Zara Case Prep Memo

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Case preparation memo GROUP NAME 6 Teams – Team O

YOUR NAMES: Frank Gerecht, Hiram Miller, Jonathon Naylor, Karina Rabara, Eric Taylor

CASE Zara DATE April 13th, 2011

1. What is/are the problem(s) in this case? Keep it to a single statement. At most, you may point out a couple of the key questions.

Zara has expanded rapidly and has reached market saturation in its home region. Zara has experienced some operational and marketing difficulties as it has tried to expand into key strategic international markets such as North America and Asia. The company needs to find a way to adapt its products and distribution model so that it can penetrate these markets. A decision needs to be made whether Zara is a global or a multinational brand.

2. What are the alternatives? Be creative! What are the strategic tradeoffs (pros / cons)? This should be a list of at least 5 alternatives. They do not all have to be wonderful ideas. This is a brainstorming step.

Do Nothing
- Pros: Easy
- Cons: Stock price will slide as the company does not grow with market expectations.

Outsource a larger share of manufacturing to regional hubs focused on producing unique items for each market. - Pros: Will allow Zara to reduce production costs and reduce transport times. May help Zara adapt designs to region tastes on a quicker basis. - Cons: Will increase coordination time between central offices and regional hubs. May lead to fractured branding between regions and inconsistent build quality. Branding will lose the cachet of being manufactured in Europe. Communication between stores and distribution hubs will be lessened and may cause overstocking on some items as well as a higher degree of failed items. -

Vertically integrate with manufacturers and distributors in Asia the Americas through joint ventures. - Pros: Reduced manufacturing costs and decreased lead time for distribution to outside areas. Will allow...
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