Case 7: Global Apparel Industry
Case 7: Global Apparel Industry
1) How did globalization change the ‘rule of the game’ in the apparel industry? What it means for a company like Zara?
Traditionally, national retailers outsource apparel production, via global brokers, to thousands of small apparel makers. Globalization created options for countries and companies in the apparel industry. Improving technology, sourcing, and production systems let innovative apparel makers compress cycle time. Shortening process time increases efficiencies and boosts profits. Zara applied its innovative strategy to reset the standards of operational efficiency in the global apparel industry. Zara’s adept coordination of the overlapping activities among its designers, plants, storefronts, and salespeople testifies to the power of its strategy.
2) What are the competitive advantages of Zara in comparison with the Gap and H&M?
Unlike Gap and H&M, Zara employs nearly 20000 people, distributed across 23 factories, to make about 50 percent of its finished garments. Their vertical integration make them to have short lead time. Zara engages many designers, so it originate designs in a few weeks. Also, Zara has one distribution center, so they have better survey over inventory, as well as low cost. Gap nor H&M can design, make, ship, and sell fashion as speedilyy as Zara.
Case 8: Value Chains
1) What sorts of conditions and motivations best explain how MNEs in the West traditionally develop value chains? Do these same principles apply to decisions made by emerging markets MNEs?
2) Looking out over the next decade, estimate the likely standards of value creation. How would you advise a company like IBM or Cisco to configure and coordinate its value chain? Would you give the same advice to a company like Tata or Safricom?
First, cost cutting is a good starting point. Many companies spend way too much money without even knowing it. For example, not everyone has to fly in business class, especially on domestic
1) How did globalization change the ‘rule of the game’ in the apparel industry? What it means for a company like Zara?
Traditionally, national retailers outsource apparel production, via global brokers, to thousands of small apparel makers. Globalization created options for countries and companies in the apparel industry. Improving technology, sourcing, and production systems let innovative apparel makers compress cycle time. Shortening process time increases efficiencies and boosts profits. Zara applied its innovative strategy to reset the standards of operational efficiency in the global apparel industry. Zara’s adept coordination of the overlapping activities among its designers, plants, storefronts, and salespeople testifies to the power of its strategy.
2) What are the competitive advantages of Zara in comparison with the Gap and H&M?
Unlike Gap and H&M, Zara employs nearly 20000 people, distributed across 23 factories, to make about 50 percent of its finished garments. Their vertical integration make them to have short lead time. Zara engages many designers, so it originate designs in a few weeks. Also, Zara has one distribution center, so they have better survey over inventory, as well as low cost. Gap nor H&M can design, make, ship, and sell fashion as speedilyy as Zara.
Case 8: Value Chains
1) What sorts of conditions and motivations best explain how MNEs in the West traditionally develop value chains? Do these same principles apply to decisions made by emerging markets MNEs?
2) Looking out over the next decade, estimate the likely standards of value creation. How would you advise a company like IBM or Cisco to configure and coordinate its value chain? Would you give the same advice to a company like Tata or Safricom?
First, cost cutting is a good starting point. Many companies spend way too much money without even knowing it. For example, not everyone has to fly in business class, especially on domestic