Zara Case Study

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

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.

What makes the middle aged mother to buy cloths in Zara while the daughter aged in mid 20s buys Zara clothing? Because it is fashion able and up to trend. By collecting data and focusing on shorter response times, the company ensures that its stores are able to carry clothes that the consumers want at that time. Zara can move from identifying a trend to having clothes in its stores within 30 days. That means Zara can quickly and catch a winning fashion trend, while its competitors are struggling to catch up. Catching fashion while its hot is a clear recipe for better margins with more sales happening at full prices and fewer discounts. In comparison, most retailers of comparable size

Let us first consider Zara 's main competitive advantage before analyzing how current and potential future strategies will affect this competitive advantage. Zara currently employs a "design-on-demand" retail model allowing the company to bring the latest fashion trends from

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.

Zara is an apparel company and the leader brand of the Spanish retail mogul, Inditex. zara was established in 1975 in Spain by Amancio Ortega who is currently the 3rd richest man in the world, the first store was opened as an outlet but by 1979 the establishment already had six stores at different locations in Spain and by 1985 the company branched out to Portugal new york city and Paris. Today Zara has over 1900 stores worldwide which are located in 22 different countries; these stores render employment to over 125,000 employees. Zara depends on information they gather from customer and organizational feedback from all their stores on a daily basis this information is then forwarded to the supply chain, which works in synergy with the stores to keep the level of storage in stores down to a minimum. Zara owns the production, supply chain and in-house production, which lead to greater speed in output (M.A.Cano)

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 brand widely known across the globe for its unique fashionable cloths .It is a part of inditex which is known as one of the world’s largest distribution group in the world and the owner of the company is Spanish businessman named Amancio Ortega .This company was formed in 1963 as a fashion retailer for women clothes but the company became a success after the addition of a new brand named Zara in 1975 .Today Zara is amongst one of the largest international company producing the fashionable clothes. After the success of the inditex as a successful brand (ZARA) maker, inditex was able to expanded itself with more successful brands across the world in different countries at the end of the 1980.from 1976 to 1983 Zara turned out to be a successful retailing brand and introduced itself with nine new outlets to the biggest cities of the Spain with its first headquarter in Goa. Year 1984 turned out to be the witnesses of first logistics headquarter of Zara covering a large area of 10,000 square metres. New York

Quick response of Zara leads it to be successful in the fashion clothing industry. Zara adopts international strategy for its operation. With vertical integration, it benefits Zara in cost aspect, however, it involves some risks. Due to our anaylysis on Zara’s operations, some of the recommendations are made to facilitate its further improvements.

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.

Zara, one of the world’s largest apparel retailers, was founded in 1975 in La Coruna， Spain. With its successful rollout in the Spanish market, it began to expand its stores around the world, and became one of the most profitable brands in the appalling market. Zara was famous for its ability to quickly respond to the market demands, which provides a useful lesson in terms of competitive advantage with its competitors. But confronting to the fast-paced and constantly changing market, if a company wants to consistently increase market share in order to survive in the competitive market, it is irrefutable that it needs to achieve sustainable competitive advantage, since the achievement of sustainable competitive advantage can be expected to lead to higher performance.

Though above analysis, Zara's core competencies ensure the four criteria of sustainable competitive advantages: valuable, rare, difficult to imitate and exploited by organization meaning cannot be replaced. Zara's products express a unique style that has created sustainable position in customer's minds and make them feel in each of Zara's product. The attraction of Zara is creative in each product, innovative and unique characteristics. So it is not easy for competitors to achieve the results.

Until now, every garment that is product in Zara’s factories around the world has to travel back to Spain in order to go through quality controls, and is then send to its distributors. But the continuous flows of goods from all the productions sites to Spain and from Spain to the markets of sell, as well as the relative communication flows necessary to such a business model will inevitably slow down as Zara will have to deal with a constantly growing number of customers. Thus, the highly centralized information system of Zara seems not to be easily applicable in Asia, in addition to being time and money consuming.