In today's business environment, the majority of fast fashion merchants are tend to globalization that aiming achieves further expansion, which is the need action when the competition in domestic market is becomes fierce (Vida and Fairhurst, 1998) However, different fast fashion retailers (Zara, H&M, and Benetton) have its different method of support its international extension ambition that may discuss at length below.
Theoretically, there are three different modes of market accessibility strategies were be consider internationally that included Wholly-owned subsidiary, Joint Projects or Relationship, and Franchising (Johnson et al. , 2008). In recent ten years, Zara is aiming much to the international market because Zara are facing stagnant consequence by the heavy tough economy in its home country, Spain. However, Zara are propensity expended internationally through wholly-owned stores. By the start, Zara will open up a flagship store in the major city. After have the experience that great for functioning locally, Zara will added the amount of its own stores in adjoining areas. This routine of market expansion is named as "oil stain" by Inditex. The main reason that Zara are favorite in expended internationally by wholly-owned stores is basically because Zara believe the controlling a sizable part of supply chain such as own its own store is the only path to attain the shortest business lead time. In other words, Zara focuses on rate through control. Zara generally have used franchising and joint venture method in the countries where this is a legal necessity and administrative obstacles, normally, Zara will mainly focus on company-owned stores (Garcia, 2010).
Similarity, H&M mainly choose the wholly-owned subsidiary accessibility method to expended internationally that similar as Zara doing. The string of company-owned stores is the key distribution route in H&M, meaning it is allowing H&M can tight control on every store's operation and own the right of store locations decision. The store location must be positioned in the leading location such as major town or towns' shopping area. H&M always chooses the way of investing directly in the international markets where is politically steady and high growth purchasing power such as Western european markets, Asian market segments and North American (Li and Frydrychowska, 2008). However, in Middle East, as a result of legal restriction, H&M is impossible to use wholly held subsidiaries. Therefore, H&M change its original admittance mode and collaboration with franchisee Alshaya, which is one of the primary retailers in Middle East. That is, H&M provides the clothes on inexpensive and deliver these to its partner, which Alshaya stocks and options these clothes and sell them in outlets. Meanwhile, H&M puts everything under its control which includes store location decision, range of merchandise, design inside the store and working out of the staff in order to remain the H&M company notion. It is so-called "franchising" (Walter, 2009).
Unlike the Zara and H&M, almost all of the Benetton retailers in market were not company-owned. Benetton have sold its products in 5, 800 mono-brand stores that send out across the world, and 95% of which are in franchising. It isn't identical to those of the franchising deal. There is informally franchised to shopkeepers with royalties weren't requested and granted no exclusive right. Benetton was the first Italian fast fashion company that used the quasi-franchising system to retailing. That is, Benetton coordinated by its self-employed partners or agents who are working on commission rate to recruited franchisees and gathered their orders. When these franchisees wide open several independent outlets in the same urban area, you won't only produce a positive iteration effect on end consumers but also a dissuasive influence on its competitors (Garcia, 2010). Indeed, Benetton's international growth relies predominantly on its network of unbiased store, this franchising method is beneficiary Benetton more easily to enter the new markets where culture barriers and subscription on wholly-owned. Besides, it is permit the Benetton can extend without investing too much of its capital, that was best for Benetton open up its success quest at the beginning that lacked of necessary capital. This technique is allowing Benetton has a fast development of sales which is becomes the driving a vehicle element of a technique for Benetton's global extension. However, since the fee for agent is only encourages sales, there exists little direct motivation to share business cleverness with Benetton or share best practices to the people agents. Therefore, it could encourage the free rider problem (DocShare, 2010).
After examination three companies' global extension quest, we can found that Zara and H&M remain struggling on its brand internationalization. Zara believe that controlling a sizable area of the chain is the only path to guarantee speediest throughput time. It may lead Zara sinking an enormous of necessary capital. Subsequently, Zara is generally rely on company-owned store entrance methods therefore it is lead to Zara bearing a large hurdles and investment risk when they go into a countries where are culture obstacles, wholly-owned restrictions and managerial barriers. Doole and Lowe (2008) says that internationalization should tends to be an incremental process, which means that Zara shouldn't to choose wholly-owned admittance settings but franchise to access the countries when they are low engagement. Furthermore, Zara didn't have committed to distribution channel to support its internationalization ambitious. The Zara's "centralized logistic" is work well in the current quantity of store that bulk in European countries, but it may not able to source more retail location into other countries (mbaNERDs, 2010).
Similarity, H&M also implied wholly-owned subsidiary method as its main foreign entry method as what the Zara doing. H&M didn't not follow the Uppsala model which at the start with no regular export activities, then export takes place via indie agent, later by having a sales subsidiary (franchising or licensing), and eventually making. H&M immediately implied wholly-owned store in all the countries may lead them bearing a high capital investment and failing risk when they operate its store in the unfamiliarity country. In the mean time, international enlargement by buying retail may be partly because H&M is the design-led company and it generally markets its products price at a lesser price that Benetton. The high cost of design and store will as a consequence to low margin, therefore H&M may decide to retain complete retail margin for itself somewhat than give some of it to franchisee and it could restrict its global enlargement. To an even greater amount than Benetton, H&M should not spend money on between retailing and design stage of the string (Li and Frydrychowska, 2008).
By assessment with Zara and H&M, Benetton's supply chain is best in the global expansion's aspect. Benetton's franchising system is permit the company can get into the new market with no high need high cost as Zara and H&M, also it is effective the uncertainty risk when the bigger physic distance (e. g. culture different, words, constraints). Besides, Welch et al. , (2007) mention that Benetton has relying on franchising model in term of four main contribution factors: captive circulation network (sell only Benetton goods), no financial commitment (franchisees use its finance to use retailers), hastens development (remove the need to oversee day-to-day performance. The image and strong brand name also has the significant contribution to Benetton. It ought to be thanks to its marketing effort which is usually provide a positive, international, world calmness, and characterized by universal themes. It is not only allowing Benetton wining reward and the attention of general population but also strengthen its global brand and image (Garcia, 2010).
However, there is certainly some recommendation that helpful for Benetton. Since Benetton is usually concentrate image on brand what the Benetton should do is sufficient control through factories that it does have and the stores and franchising so it operates. With this process, Benetton's internationalization's trip can be choosing greater very good.
