Examine the Success of Zara

Topics: Inditex, Marketing, Zara Pages: 7 (2036 words) Published: November 5, 2008
Executive Summary

This report aims at trying to distinguish between order winning & order qualifying criteria of Zara product or service, from Operational point of view, which helped Zara to support it’s product or service in an increasing competitive and core competent environment of fashion & clothing industry. Supply chain management, various designs, ability to collect cash quickly, and a word of mouth are few of the important aspects of strategic operation capabilities Zara developed. Since, Bershka and Zara has a different market segment target, and so formulating strategies for both of these entities as one, might effect the operations of the company in the Inditex group as a whole, as customer has already accepted the label and brand of both of the organization in a group – which seems to be integrated perfectly within group.

1. Introduction

In the last thirty years fashion has changed from an elite accessory of the super rich to a mass market product. Since the mid nineties, the departmental stores that traditionally dominated this broader market, have started to loose ground to specialist clothing chain offering the latest design at competitive price.

Founded thirty nine years ago, Europe’s fastest-growing apparel retailer, the Industria de Diseno Textil (Inditex)a sells on a global scale, with nearly 3,164 stores in 63 countries under eight banners- Zara, Oysho, Massimo Dutti, Pull and Bear, Bershka, Stvradivarious, Zara home and Kiddy’s Class. (INDITEX homepage/Zara)

2. Background and business

Zara was the largest division of Inditex and follow a strategy of cutting edge fashion at affordable prices that resulted in 76 % retail sales. Zara owned and operated almost its entire store network, except few places such as Japan, where local laws does not allows full ownership of retail estate. Zara always try to locate its store in most upmarket, high prestigious and location it could find, even though it is very expensive.

Actually, Zara created a ready to wear business - leading fashion label designs, its whole operation to fit the customer by formulating strategies that required generation of a great deal of product variety throughout the year . Zara had a team of more than two hundred and sixty people in the commercial team, out of which 200 are considered to be designers. Together they designed approximately 40,000 items per year from which 10,000 items were selected for productions. (Ferdows et al, 2002) 3. Literature and theories

The three most important challenges to a firm are probably quality products, promised delivery times (supply chain) and acceptable cost (or prices), encapsulating within effective planning, organizing, and control of all the resources and activities necessary to provide the market with tangible good and services. (Waller 2002)

Hill (1993) developed a tool-product profiling to ascertain a certain level of fitness between process choices and the order-winning criteria of products. The purpose of profiling is to provide comparison between product characteristics, to differentiate it in market, and the process characteristics used to manufacture the products to make the necessary adjustments (Slack et al., 2004).

4. Zara Order winning and qualifying Criteria

Zara used its core competent skills in designing, supply chain management, just in time, With a sound mix of organizational culture to respond to its customer in a warm, friendly and in innovative way to cash upon. Hence its delivery speed, product customization & range of various designs available are order winners, while product quality, its price and the services may be categorized as order qualifiers.

4.1 Distinguishing between Order winning and Order qualifying criteria encapsulated within Zara’s product and service

Figure 1 (source : slack et al 2004, p – 73)

Figure 2 (source :...

References: Slack, N., Chambers, S. and Johnston, R. (2004), Operations Management, FT Prentice Hall.
Waller, D. L. (2003), Operations Management : a Supply Chain Approach, London Thomson Learning
Heizer, J
Kruger, D., Wit, P. and Ramdass, K. (2005), Operations Management, Oxford University Press.
Deshpande, R, Farley, J.U and Webster, F.E. Jr (1993), “corporate culture, customer orientation and innovativeness in Japanese firms: a quadrad analysis”, Journal of marketing, vol. 57 No.1, pp. 23-7.
Kohli, A.K., Jaworski, B.J & Kumar, A. (1993), “MARKOR: a measurable of market orientation”, Journal of marketing research, volume. Xxx, November, pp. 467 -77.
K Ferdows, JAD Machuca and M lewis (2002) CIBER case collection
Inditex (publisher), Annual Report for the financial year 2005/06
Ferdows, K., Machuca, JAD., and Lewis, M. (2002), “Zara”, Centre for International Business Education and Research (CIBER.), The Indiana University CIBER .
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