How Zara Generates Sustainable Competitive Advantage

1680 Words7 Pages
Drawing on the Resource Based View literature, evaluate whether and how Zara generates sustainable competitive advantage Introduction The Resource-Based View, is a model that sees resources a key to superior firm performance. Resources include all assets, capabilities, organizational processes, firm attributes, information, knowledge and other major elements controlled by a firm’ (Barney, J, 1991). Theoretical Models- (Heterogeneity and First-Mover Advantage) A model identified is that of the ‘first-mover advantage’ (Lieberman & Montgomery 1988). This theoretical concept highlights that, the first firm to implement a strategy can achieve a sustained competitive advantage over other firms. According to (Barney, J 1991), ‘these firms may…show more content…
In contrast, the tradition industry model might involve cycles of up to 6 months for design and three months for manufacturing (Z9). As a result this short product cycle time, this reduced the level of working capital required and also assisted in simultaneous manufacturing of new products (Z9). Therefore, this gives Zara the incentives to increase its product line faster than their competitors Zara’s factories were also highly automated and was based on a capital intensive approach, which included designing patterns, cutting, finishing and inspection. This is in contrary to its major competitors (GAP, H&M and Benneton), who outsourced vast majority of their production to nations outside of the UK (Z5). Design Zara’s design teams transcended design, narrowly defined. The teams also continuously tracked customer preferences and used information about sales potential based, among other things, on a consumption information system that supported detailed analysis of product life cycles. Retailing and Merchandising Zara spent only 0.3% of its total revenues on media advertising and marketing, in comparison to the 3-4% spent by most specialty retailers (Z13). Therefore, it is evident that Zara maintain a superior cost advantage over its competitors. In order to compensate for lower advertising costs, Zara places greater emphasis on its store layout, store locations and most importantly its

More about How Zara Generates Sustainable Competitive Advantage

Open Document