemed to be quite an apparent collection in which identified transmitted, radio stations, newsprint and out-of-home, as well as billboard, promoting, as regular marketing. Today, there is certainly a whole lot brand-new marketing from the mixture that there is zero apparent classification between regular and nontraditional marketing. These two brands (Zara and H&M) are using all the social media platforms to advertise their newly released products, to get the feedback and any innovative idea regarding the brand. During the past, marketers may have experienced couple of marketing options, so they really didn't have to place all the imagined inside their marketing tactic. Using the introduction of digital and social networking and also several varieties of out-of-home marketing, marketers are capable of doing many different points. They could utilize focused promoting as well as take a wide-ranging tactic. Their components supplied by means of mail, online catalogs, Net, e-mail, cellular phone, or perhaps direct-response advertising and marketing from all over the globe which ensures unique quality. Moreover, Zara and H&M are using multiple software and tools to keep their brand lead the race (Haugen, 2010). Forms designing to printing, from monitoring to advertising, from calculating the risk factors to find the possible solutions for these risks all are being done by some sophisticated software and tools. Without technology, it’s difficult for either one of them to attain their place in the market.

Risk Management According to law of business, risk management must be planned in the initial stages and then the situation of the business must be analyzed according to that planning. Zara and H&M are both very well familiar with this thing as they also have the advantage of such a diverse and huge market in which they are operating. For example if the summer collection in the 2013 are not sold in Americas and Europe as expected, then in January 2014 these clothes can be launched in Australia to kill or reduce the risk of overstock. Similarly, if stock there is available in Australia and the trend has gone, then this stock can be introduced to China or India. Because of globalization, these two brands and similar ones are enjoying the benefit of global presence. Moreover, the countries where Cotton is cheap i.e. India and China are the markets of all the big textile industries. Zara and H&M are also present in these markets so they can get cheap labor and material for their business as the backup option if Spain for Zara and Sweden for H&M becomes costly option for them. Bar code scanning technology helps to collect the data with in short span of time. When there is a need of collecting information and data then this technology is really helpful and can be really cost effective. Moreover, its ultimate benefit is theft prevention. Both H&M and Zara have introduced these technologies to technically sound their business and take the minimal risk options. The questionnaire for risk management is also a very intelligent step. It will tell the demands and requirements of the customers and will confirm that what really the demands of customers are. Though the research work, case studies, questionnaires and other study will tell the demand of the customers and what they really feel/want from these two brands. The basic purpose of collecting information regarding the products makes it easy for the company to decide that what are the pros and cons in the products. It is also a perfect step towards risk management. It gives us a complete analysis of the product usage and its implications to the environment, also makes the major failure the least likely option (Jeffs, 2008).

Quality Particularly in the garments industry, there are certain risks involved in the business. The most important thing is the quality of the fabric. It has to be top class so that a pure garment could be made at the end of the day and more of the people could buy the items (Patton, 1995). All the top garment industries (notability Zara and H&M) are doing a fine job in the garments industry as they have adopted well-defined quality standards. There is a diverse research made on the garments and fabric business as they do change with respect to the trends and fashion (Gentle, 2000). They both develop their marketing and production strategies just according to the global needs just because of globalization impact and also to take full advantage of globalization. In summarized way, it is better to claim that globalization provides many opportunities to the clothing industry especially for Zara and H&M brands so that they can learn the quality standards from other nations in clothing industry if they are not good enough at it. Their unique quality and beautiful designs made them two of the biggest and most demanded clothing industries of the world. They are totally unmatched with other clothing brands when it comes to brands quality as well as price. Their recent growth and success are the two best parameters to calculate their quality of brands. Very soon they will be like the two only runners in this industry, but here Zara has significant edge over H&M when it comes to growth and quality. Zara eco- fabric is also one of the big achievements in matter of quality standards. From production department to the store, they have an environment friendly route and standard that can be defined as:
With the product • Ecological fabrics. • Organic cotton.
In the store • Save energy. • The eco-efficient store. • We reduce waste production and recycle. • We share a commitment to the entire workforce. • A team environmentally aware (Zara, 2013).

Conclusion Globalization has made the garments to change and made according to it. People love to wear these brands as they produce what is required by the customers. Marketing of these products is one of the best factors of their success. The two brands discussed in this essay, also claims their success just because of the opportunities provided by the globalization. We can conclude this essay by saying that without globalization clothing industry have limited chances of growth and have limited demand which now completely changed. However, globalization also creates competition to the clothing industries. H&M and Zara are the fierce rivals and are front runners in the clothing industry, where Zara has the edge over H&M. Both companies are talking the trends and climates of different markets seriously in order to launch their next collection.

References

AboutHM. (2013). The history of H&M. data retrieved from http://about.hm.com/en/About/ facts- about-hm/people-and-history/history.html
Docstoc. (2009). Zara history and background. (Retrieved from http://www.docstoc.com/docs/ 15866491/ZARA-History-and-Background)
Guardian. (2012). Zara bucks Spanish economic gloom. Data retrieved from (http://www.guardi an.co.uk/business/2012/jun/03/zara-bucks-spanish-economic-gloom).
Haugen, D. M., & Mach, R. (2010). Globalization. Detroit: Greenhaven Press.
MarketLine. (2009, April 17). H&M company profile. Retrieved from (http://www.marketlin einfo.com/)
McDaniel, C. (1998), Marketing, (4th edn), South-Western College Publishing, Cincinatti.
NYTimes. (2012). How Zara Grew into the World’s Largest Fashion Retailer. Data retrieved from (http://www.nytimes.com/2012/11/11/magazine/how-zara-grew-into-the-worlds-largest-fashion-retailer.html?_r=0)
New York Times. (2012). How Zara Grew into the World’s Largest Fashion Retailer, p.2 (Nov 9)
Lopez, C., & Fan, Y. (2009). Internationalization of the Spanish Fashion Brand Zara. Journal of Fashion Marketing and Management, 13(2), 279-296.
H & M (Hennes & Mauritz) Collaboration with Designers. (2012). S.l.: MarketLine, a Data monitor business. Daniela Barbosa, D. (2013). “H&M pode ter pelo menos 40 lojas no Brasil - EXAME.com”. Exame.abril.com.br. Retrieved on 8 November 2013.
Jeffs, C. (2008). Strategic management. Los Angeles: SAGE.
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H and M Five Forces

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