Read the ZARA case. The ZARA case illustrated and discussed issues of vertical integration. Under what circumstances might vertically integrated companies such as ZARA outperform the competitors?

Instructions:
This assignment is related to Corporate Strategy: Vertical Integration and Diversification

Read the ZARA case. The ZARA case illustrated and discussed issues of vertical integration. Under what circumstances might vertically integrated companies such as ZARA outperform the competitors? Transaction cost economics suggests that it might happen if the costs of organizing the transactions internally are less than the costs of organizing the same transactions externally (through the market interface).

Answer below question:Note: no need of introduction of vertical integration.

Question: Name a substantial “external” transaction cost of ZARA, and explain why it might be important? 500 words


 

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