Supply Chain Management Case Study

Question 1: In what ways are elements of the classical and behavioral management approaches evident in how things are done at Zara International? How can systems concepts and contingency thinking explain the success of some of Zara’s distinctive practices?

There vertical integration allows small batches of produce to be distributed and tested out allow them to save more money and cut inventory backlogs. Zara maintains a low cost by avoiding outsourcing (where possible) and producing all its merchandise and produce in home soil in Spain. Also Zara own many fabric dying, cutting and processing equipment that provided Zara added control and flexibility to adopt new trends on demand. Effectively Zara is able to design and manufacture products as well as deliver them in less than two weeks in contrast to competitors such as Benetton and H&M which require at least between five weeks and 4 months lead time to fill orders from its retail operations. One major unique characteristic was that Zara own its in house production which gives Zara the flexibility of quantity, variety, and the frequency of the designs they produce.

The current structure of Zara will prove to be advantageous as it continues to expand globally. With the current marketing setup, Zara has always promoted its products by way of their retail space. There is almost never a large marketing campaign for the new product line, which unlike their competitors allows Zara to decrease their costs. For every new store that is opened by Zara there is a centralized distribution center that is responsible for supplying the

Zara International was a retail shop originated in La Coruna, Spain in 1975. It was clothing and accessories shop and imitated the latest fashion trends and sold them at a lower cost. It became Zara International after entering Portugal in 1988 and then the United States and France in the 1990s. The distributor for this brand is Inditex and is considered the most successful retail chain in the world. Zara has a business strategy that is very different from the retailers nowadays. If a customer orders a product Zara’s distribution centers can have the items in the store within 24 to 48 hours of receiving the order, depending upon the country. The business plan that Zara’s executives made was very innovative and played a great part in the

1. With which international competitor listed in the case is it most useful to compare Inditex’s financial performance? What do comparisons indicate about Inditex’s operating economics? Why?

Afterwards we will describe the main foreign market entry modes that Zara used in their process of internationalization. We will also focus on the factors that affected the decisions of Zara when choosing the right entry modes. Ultimately, we will discuss the structures and controls that Zara used to improve their business strategy. The whole report will focus and give an overview of the strategy that Zara used to become successful, as well as it will help us get a better understanding of the processes that occur inside the company.

While moving to USA, Zara is faced with its competitors, GAP. With this opportunity, Zara can learn firsthand about its competitors and its customer in huge global market of fashion. USA is a risky market with vindicated retrospection (Martinez 1997). According to Zara, International expansion is study procedure which cannot be postponed; it can augment the knowledge and idea of the global market. Finally, internationalization comprises the risk and cost of different markets (Martinez 1997; McGoldrick

  7.  Which of the following is not one of the factors driving an emphasis on supply chain management?  a.  An increasing emphasis on domestic sourcing due to the longer lead times and higher levels of  pipeline inventories associated with global sourcing.   b.  The cost and availability of information resources between entities in the supply chain that  allows easy linkages that eliminate time delays in the network.  c.  The level of competition in both domestic and international markets that requires organizations  to be fast, agile, and

Differences in positioning also affected the stores which products were sold and ZARA’s overall image. For example in South America, ZARA’s products had to present a high-end rather than a mid-market image and it was emphasized that they were “made in Europe”. However, the image

3. What IT infrastructure and capabilities does Zara currently have? That is, what types of IT infrastructure does Zara currently deploy in its operations?

Zara is one of the most well-known international companies in the world. It is recognized for its high fashion, quality garments and affordable prices. Zara’s parent company is Inditex.  “One of the world’s largest distribution groups” (Zara, n.d).  Zara offers fashionable designs for men, women and children. Zara was opened in A Coruña, Spain by Amancio Ortega and his partner Rosalia Mera in 1975. They wanted to name their store after their favorite film Zorba the Greek. Since that name was already taken, they came up with a name that had similar letters. Zara was born and the brand become a global phenomenon which is currently headquartered in Artexio, Spain. Their mission statement indicates that customers come first in their business.

To compete and win over all the challenges mentioned above Zara adopted a wonderful strategy of internationalization. The company made a logical tradeoff between negotiable and non-negotiable decisions for the betterment of

The group has decided to work on a brand that has a well-known reputation in the fashion industry for affordable high-fashion products. Zara provides a range of products that is classified as organic products where cottons are being processed without pesticides. The process is environmentally sound and safe for farmers to pick cottons. Our team’s objective is to increase awareness with a strategic approach while working within budget; Zara only spends 0.3% of their revenue on advertisement while being an internationally well-known fashion company. Our goal is to help Zara extend their product range (organic) to help it create awareness through strategic approach with advertising and branding techniques.

Q6: You mentioned that your company is trying your best to manage supply chain, how your company manage supply chain? Which strategic planning and operational decisions your company should make?

From an analytical prospective, explain how information systems relate to the way Zara runs its business. What types of systems are the most essential for this company in its current environment?