Zara Case Study Answers

Zara is a high-end street store offering the latest tastes in fashion for women, men, and children alike. Amancio Ortego, Zara’s founder, has made the store grow with rapid success in both its home country, Spain, and internationally. One of the distinct reasons why Zara is such a unique company compared to its competitors is its foundation of the quick response system. Today, Zara’s cycle time is six weeks, in which it responds to its customers’ demand very quickly, unlike most stores that take half a year. Overall, Zara is distinct from most apparel stores in its ability to travel globally and from its international strategy.

The business idea of Zara is to link customer demand to manufacturing, and to link manufacturing to distribution. And based on this general idea, Zara has several essential elements for its business model. First, speed and decision making, which means that in the external level, Zara need to respond very quickly to demands of target customers, and always keep in style. While for the inside, Zara treasure intelligence and judgment of common employees who enjoy a great deal of autonomy. Second, its marketing, merchandising and advertising strategy. Zara does not spend on virtually advertising, while it spends heavily on stores, and no selling online because of

Another way there strategy contributors to their success is that they have the capability to keep a significant amount of product in home soil in there won factories and reserve approximately 85% of their capacity for seasonal adjustments this way they will be able to rapidly respond to unexpected trends in the industry. Additionally they use foreign factories as many other companies do as cost is much cheaper which allows production to increase and distrusted accordingly, however for fast fashion items Zara produces in

Zara International is considered a high end clothing store that is affordable. Due to its quality in fashion, low prices and immediate availability, popular stores such as Gap and H&M fail to keep up with Zara’s success. Zara’s well known tactic of fast fashion has separated them from their competition. The ‘fast fashion’ objective is to distribute top trends of fashion within the runway to customers by selling them in local stores. Zara has been able to achieve the fast fashion perspective by hiring approximately 200 people that will assist in getting these trends out in stores within a matter of weeks.

The case study is upon on the resource based view. First, the firm resources were divided into three major parts: tangible resource, intangible resource and human resource as Grant suggested. The main body of the essay will also be divided into three parts according to the resource classification. Then, a VRIN test would be carried after listing different types of resources to inspect whether they are able to provide a sustainable competitive advantage for Zara. Finally, Zara’s dynamic capabilities will be discussed to state how Zara used the resources based on their organizational culture.

The Spanish retail chain Zara has unique supply chain management practices that enable it to gain a competitive advantage over other fashion retailers in the industry. Zara’s rapid response time enables the firm to quickly respond to changing fashions while deliberately under producing products. This strategy, which is supported by competencies in logistic management, design and information systems, allows the company to maintain less inventory and higher profit margins and is a key factor to Zara’s success. The firm should continue to add value by seeking new opportunities to expand in the retail market and maintain their sustainable growth.

Zara 's combination of cutting-edge fashions and culture lends itself well to a European-style, fashion-conscious consumer. While this type of consumer can be found in New York, this is not representative of the entire US market. Retailers in small towns and urban sprawls rely more on a shopping mall atmosphere. Adapting that strategy would undermine Zara 's image. It is therefore recommended that Zara target only major metropolitan areas which would likely have higher concentrations of fashion-minded individuals.

The basic strategy for fighting competition is to attract buyers at lower prices, more unique designs, high-quality design, efficient customer service and solid image brand. Thus bargaining power of buyer for apparel industry is high as the products falls under the basic needs in human lives. There is no much difference in terms of products offered by the apparel company, so if buyer is unhappy with the product or service they can easily switch to another brand. Thus, Zara are trying to strengthen its position in the market by using their unique strategy by giving priority to buyer to meet their special needs.

In society is such opinion about prices, if the product price is low, it means that the quality is low. People think that everything with high prices has high quality, but it is not true. In this case Zara did not want to be seen as a low quality brand. Hence they create products of high quality. They wanted to be first between fashion brands and add new designs to their collections twice a week. For customers is not good to look the same designs two week, the company knows about customers needs and they remove the products that do not sell well and changes the stores’ organization twice a week. Products can be different by their functional aspects, by the price and the quality. Zara differentiates by these elements. The main point of the differentiation strategy for Zara is combination of the low price and high quality and if other companies want to be desirable, they must do the same. Zara tries to decrease the product in the inventory and increase the number of variable

In comparison to competitors, Zara’s business strategy, in regards to strategic partnerships and cost of production, provide for a strategic competitive advantage. Zara, unlike its competitors such as Gap, Benetton, and H&M, does not use Asian outsourcing. Eighty percent of Zara’s materials are manufactured in Europe, with 50% made in Zara controlled facilities in the Galicia region of Spain near headquarters. Most of Zara’s competitors have 100% outsourcing to cheap Asian countries. Though the cost of production in Spain is 17-20% more expensive than Asia, Zara does have a competitive advantage over its competitors in regards to operations. The local strategic partnerships that Zara maintains with manufacturers in Europe allow for a product throughput time of 3-4 weeks from conception to distribution. To make this happen, the company designs and cuts its fabric in-house and it acquires fabrics in only four colours to keep costs low. The proximity of these suppliers gives Zara great flexibility in adapting their product lines based on up to date market trends and consumer behaviour. It also decreases costs of holding inventory. Zara’s competitors, through outsourcing to Asian countries such as China, sacrifice the benefits of proximity for low labour and production costs.

Zara is a clothing company that was founded in 1975 and came from Spain. Its under Inditex group which owns other brands such as Massimo Dutti, Pull & Bear, Oysho, Uterques and many more companies. Zara grew very fast and currently in 2012 has 1,617 stores worldwide. With a large name in the fashion industry, besides that, Zara faces tough competition internationally including H&M, Benetton, and GAP. In order to keep up with the speed chic, Zara need to keep up also with the information system to run their business.

The brand is well-known for its capability to distribute new clothes to the stores “fast and in a small batch, twice a week”, the store managers order clothes and other items, on a schedule that they follow in all Zara stores, so the new garments arrived just in time. To reach this Zara controls most of its supply chain than the majority retailers do. On opposed to H&M, Zara keeps a nearly all of its production in-house.For Zara, the supply chain is its competitive advantage. In house production allows it to be elastic in the quantity, occurrence, and multiplicity of new products that are gone to be launched. Zara commits only 15 to 25% of a season’s line. And it curls in only half of its line by the launch of the season, sense that up to 50% of its garments are designed and manufactured during the season. If items become highly popular all of the unexpected, Zara respond directly and create a new design in that popular style, so that gets new stuff into stores while the trend is still

With little marketing, mainly through word of mouth and the small production batches availability that draws customers more often in stores then rest of the market players they have been able to achieve customer loyalty and satisfaction. In apparel industry zara have logistics and supply chain management like no other and yet it is the reason of their success. With central control on decision making and production to procurement the delays and cost hikes that are possible at any other place is minimized

Thirdly, it is unique that Zara spends money on marketing, but concentrates on opening new stores instead. For their business model, Zara has a competitive advantage in areas of development, marketing, cost of production and IT infrastructure. Zara gives power to their store managers in deciding what to display and what to sell in the stores based on market research done by the headquarters. Then managers are able to order clothes to meet customer’s demand. For product development, managers need obtain the standardized information from the market or customer feedback by using a handheld device. Then send it back to headquarters for further market research. As a result, the headquarters can have a more effective plan for design and production. In reality, this allows Zara to produce around 11,000 new styles per year, while their competitors can only produce 3,000-4,000. Zara’s speed makes its product development outstanding from the market and it is important for future success. In the area of marketing, Zara only spends 0.3% of their total revenues for marketing expenses, while their competitors spend 3-4% on average. Moreover, Zara focuses on attracting customers by having a good choice of location for visibility marketing, store layout and the styles of product. For example, Zara has new styles of clothes every week and often not restocked, customers will then be attracted to visit the stores every week to

As mentioned we also believe that Zara uses another strategy, namely product development. We base this on the fact that they have expanded their product line. Now they don’t just sell clothing, now customers also have the opportunity to buy accessories, cosmetics and furniture in Zara stores. Even though Zara is introducing new products, they still relay on their existing target group.