Zara Case Study

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The main objective of their marketing activities is to react swiftly: Zara is able to design, produce and deliver the product to the customer in just one month. The main reason for this is that Zara does not forecast the designed clothing. Fabrics and garments are the only materials to be purchased on the basis of forecasts. Their main strength is to capture real-time information on the shop floor and develop designs on the basis of this information: so-called ‘commercial managers’ conceptualize the type of garments and the kind of fabric it will be made off. Based on this real-time information, garments and its technical specifications are prepared in strong collaboration with other departments along the supply chain. In doing so, the final design is ‘assembled’ on the basis of current customer demand. This gives Zara a strong competitive advantage since they integrated the product development with up-to date marketing activities and information. Also, Zara does not invest in expensive commercials or campaigns. Most of Zara’s marketing budget is spent on information technology and communications to keep ahead of day-to-day trend information. This gives the supply chain flexibility and a competitive advantage.

Another important differentiator is that Zara puts more emphasis on offering different styles rather then increasing the volume per item. The flexible supply chain can produce quickly enough, so large numbers in stock does not add value. Their suppliers are found in Spain, India and Morocco. This enables Zara to switch between suppliers when performances are lacking or due to external market conditions.

A high level of vertical integration (including independent companies) exists in the supply chain of Zara. All product development and (final)production facilities are kept in-house: dying and processing activities of fabrics are fully controlled (not out-sourced). Non-strategic activities are fully outsourced and the actual ‘assembly’ processes of...
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