Strategic Operation Management Assignment
Zara is a clothing and accessories retailer selling stylish apparel at affordable prices, and it is also the most profitable brand of the Spanish clothing retail group Inditex SA. Ortega planned for this new Zara outlet, located near his factory in La Coruna in northern Spain, to sell this overstock merchandise himself. Since then, Zara has expanded into 500 stores in 68 countries as of January 2007 and has become a leader in customized fashion retailing. This assignment presents core competencies to help Zara achieve competitive advantages in fashion industry. Besides, we also offer five competitive objectives about quality, speed, flexibility, dependability and cost to evaluate efficiency in business operation of Zara. Then analyzing supply chain management to consider how Zara maintain, improve and develop its strategies and business. Finally, the assignment will discuss about Zara’s quality not only in operation system but also in human management. Firstly, the essays will discuss about Zara’s core competencies. An important content in the internal environment analysis of business to strategy planning is to analyze the resources, capabilities and core competencies of the business, competitive advantage and competitiveness of enterprises. The purpose of internal analysis of the enterprise is to identify and evaluate potential resources as well as existing that create sustainable competitive advantage of enterprises; identify obstacles in maintaining the sustainable advantages competitive. This analysis is important basis in the selection of the business strategy. Core competence is unique strength that permits the company to achieve the superiority comparing rivals in strategy, business operation, quality, innovation and customer responsiveness. Zara's success derives from core competencies of the company in design, manufacturing, warehousing, distribution and retail. Its capabilities link functions including design, speed, production, responsiveness, technology and e-business to manufacture creating commitment of employees and supply fashionable products quickly to customer demands with affordable prices. Zara’s capability is to utilize the advantage of geographical condition by hiring the Spanish and the Portuguese and building manufacture factories nearly headquarter in Arteixo. Unlike competitors, the majority of factories are located in foreign such countries in Asia or South America in order to reduce material and labor costs. By positioning the design and production facility closely, Zara makes the fast action to market situation possible. Besides, Zara has flexible production system and efficient distribution system. In the 1970s, the production and the distribution of garment product from factory to consumer take about 6 months, but it now takes about 6 weeks. Spending short period of collection preparation, Zara takes about 15 days start from market research to sales. More than 300 designers constantly follow the market events, fashion trends and customer tastes in designing 12000 unique products in one year that compares to 2000 or 4000 products designed by rivals. Therefore the entire design, production, distribution and sales respond quickly to shifts in consumer tastes, each style is no longer than 4 weeks. This leads Zara has low level of inventory due to fast supply chain. Because of the continuous production of new product, Zara produces small product quantities. Zara promotes the interest of customers with new products and increases the frequency of visiting the stores of customers. Besides, Zara also creates value from product differentiation. With fast turnover ratio, products are always changing to market satisfaction. It is hard for customers to find the same cloth in the street. These make customer enjoy the scarcity of high price product with economical price. Its ability to bring changes quickly to fashion market leading customers...
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