The teaching note is exemplary for its comprehensiveness, clarity and usefulness. For many it's an eye opener. Hence, they could not match the expectations of the customers, which caused many problems for their brands Gluyas, 2004. The problems that they need to address are as follows; Rapid Organic growth outside of Spain — Zara have shifted focus into expanding overseas, specifically the Asia region. Within a few weeks, hundreds of European women sported the same look.
This should be done with utmost care otherwise company may attract many doubts and queries regarding its quality management and human power management processes. Many other companies are still not being able to take a decision on this pattern. Inditex operated 1558 stores in 45 countries out of which nearly 550 were Zara stores. The company is Zara, the flagship specialty chain… 694 Words 3 Pages Jay Case Study: Zara International Fashion at the Speed of Light Question 1: In what ways are elements of the classical and behavioral management approaches evident in how things are done at Zara International? The product line of Zara is divided into three major sections; female, male, and kids. Before reading the case many believe that retailing is just about building a brand through marketing, but they soon realize that Zara was build around its operations and the brand recognition came later as a consequence. . Zara segmented the product lines further by price, fashion content, and target age group to maintain variety, and its pri ces were also kept lower than comparable products from a competitor.
If these market signals were not enough, she had also spotted a colleague wearing the skirt. The new khaki skirt had sold out in the La Coruña store after only a few hours on the shelves and the store manager had just told her that she could have easily sold more. Machuca, University of Sevilla, Spain. Different countries have different styles, likings, preferences, hence, one design not being appreciated in one country can be very well received in another. Zara has a business strategy that is very different from the retailers nowadays.
Where should Zara focus its efforts and what should drive its expansion from here? I taught the Zara case several times, and made some changes, before making it public. The exponential growth of Zara. It has also gained the reputation of more responsible and rational company towards the environment and community welfare concerns. Large choice of styles Zara produces around 1000 new styles every month, which means that fresh fashion trends reach the stores quickly. Numerous cases had been written to better understand Zara's operations, marketing, information systems, and overall strategy, but most authors alike had questioned Zara's long-term sustainability.
Zara is the clothing and accessories retailer seated atop the industry; Zara is the flagship specialty chain of Spain-based conglomerate Inditex consisting of 1495 stores. It is on track for what appears to be world domination of its industry. As a result, we pledge to continuously innovate our business to improve your experience. Borges called around a few of the Seville stores and discovered that sales there were also very brisk. However, through a sound system, it can excel in globalization also. .
Despite the seemingly counter-intuitive business model Zara operates, it has become one of the leading fashion retailers in theworld. Role of information system is also evaluated within its business operations, strategies and processes. Since a large amount of its production is in Spain, it has a centralized distribution center inEurope. Zara follows decentralized model where store managers have lot a of power — It is very difficult to find such efficient people once we they scale. You can either assume that this spending was flat or you can assume an increase.
The management has taken some daring entrepreneurial decisions that lead to the success and wide acceptance of the brand. For a business to be successful, its customer-driven logistics plays a vital role Waller, 1998. How do the issues of the Zara case play out at your company? With their simple business model of speed, flexibility, and high fashion, Zara has the competitive advantage to be sustainable. Fast Fashion has forced retailers to desire low. Recommendation: Therefore, Zara should change the operating system as its main strategy is to provide positive and quick response to the target customers in order to meet their demands, which is used to identify the trends of customer in advance. Since the store manager is the soul of a single retail store, ifInditex wants to expand globally, it has to make sure that it has enough innovative, strategicand responsible store managers.
A distribution center in another location would almost certainly entail higher labor costs, but ifthe market in the other country were big enough, the decreased transportation costs wouldoutweigh the increased labor costs. Here the case is open-ended and the quality of the discussion depends on students' participation, but in my experience it always goes well. Business Model Zara has a unique and very effective business. While Zara has a very effective and efficient model in its home European market, it will need tomake changes in its supply chain in order to expand to other markets around the world. The other half of its products are procured from 400 outside suppliers, 70% of which are in Europe, and most of the rest in Asia. In 2001 alone, while many companies in the industry were facing downturns, Inditex sales grew by 27% over 2000 and profit increased by 32%.
Thus, another distribution center would be beneficial not only because it canfacilitate excess demand brought about by expansion, but also because having a single factoryto manage all of your distribution is extremely risky. To facilitate quick changes in printing and dyeing, Zara also work closely with Fibracolor a dyestuff producer part owned by Inditex - Zara purchase 20% of its output. Unlike the European markets that do tend to follow an encompassing general fashion trend, theyoung U. The four companies shown given in the case have very different business models. Of course, reliance on joint ventures and franchising is common practice in this industry - in 2001 Benetton, a successful pioneer in the innovative management of the fashion retail supply chain, had almost 6500 franchised stores in 120 countries — because It can help to cope with overseas expansion, secure financing, reducing regulatory risks, etc. Threat of New Entrant: Low The threat of new entrants is quite low.