Zara Business Model (Case Analysis)

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Zara Case Quest

4/5/2011
Done By: Faisal Alsawaihan

Zara case Quest
What Business is Zara In? (Business model)
Zara is one of the Inditex group, which they mainly in the apparel industry. It considers the most successful brand in this group and most of profit margin is coming from Zara stores that are widespread around the world (76countries) and their main products of apparel are for men, women, and kids. As we can see from the article (It for fast fashion) and Zara’s annual report in 2009, the business model of Zara is based on the link between three important processes, Ordering, fulfillment and, design and manufacturing. To explain more, Zara’s business model can be addressed in the following: 1- Linking customers to manufacturing process through very organized methodology that is depending on involving effective groups in this process such as commercials and store managers. This method allows to Zara to respond very quickly to the demand in the apparel market at the same time they cope with the new fashions and styles. Zara always tries to produce the styles that is still hot and having demand between target customers. The group is working hard to meet the information demands of customers even with communicating them via social network. These followers in some cases has exceed 2 million people which reflects clearly how is Zara becomes one of the most successful business model in apparel industry around the world. They send their fast-fashion distribution model to users via the internet. That does include the latest collections hitting the stores for every customer segment. Moreover they combined their experience to insure that all collections are satisfying most of their customers. We can see here the ability in Zara’s business model to be very strong by comparing with other Apparel brands in terms of disruptive innovation. Zara can be the leader in both, designing for different set of consumers and lowering the price at the end of product cycle to allow enough space of new products. Most of Zara’s shoppers know exactly that some of cloths may not be available in next visiting, so they to decide to by it immediately or may lose the design forever!!This concept of shopping has developed very successfully by Zara’s management in the last ten years. ( appendix1) 2- Linking the employees to decision making process (Store) by addressing the question, where the customer and fashion meet? Zara’s senior managers wanted to give the employees throughout the company to make their decisions of their stores. The store is where the customer needs to be and “where the group’s business model begins and ends”. The designer group is setting in the process to meet further goals of design and production. They try to be first in preferred locations, and then in unique appearance. The coordination of tailored product very important to them at the same time the excellent customer service. (appendix1. Zara business model) 3- Rapid response to market needs which can clearly be seen as the link between design and production. Zara design and produce the new products in three weeks and their shipment doesn’t take more than three days to the furthest location around the world. They have very organized system which helps them to recognize the needs of market and meet it quickly. They rely on their experiences and the stores managers rather than formal forecasting of the market. The delegation of authority could be important successful factor can be seen in Zara strategy. The store manager has to decide which garments should be on sale and which is not. Store manager has the authority to predict the store needs of specific garment based on his or her experience in local market. This relationship is very important between store’s personnel and production center. The link with the distribution center is very important to Zara, so they make their own flexible procedure to facilitate this process. Placing orders and receive them...
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