Zara Case Study

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Major Facts:
Zara is a fashion company based in Europe, the case goes over a lot of different areas of the business. Everything from how they operate differently than their competitors, their outdated IT systems, and where they plan to go in the future. The case shows many strategies Zara has taken in order to become successful in Fashion industry, having a customer’s driven process, agility, retail power, and a successful supply chain. As in the case, managing a supply chain in the fashion industry is extremely difficult. Customers’ wants and trends are constantly changing, and suppliers have to be ready for those changes at anytime in order to work with Zara. Zara, one of the brands of Inditex and most profitable, was established in 1975. It has become well known for their fashion designing and manufacturing efficiencies. The company has developed into the leader of highest profit margins comparing to its competitors, also being one of the most famous fashion companies know by consumers. It’s a Spanish based company, manufacturing all of their products in Europe, later distributing them all across the world to their retail stores. Inditex group has set up strategies for Zara to follow when first creating the company, and now with the operations. Stating that “Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interacts”. For each of their retail store the approach has been focused, “at the store, we save energy, the eco-friendly shop, we produce less waste, and recycle, and our commitment extends to all our staff, an environmentally aware team.” Inditex has done a fantastic job with the brand and operations of Zara. It has made a strong base of exactly what the intent of the company is, and setting the operations of how they are going to do that. They know exactly what it is that their customers are looking for, they produce it, and go about and beyond that promise for their customers to keep them coming back. Because they know that the fashion industry is huge, and their customers have plenty of other options to shop at. Zara is selling merchandise in 68 countries, and has mentioned before, manufacturing in Europe, then distributing to their locations. Zara has set a procedure for all of their retail stores across the world, which is to have the same culture of rapid sale and removal of older inventory. One concept followed by Zara, is to “offer variety of clothes in a short quantity and for a shorter time period, customers being aware of this flow of items in stores, having them buy the items right away rather than waiting for some sale.” Zara looks at two principles to base their operations, first being to follow the trend of consumers, producing what they want and when they want it, sell the products before that style goes out. Secondly is to design and produce clothes for the short run that matches current trends. They are not looking to draw shops interested in long term clothing, continuous repeat customers is what target market they seek to attract. What is Zara’s business model?

Their business model was strait to the point, “link customer demand to manufacturing, and link manufacturing to distribution.” Zara focused from the case on speed and decision making, their strategies towards marketing, merchandising, and advertising, and finally the company’s financials and growth. With Zara’s speed and decision making is a must, trends in fashion changing so often and quickly, Zara knows that it has to react fast to produce for their customers before they want something else. With decision making, Zara was beyond start, having their store managers choose what garments and place orders for their store location. Using intercompany knowledge instead of having teams of so called specialist telling you what to produce, which has paid off as a result. Zara is saving money by this, at the same time making more money by high amounts...
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