Case #2- ZARA: Fast Fashion
The case study discusses the strategy of Spanish fashion house Zara and how it has been successful in the retail space. Zara rose to success in the fashion industry because they created a model that allowed the store to look fresh and new to the consumer on a regular basis which in turn created a sense of urgency which in turn moved the product. The low levels of inventory also ensured Zara would not be hit with extensive extra costs or merchandise that would have to be sold for a loss. Zara was able to establish this successful model through extensive market research which provided a constant stream of customer feedback on the product development and prevented Zara from having to buy in mass quantity/batches at the beginning of a season based on an anticipated forecast. Additionally, Zara was able to locate various business functions in close proximity of the HQ which in turn allowed for tight control and enabled joint decisions to be made in an expeditious manner. The control also extended to the initial investment of the raw materials used to make the end products and the direct/indirect ownership of processing. As a result of this setup, Zara had the capability to respond very quickly to feedback from their customers. Finally, the communication and information technology were a vital component to managing the company. The tightly woven network allowed for constant interface of the various functions and management of the extensive variety of product information. Because Zara not only creates the merchandise but also sells it, the people who decide on product styling and the product distribution are collocated and can have immediate discussions to make effective decisions. They can also work together to ensure that any product not reaching a threshold of volume is not reordered. Strengths: The key success factors that created a competitive advantage for Zara were: Short lead times for concepts to reach the...
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