We can evaluate ZARA’s strategy by answering 4 basic questions about the business: |What BUSINESS is the company in? |Who will be its TARGETED CUSTOMERS? | |ZARA is in the business of international |ZARA targets the fashion conscious customer who | |fashion apparel production, distribution and |exhibits frequent shopping behaviour. | |retailing. | | |What PRODUCTS/SERVICES will it offer? |How will it go about ACHIEIVING all this? | |Designer styled garments with relatively high |A value-chain analysis will be conducted to | |fashion content but not excessive physical |better understand ZARA’s approach. | |quality. | |
|Firm Infrastructure: Key activities are conducted in Spain. Company-owned stores in established countries. Franchising in risky | |countries. Joint-ventures in larger and important markets with barriers to direct entry. | |Human Resource Management: Section manager will train personnel exclusively on the job. Promotion from within, low turnover. Store | |managers received a fixed plus variable salary depending on store performance. | |Technology: Advanced telecommunications system to connect headquarters and supply, production and sales locations. Consumption | |information system which supported detailed analysis of product life cycles. | |Procurement: Purchasing offices in Barcelona and Hong Kong. Sourced mainly for “gray” (undyed) fabric to maximize flexibility through | |Comditel, a 100% owned subsidiary of Inditex. |
|Forecasting: |Retailing: |Logistics: |Designing: |Manufacturing: | |> Zara concentrates |> Investment in Prime |> Centralized distribution |> Styles were produced by |> Utilize JIT production | |forecasting on the kind and|Locations |system through Arteixo. |designers in large |and Quick Response (QR) | |amount of fabric it will |> Consistent store image, |Setting up another |quantities. Best designs |manufacturing strategies | |buy |attractive ambience |warehouse in Zaragoza. |were selected and produced |> Resulted in short cycle | |> Zara’s mantra is on |> Relied on significant |> Utilize third party |> Only 1/3 of designs go |times | |reacting swiftly rather |centralization of store |logistics companies |into production |> Manufactured 40% of | |than forecasting end demand|window displays and |(shipping and air) to |> 1% failure rate due to |design-sensitive, finished | |accurately |interior presentations |deliver finished goods to |learning by doing effects |garments internally | |> Fast reaction is based on|> Start with a flagship |stores | |> Manufactured 85% in-house| |high frequency feedback |store in a major city and | | |after the season starts | |from store managers and |add stores in adjoining | | | | |preference tracking by the |areas | | | | |design team | | | | |...
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