MGMT 6620: Operations & SCM
HBS Case Study
Zara: IT for Fast Fashion
1. What is the Zara “business model”? What weaknesses, if any, do you seen in this business model? The value propositions offered by Zara to its main customers who are young, fashion conscious city-dwellers is offering new styles within the time-frame of several weeks as well as providing assortment of choices for customers and the uniqueness of clothing styles fitting individual customer needs. To achieve this Zara’s business model had the following: 1. Incorporating the horizontal structure for placing orders and deciding which items to push aggressively by delegating decision making responsibilities to store managers; 2. Low volume production of any item and high inventory turnover, which secured better tracking of “hot” items, which can be sold well; 3. Reduction of losses on items which are not selling well- Company was eliminating inventory build-up by managing low inventories and by their frequent updates company achieved high foot traffic in its stores and used the stores as focal points of its marketing campaigns. Weakness in Zara’s business model is that each store is highly dependent on decision making capabilities of store managers, which might cause the problem if many of them decide to leave. Moreover, since company relying on small shops scattered throughout Spain and Portugal for its production any economic downturn in those countries can cause the increase the cost of manufacturing or COGS. 2. In your opinion, what are the most important aspects of Zara’s approach to IT? Are these approaches applicable and appropriate anywhere? If not, where would they not work well? The Most important aspect of Zara’s approach to Information technology is the use of DOS-POS in its current store to track customers demand quickly, decentralize the company and provide customer with trendy clothing options. Yes these approaches are essentially applicable starting from...
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