Zara Fast Fashion: Executive Summary

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 world 's largest clothing retailer has been able to cope with the financial crisis better than most of its rivals, helped in part by the expansion of shops in fast, growing commercial centres and also by offering affordable fashion at a fraction of the cost of designer fashions. This case provides information on Zara and its major rivals in the industry to highlight the challenges and opportunities facing companies who are competing on a global basis. Zara is the biggest player in the clothing retail sector and leads the way in sales and consumer growth whilst being recognised

Zara’s value chain differs from the other traditional models a lot. The design and creation rely extensively on copying fashion trends observed at the fashion shoes and at competitors’ points of sale, which based on buyers and designers alike.

No business in this type of industry has total control over the market price and there are no barriers to entry and exit. Because of its monopolistically competitive playing grounds, Zara’s conduct is to increase its market power by producing demand for its heterogeneous products. Through differentiation and cost leadership, Zara attempts to increase market demand by offering new items weekly while keeping a low inventory, thus making its products unique and attractive to consumers. Because of its backward vertical integration model, Zara creates a strong synergy throughout its production process. Zara has sustained a competitive advantage globally by expanding into new markets and becoming more efficient. In a monopolistically competitive industry, Zara is expected to make profits in the short run but will break even in the long run because demand will decrease as average total costs increase. This means in the long run, a monopolistically competitive firm, such as Zara, will make zero economic profit (AmosWEB, 2001).

These points of interest lead ZARA to be the business sector pioneer in dress industry. ZARA can cut its expense and time or having cost and time control as it doesn’t outsource its distribution, this additionally permits them to stay away from the contentions that for the most part emerges on account of receiving diverse appropriation channels. Vertical integration is likewise serving as a state of separation in the middle of ZARA and its rivals, as a rule retailing stores outsource its distribution and that can be the reason of deferred distribution. (Bootwala,

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

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.

1- With which of the international competitors listed in the case is it most interesting to compare Inditex's financial results? Why? What do comparisons indicate about Inditex's relative operating economics? Its relative capital efficiency? Note that while the electronic version of Exhibit 6 automates some of the comparisons, you will probably want to dig further into them.

The core concept of Zara 's business model is they sell "medium quality fashion clothing at affordable prices", and vertical integration and quick-response is key to Zara 's business model.  Through the entire process of Zara 's business system: designing, sourcing and manufacturing, distribution and retailing, they presented four fundamental success factors: short cycle time, small batches per product, extensive variety of product every season and heavy investment in information and communication technology.  These four elements are involved in every aspect of the business.

The researchers need to find out the market trend, market size, market growth and market share of Zara. In addition, macro-environment and micro-environment that form up marketing environments also need to be analysed and interpreted to investigate the factors that will affect the business directly or indirectly. Based on the research, micro-environment includes competitors, H&M, Mango and Uniqlo while marketing intermediaries includes Zalora, Taobao and Tradesy. Meanwhile, macro-environment involves technological environment and economic environment. Apart from industry analysis, company analysis of Zara consists of company background and history, company operation, mission statement, SWOT analysis and competitive advantages. Based on research, the researchers realized that the founder of Zara is Amancio Ortega and Rosalia Mera. They also realized that how does Zara can operate the business successful and effective, the reason is that Zara has a good operation management within the company. Moreover, SWOT analysis is divided into internal origin and external origin, it is used to analyse strengths, weaknesses, opportunities and threats of Zara. Lastly, for competitive advantages, this part is to investigate the elements and strategies that contribute Zara become more successful and more

This concise summary will introduce and also, briefly, analyze and summarize the case at hand: Zara: IT for Fast Fashion and the issues Mr. Salgado and Mr. Sanchez are facing alongside the rest of Zara and Inditex’s management. The problems introduced are all major concerns that are currently affecting or risking to potentially affect the company in the future. These include issues with the current operating system and point-of-sale systems the company operates. They provide limited visibility throughout inventory levels resulting in customer and employee dissatisfaction alongside inefficient time consumption due to

Zara is a clothing and accessories retailer selling stylish apparel at affordable prices, and it is also the most profitable brand of the Spanish clothing retail group Inditex SA. Ortega planned for this new Zara outlet, located near his factory in La Coruna in northern Spain, to sell this overstock merchandise himself. Since then, Zara has expanded into 500 stores in 68 countries as of January 2007 and has become a leader in customized fashion retailing. This assignment presents core competencies to help Zara achieve competitive advantages in fashion industry. Besides, we also offer five competitive objectives about quality, speed, flexibility, dependability and cost to evaluate

A woman who shops at Zara is stylish, well dressed and likes to stand out in the crowd. She is fashion conscious, but would not go the full length to capture the latest trend and so is a bargain hunter and a bit of a shopaholic.

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.