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Topic: Business
Number of pages / Number of words: 4 / 964
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Zara manufactures close to half of the clothes sold in its retail stores and undertakes all of its own distribution from manufacturing plants to retail outlets. Gap outsources production and distribution. Should Zara outsource its manufacturing and distribution? Should Gap backward integrate into production and distribution?

Zara – like American Apparel – is an interesting and unusual example of a vertically integrated fashion clothing company...


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Thus, Gap does its own design, but its manufacturing is undertaken by contractors, mostly in Southeast Asia. The advantages of this system are:

  • It avoids the problem of managing manufacturing plants far away from the retailers’ retail operations and corporate head offices.
  • Retailing and manufacturing are strategically dissimilar – different capabilities, different optimal scale...

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