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Business Model Analysis In The Fast Fashion Industry

4714 words - 19 pages

Cover Page

Business Model Analysis in the fast fashion industry

Table of Contents

1. Introduction 3
2. Industry environment of fast fashion 4
2.1 PEST analysis 4
2.2 Five forces analysis 6
2.3 Summary of findings 7
3. Analysis of Zara and H&M 7
2.1 Analysis of Zara 7
2.1.1 Vision, mission and objectives 7
2.1.2 Internal analysis 8
2.1.3 Business model canvas 8
2.1.4 Value proposition canvas 9
2.2 Analysis of H&M 10
2.2.1 Vision, mission and objectives 10
2.2.2 Internal analysis 10
2.2.3 Business model canvas 11
2.2.4 Value proposition canvas 12
2.3 Summary of findings 12
4. Comparison of business models between Zara and H&M 12
4.1 ...view middle of the document...

Today’s companies not only seek to outperform competitors through their business model but also leapfrog their business model into source of competitive advantage (Voelpel et al, 2004). As fast fashion has its industry characteristics and undergoes those emerging environmental forces, business model analysis via referring to a few firms could help identify how firms are capturing business opportunities in the form of inventing or reinventing their business model (Voelpel et al, 2004). This report will present an analysis of business model of two dominant fast fashion companies, Zara and H&M. It will start with an identification of industry environment of the fast fashion sector. Then this report will continue to investigate into business model of Zara and H&M. After that, a comparative analysis of Zara and H&M’s business model is presented. Then this report will undertake a development of a business model for a new company in the fast fashion industry. In the last part, the author will reflect on the strategic insights learned through this individual project.

2. Industry environment of fast fashion
2.1 PEST analysis

Table 1, PEST analysis
Political environment | Liberalization of international trade: Liberalization of international trade is facilitated by governments, such as India, China, Thailand and Bangladesh (Jawara and Kwa, 2004). Fast fashion companies could leverage location-based advantages, such as low-cost labour, quality raw materials like organic cotton, and promising markets as outlets.Government supports: Governments in different countries are exerting great functions to help develop the global textile industry, such as establishing organic farming programs and providing farmers incentives to grow environmentally friendly materials.Building infrastructure: Compared to one or two decades, Countries like China, India, Thailand and Bangladesh have significantly invested in the building of infrastructure to promote their national competitiveness in transportation (World Economic Forum, 2015). This progress builds the solid foundation for firms to develop agile supply chain. |
Economic environment | As exhibited in illustration 1, fashion market in the future 3 years is still going to be embraced with substantial growth, with CAGR being 5.1% between 2013 and 2018 (MarketLine, 2014).Illustration 2 shows that clothing, footwear and accessories account for the largest market distribution (MarketLine, 2014).Illustration 3 shows that womenswear accounts for 49% of the total market share (MarketLine, 2014). This shows womenswear is still the dominant category. |
Social environment | Waste culture: Fashion product waste is a serious issue in the US and Europe. Each year, each American household throws away around 82 pounds of waste and consumers in the European Union throw away 5.8 million tons of waste (DuFault, 2015). This poses firms a challenge to strike a balance of production and meeting consumer demand (Luz,...

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