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Case Study of Zara: Fast Fashion from Savvy Systems

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Case Study of Zara: Fast Fashion from Savvy Systems
MN3027 – STRATEGY IN ACTION

ASSIGNMENT 2 – 3,000 words

ZARA: FAST, FASHION from SAVVY SYSTEMS

Contents Contents 2 1.0 Introduction and Key Issues: 4 2.0 Present Vision, Mission, and Corporate Objectives: 5 3.0 Situational Analysis: 6 3.1 Environmental Analysis: 7 3.1.1 PESTLE: 7 3.1.2 Market Structures: 9 3.2 Industrial Analysis: 9 3.2.1 Competitive Forces: 9 3.2.2 Strategic Groups: 11 3.2.3 Key Factors for Success: 12 3.2.3 Competitor Profiles: 13 3.3 Internal Analysis: 14 3.3.1 7s Framework: 14 3.3.2 Cultural Web: 16 3.3.3 Competitive Advantage, Core Competences and Capabilities, Sustainable Competitive Advantage: 17 3.3.4 Resource Audits: 17 3.3.5 Financial Ratios: 18 3.3.6 Value Chains and Value Systems: 20 3.4 Brief Summary of Current Situational Analysis: 23 3.4.1 SWOT Analysis: 23 4.0 Strategic Options and Choice: 24 4.1 Porter’s Generic Strategies: 24 4.2 Ansoff Matrix: 26 5.0 Implementation Issues: 29 5.1 Product: 29 5.2 Price: 29 5.3 Promotion: 29 5.4 Place: 29 5.5 Process: 29 6.0 Conclusion: 31 Bibliography 32 APPENDICIES 36

1.0 Introduction and Key Issues:
Zara is one of the largest flourishing fashion retail outlets in the industry offering clothing lines for women, men, and children. They are currently operating in 68 countries, globally, and have entered in new markets, due to the development of international enterprises, a consequence of reduced barriers for trading due to developments in information technology.
Zara is a Spanish firm founded by Mr.Amancio Ortega. At first, Zara is a subsidy company that falls under the parent company of Inditex Industrias de DisenoTextil, which is a futuristic central command of game – changing clothes and also holds eight different brands.
Zara’s business strategy is quite different than their competitors, for example, their expenditure on marketing is very little as compared to their


Bibliography: Psychologyface, 2011. McKinsey 7S Framework. [Online] Available at: http://psychologyface.com/2011/12/mckinsey-7s-framework/ Baidu, 2012. Zara. [Online] Available at: http://baike.baidu.com/view/522422.htm BBC NEWS, 2010. Zara 's profits jump on strong global sales. [Online] Available at: http://www.bbc.co.uk/news/10273021 Christopher, M., Lowson, R. & Peck, H., 2009. Creating Agile Supply Chains In The Fashion Industry. [Online] Available at: martin-christopher.info/wp-content/uploads/2009/12/CREATING-AGILE-UPPLY-CHAINS-IN-THE-INDUSTRY.pdf CNN, 2001. Zara, a Spanish success story. [Online] Available at: http://edition.cnn.com/BUSINESS/programs/yourbusiness/stories2001/zara/ College of Textiels NC State University, 2006. Zara Fast Forward Workshop. [Online] Available at: http://www.tx.ncsu.edu/jtatm/volume5issue1/Zara_fashion.htm CQDR, 2008 . Using Ansoff Matrix analyze Zara. [Online] Available at: http://cqdr.blogspot.com/2008/08/using-ansoff-matrix-analyze-zara.html Economists, 2005. The future Of Fast Fashion: Spain 's Inditex, he owner of the Zara chain of fashion stores, has bold but worying expansion plans. [Online] Available at: http://www.economists.com/node/4086117 Fashion United, 2011. The Zara aura Spreads In India. [Online] Available at: http://www.fashionunited.in/news/fashion/the-zara-aura-spreads-in-india-110520112005 Garcia, J. M., 2010. Benetton and Zara information systems:a comparative analysis, Spain: Organisation de Empresas. Ghemawat, P. & Nueno, J. L., 2006. Zara: Fast Fashion, Boston: Harvard Business School. Guddal & Saurabh, 2010. Zara Case Ass. [Online] Available at: www.scribd.com/doc/38701912/Zara-Case-Ass Inditex, 2010. Annual report 2010, Spain: Inditex. Join Fashion: Inditex, 2011. Join Us. [Online] Available at: http://www.joinfashioninditex.com/joinfashion/en/join-us Key Note, 2011. Clothing Retailers, London: Key Note. Kotler, P., Armstrong, G., Saunders, J. & Wong, V., 2006. Principles Of Marketing. 4th ed. New Jersy: Prentice Hall. London Metropolitan University, 2011. Zara: Fast Fashion from Savvy Systems. London(London): Weblearn. Lopez, C. & Fan, Y., 2009. Internationalisation of the Spaninsh Fashion Brand Zara. Journal of Fashion Marketing and Management, 13(2), pp. 279-296. Marcouse, I. et al., 2003. Business Studies. 2 ed. London: Hodder Arnold. McEachern, W. A., 2009. Economics: A Contemporary Introduction. 9th ed. Natorp Boulevard: Cengage Learning. Morris, S., 2011. Euro woes to slow Zarar maker Inditex 's growth. [Online] Available at: www.guardian.co.uk/business/feedarticle/9994086 Oxford Dictionary of Business and Mangement, 2006. Oxford dictionary of Business and Management. 6th ed. New York: Oxford University Press. Porter, M. E., 1980. Competitive strategy: techniques for analyzing industries and competitors. 1 ed. New York: Free Press. Reid, G. C., Jacobsen, L. R. & Anderson, M. E., 1993. Profiles in small business: A competitive strategy approach. 1st ed. London: Routledge. shiva5717, 2011. Zara: Marketing Plan. [Online] Available at: www.slideshare.net/shiva 5717/zara-mareting-plan-8154233 Stylemeister, 2010. ZARA – fashion invader extraordinaire.. [Online] Available at: http://www.menstylepower.com/2010/09/zara/ Thinking Made Easy, 2010. Strategic Management of Zara. [Online] Available at: http://ivythesis.typepad.com/term_paper_topics/2010/10/strategic-management-of-zara.html Thompson, J., 2011. Zara owner targets China after profits soar in 2010. [Online] Available at: http://www.independent.co.uk/news/business/news/zara-owner-targets-china-after-profits-soar-in-2010-2251156.html Thompson, J. & Martin, F., 2005. Strategic Management: Awareness & Change. 6 ed. Hampshire: Cengage Learning. Tokatli, N., 2007. Global sourcing: insigts from the global clothing industry - the case of Zara, a fast fashion retailer.. Journal of Economic and Geography, pp. 21-38. Tutor2u, 2011. Ansoff 's Product / market matrix. [Online] Available at: http://tutor2u.net/business/strategy/ansoff_matrix.htm Wikiwealth, 2011. Zara SWOT Analysis. [Online] Available at: http://www.wikiwealth.com/swot-analysis:zara Zara, 2010. Company. [Online] Available at: http://www.zara.com/webapp/wcs/stores/servlet/category/uk/en/zara-W2011-r/11112/Company Zara, 2010. Environment Policy. [Online] Available at: www.zara.com/webapp/wcs/stores/servlet/category/uk/en/zara-W2011-r/18001/Our%2BMission%2BStatement Zara, 2010. Work With Us. [Online] Available at: http://www.joinfashioninditex.com/joinfashion/?idEmpresa=1 Source: (shiva5717, 2011) However, as Zara is in high fashion industry, where they offer textiles / clothing of the latest fashion with a shelf life of maximum of two weeks, hence the new product life cycle will appear in the next diagram beneath. Source: (shiva5717, 2011) By analysing the Product Life Cycle of Zara; this proves that Zara does not need to spend a lot of money into advertising, as the sales of the new (birth) products are a lot higher compare to a typical Product Life Cycle
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