There are certain strengths that allow a company to expand its borders. But for this to happen, not only the local experience is enough where there can be a good positioning of the brand or service, good response from consumers, a good cost structure, a good sales approach or even, high standards of quality and productive efficiency; This apparent dichotomy is evident in the diverse dynamics of global markets where there may be products of similar quality and characteristics with large price differences; Aspects such as distance and costs related to supplies, transportation, tariffs and taxes in general, are only part of the analysis. This may not matter if a good global expansion strategy is not established (8.6 Notes: Global business strategies).

Nevertheless, internationalization is not an unattainable phenomenon from companies with high standards of efficiency and the empirical evidence shows that an adequate strategy of market penetration considering the right dimension, can have great worldwide success. One of the success stories is that of Inditex, a multinational that operates in more than 70 countries.

a. Adapting to global market

Following Ghemawat's analysis that the world is semi-global, companies not only have to compete on costs or quality but also consider cultures, traditions or geographical aspects of countries. Of course, a good business strategy by breaking paradigms is a component of success. Inditex, a Spanish company that owns the Zara brand, has based its strategy on various pillars in the textile sector where the competition in design, quality, prices and standards is one of the most complexes in the world. The pillars of the strategy are the following:

1.- Vertical integration model (high response to the market and low costs)
Benefits: rapid adaptation to trends, high response to demand, eliminate high costs of positioning fashion products

2.- Own production and local and external suppliers (Spain, Portugal and Morocco)
Benefits: Great control of your supply chain, adaptation and productive flexibility.

3.- Own stores (in most cases)
Benefits: control of the sale to the retailer and increase of the margins of profitability, greater control of distribution and inventories.

b. The multinational INDITEX under the AAA framework of Ghemawat

As mentioned by Professor Klaus Meyer (8.8 interactive video Module 8), in internationalization strategies multiple factors must be considered, in some cases more than one approach can be taken to delineate a corporate strategy. Here are some brief elements of ZARA's strategy to compete in the global market.

Ghemawat AAA framework
Strategies of multinational Inditex (Zara)
Aggregation strategy
The integration of the firm's operations achieved greater administrative and operational control and a broad capacity to respond to the market

Focus on minimum adaptation:
Sell products with global fashion trends, following a Pull strategy

Share costs with local firms:
Not all Zara stores are owned which shows that they have mixed strategies
Flexible business models:
High response capacity to the market which makes the company more flexible to others in the textile segment.  
Fragmentation of the supply chain with own plants in Spain, Portugal and Morocco

Elaboration: Holger Ramos Benavides; Sources: 8.6 course notes (AAA framework), El País, Zara international success


The AAA framework puts in perspective what are the elements that a company must analyze in the elaboration of an expansion strategy from the local to the international level. It is also necessary to understand that the strategies must consider the local aspects and how these can affect the business turnaround. Although there is no exact formula, innovation and adaptation are still determining factors in the success of these strategies, such is the case of Inditex described in this essay.