Zara uses a vertically integrated system (VMS): In this system, wholesalers, retailers and distributors work as a unified system. One channel owns the others. They have a corporate VMS system, because Zara has managed to build a system that is controlled from the headquarters and it allows a quick response to decide and solve problems. Inditex, Zara’s parent company owns most of the resources to design, produce and distribute.
Recommendations: Instead of doing everything themselves, Zara could train their managers in the local stores to already make quick decisions than to just send many ideas to the main headquarters in Spain and let them decide what is best. So spread the decision making process among their local stores.
Zara’s vertical integration has many advantages, but there is a drawback for Zara as they focus distributing small batch quantities and do not receive any discounts on manufacturing large quantities.
Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. The activities of a business could be grouped under two headings: Primary Activities - those that are directly concerned with creating and delivering a product. -Inbound logistics: All the raw materials are collected from their distributors and in Pandora’s case these are the songs from musicians. - Operations: is transforming the raw materials into a finished product and service. Pandora’s software gets smarter through the listener’s inputs of likes and dislikes and marks them as unique playlist for that same user. - Outbound logistics: All those activities associated with getting finished goods and services to buyers. Pandora has pushed the music service into a variety of channels, including apps for smart phones and tablets as well as through home entertainment systems such as video game players, DVD players and Internet radios. - Marketing & Sales:...
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