Management and Zara
1) What is Zara's fundamental business strategy? Is it simple? What are the principles for Zara's business operation?
Fundamental business philosophy of Zara
The fundamental business strategy of Zara is very simple which is linking customer demand to manufacturing, and liking manufacturing to distribution. Zara has been running their business in fashion industry which is susceptible to seasons and quick changing customer tastes. Zara has been approached to and considered their business as a perishable commodity business just like a fresh baked cake or bread to be consumed quickly.
Thus, the main business tactics of the company in context of this business philosophy is ;
[ Short lead time ] More fashionable clothes and embracing quick changing customer's tastes [Decentralized Management] Taking advantage of the intelligence and trust the judgment of employees [Lower quantities] Inventory will be formidable burden in perishable products [More styles] Providing more choices for customers and more chances of hitting it right.
< Zara's Business Concept > Fashion at Low Cost
Low Cost Fashion
Reduce Creative Design ( Copy of leading styles )
Define a fast response process
Optimize the process ( lean organization)
Advertising only for new arrivals
No discounted sales
Specialized network for production Interdependent between design and product team
Low product complexity : 3 types, size and colors
More choices ( approximately 11,000 new items in a year)
No classics ( Design for clothes to be worn 10 times )
The principles for Zara's business operation
Based on the business strategy and tactics, Zara has been trying to optimize its business operation largely in three cyclical processes ordering, fulfillment, and design and manufacturing. Much of the process are standardized
Fundamental business philosophy of Zara
The fundamental business strategy of Zara is very simple which is linking customer demand to manufacturing, and liking manufacturing to distribution. Zara has been running their business in fashion industry which is susceptible to seasons and quick changing customer tastes. Zara has been approached to and considered their business as a perishable commodity business just like a fresh baked cake or bread to be consumed quickly.
Thus, the main business tactics of the company in context of this business philosophy is ;
[ Short lead time ] More fashionable clothes and embracing quick changing customer's tastes [Decentralized Management] Taking advantage of the intelligence and trust the judgment of employees [Lower quantities] Inventory will be formidable burden in perishable products [More styles] Providing more choices for customers and more chances of hitting it right.
< Zara's Business Concept > Fashion at Low Cost
Low Cost Fashion
Reduce Creative Design ( Copy of leading styles )
Define a fast response process
Optimize the process ( lean organization)
Advertising only for new arrivals
No discounted sales
Specialized network for production Interdependent between design and product team
Low product complexity : 3 types, size and colors
More choices ( approximately 11,000 new items in a year)
No classics ( Design for clothes to be worn 10 times )
The principles for Zara's business operation
Based on the business strategy and tactics, Zara has been trying to optimize its business operation largely in three cyclical processes ordering, fulfillment, and design and manufacturing. Much of the process are standardized