Zara: Dealing with an Irresponsible Supplier in Turkey

In late 2017, Zara, a major Spanish multinational retail clothing chain specializing in fast fashion, was the target of a negative campaign initiated by the workers of one of the company’s Turkish suppliers, Bravo Tekstil, who had been left without pay after their employer declared bankruptcy and disappeared overnight. Zara was in the media spotlight, and Clean Clothes Campaign, the garment industry’s largest alliance of labour unions, was pressuring the company to compensate for the workers’ losses and pay three months of wages and severance. Although not legally liable, Zara offered to pay about one-quarter of the Bravo Tekstil workers’ claims to limit its reputational damage. Bravo Tekstil’s workers remained largely dissatisfied with this offer and promised further actions against the Spanish multinational enterprise (MNE). In the short term, Zara had to decide how to respond effectively to these specific allegations, and over the longer term, it had to develop a more deliberate strategy for managing its suppliers’ potential irresponsibility.

<p align="justify">This case explores how a fast-fashion powerhouse should address irresponsible supplier behaviour and is suitable for undergraduate- or MBA-level courses in business ethics, international business, and strategy. Regarding business ethics, it highlights stakeholder and shareholder theories, issues of monitoring in MNE-supplier relationships, and reputational consequences. Regarding international business, it examines the role of multinational enterprises in global value chains and their competitive advantage. Regarding strategy, it discusses make-or-buy decisions, the pros and cons of each, and responsible strategic management, emphasizing how firms anticipate stakeholder reactions to value-chain misconduct. After working through the case and assignment questions, students will be able to do the following:<br><br><ul><li>Identify the opportunities and challenges in global value chain relationships.</li><li>Analyze the roles of multinational enterprises and their suppliers in global value chain relationships.</li><li>Explain how stakeholder pressure might inform firm strategy in market transactions.</li><li>Define ownership- or firm-specific advantage, and explain its relevance for MNE competitiveness.</li><li>Describe monitoring, and outline the conditions under which it is more effective in global value chain relationships.</li></ul>

• fast fashion
• Zara
• Bravo Tekstil
• supplier bankruptcy
• worker compensation
• reputational damage
• business ethics
• international business
• strategy
• stakeholder theory
• shareholder theory
• MNE-supplier relations
• global value chains
• competitive advantage
• make or buy
• strategic management
• stakeholder reactions
• ethical supply chain
• multinational enterprises
• monitoring effectiveness