Business model risks
Just-in-time manufacturing relies heavily on production in Northern Spain. Any weather, labour or terrorist disruption to the area will have a serious impact to sales, as there are no alternative supply centres in Europe.
As production is carried out in Spain where average wages are higher than low cost Asian countries so factory wage costs will be higher than competitors, which will affect margins.
Zara is also vulnerable to financial vulnerabilities in the Euro as most of its cost-base is denominated in Euros.
Finally increased oil prices will affect profits as twice-weekly deliveries means higher transportation costs.
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