Zara Strategy

Topics: Supply chain management, Supply chain, Strategic management Pages: 13 (4694 words) Published: April 20, 2012
* Definition of terms

* Strategy
The primary goal of strategy is to outline long term plans a company would undertake taking into consideration several factors which affect its business environment. It is in other words a broad-based formula for how a business is going to accomplish its mission, what its goals should be and what plans and policies will be needed to carry out those goals.

* E commerce
The online environment is flooded with a lot of transactional activities. It is used by people (consumers) in search of a product or a service, businesses looking to sell to customers, or buy from other businesses as the case may be and even the government in its dealings with individuals and corporations. These multiple exchanges often involve financial transactions, usually in exchange for a good or service. This continual interaction on the web could be summed up under the term e commerce. It involves business activities over cyberspace. Background and History of Zara.

Zara is a much-admired fashion brand, and is a part of the ‘Grupo Inditex’ group of textile companies which Mintel (2007) recognized to be one of the “largest, fastest growing and successful” clothing retailers across Europe. The Inditex Group comprises a host of major high street brand names which are very popular all over Europe, America, and Asia where majority of the outlets are located. They include Zara, Pull and Bear, Bershka, Stradivarius, Massimo Dutti, Oysho, Zara Home and Uterque, boasting 5,402 stores located in 78 countries across all continents . Of this number, Zara alone has 1603 outlets, including 201 and 303 Zara Kids and Zara Home stores respectively. This places the brand at the very helm of the Inditex group of companies whose market share and annual figures are very reflective of Zara’s performance as an individual in the lot. Zara started operations in North Western Spain, in A Coruna, Galicia, where its first store was opened. The founder of Zara, Armancio Ortega intended to offer very fashionable clothing at affordable prices which is usually difficult to achieve, especially in an industry where eccentricities are high-priced. This approach to fashion proved successful as Zara started its expansion the following year, opening a store in every Spanish city with over 100000 inhabitants since it was well received by the Spanish public, and by 1984 Zara had expanded its network to several major cities in Spain. Armancio Ortega founded Inditex in 1985 as a holding company for Zara and spent the next few years devoting all his manufacturing output to Zara, and establishing the foundations of an effective distribution system that would support his plans of worldwide expansion in the long term. In 1988, Zara’s first international store was opened in the city of Oporto in Portugal. Spain and Portugal are quite similar in many aspects from culture to food and this soon proved to be true for fashion too. This was a somewhat cautious and strategic attempt by Inditex to gain sufficient market share at home, in the region with which it is familiar before venturing into the other fashion cities where there is higher competition (New York in 1989 and Paris in1990). Zara’s mission statement

Zara’s Mission Statement
This is spelt out on the company website. Through Zara’s business model, their aim is to contribute to the sustainable development of society and that of the environment with which they interact. The company's commitment to the environment is included in Inditex Group’s Corporate Responsibility Statement which says . Zara’s goals and objectives

Zara has established certain objectives which they have backed with actions in their stores and throughout the process of production. They have adopted an energy saving and eco friendly model for their stores which influences the design, lighting, layout and all else tailored to restrict energy consumption to 20%. Also, there is a commitment to produce less...
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