After reading a post by a fellow student, I found it interesting how ZARA can still be successful while maintaining the traditional Vertical Integration system.

The Dell example we discussed in class seemed to imply that virtual integration is the way to go in modern business; however, firms like Zara and Ikea prove that, with the right strategy, it is possible to survive and thrive with a vertically integrated system.

Why does vertical integration work well with firms like Zara, but not with firms like Dell? First, I thought it is due to the differences in the products they manufacture. According to this article, Zara has retained vertical integration because of the “fickleness” of fashion trends.

Computers are about research, development, who has the thinner chips and faster processors at the end of the day. Outer aesthetics and software aside, all firms are aiming for the exact same goal.

On the other hand, fashion is about high-quality, unique products that cannot be copied by other competitors. In this sense, it would be worthwhile to keep seamstresses and designers in your company as loyal employees, rather than outsource their work to temporary partners that might emulate their styles in the future.

This is why Zara is constantly sending its designers across the globe to attend fashion conventions and catwalks; it wants to stay one step ahead of its competitors in the fashion market. With the information designers bring back and its company-owned factories, Zara can quickly design, manufacture, and market a new line of products in merely 3 weeks. This is something that other virtually integrated clothing brands (like GAP, H&M) cannot do.