• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Zara case study

Extracts from this document...

Introduction

[Type text] Prof: Ahmed El Melegy Ammar Al-Areqi 4491 Zara Case Study 1. Discuss the nature of competition and demand in the apparel industry? While most apparel manufacturers were migrating manufacturing to Asia to gain cost efficiency, Zara recognized that speed, flexibility and innovation were key to establishing a stronghold of the market. Although manufacturing in Spain and Portugal has a cost premium of 10 to 15 percent, the local production means the company can react to market changes faster than the competition, ensure tighter connectivity between design and manufacturing, and produce greater flexibility in product distribution 2. What are Zara core competencies and competitive capabilities? Zara has remained focused on its core fashion philosophy that creativity and quality design together with a rapid response to market demands will yield profitable results. In order to realized these results Zara developed a business model that incorporated the following three goals for operations: develop a system the requires short lead times, decrease quantities produced to decrease inventory risk, and increase the number of available styles and/or choice. ...read more.

Middle

To make this happen, the company designs and cuts its fabric in-house and it acquires fabrics in only four colors to keep costs low. The proximity of these suppliers gives Zara great flexibility in adapting their product lines based on up to date market trends and consumer behavior. It also decreases costs of holding inventory. Zara?s competitors, through outsourcing to Asian countries such as China, sacrifice the benefits of proximity for low labor and production costs. Though there is a cost advantage in their approach in regards to labor, the lack of flexibility in changing orders based on current trends hinders their operational efficiencies. Inventory costs are higher for competitors because orders are placed for a whole season well in advance and then held in distribution facilities until periodic shipment to stores. This proximity effect and the flexibility that it gives Zara is fundamental to their basic concept to respond quickly to shifts in consumer demand and has provided them with a competitive edge in comparison to their peers. ...read more.

Conclusion

Here Zara focuses on flexibility and relies on being market sensitive, as opposed to the traditional method of being forecast driven. Zara recognizes the need for quick response; therefore just 40% of its total garments, mainly the products with the least transient appeal are manufactured in the Far East region, whilst the remainders are produced in Spain using Zara?s own highly automated factories in pursuit of achieving a strategy capable of the most effective quick-response system. In conclusion, Zara has maintained an upper hand over its competitors by the response to the changing market trends and fashion and by vertical integration. Zara, with its present IT infrastructure has been effective and able to be consistent with its core business. However, depending on an unreliable change from the supplier side, obsolete OS will not be compatible for future improvements or growth. Although, there no immediate need to change the current system, Zara should not invest more in the current obsolete IT infrastructure. It should adopt the change to the new OS eventually. Making a gradual change to the new system will increase Zara?s efficiency, without facing the sudden setback of implementing the change at once. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Business Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Business Studies essays

  1. Case Study - Recovery Kitchens Ltd

    By using a variety of promotion strategies, Recovery Kitchens Ltd will be able to attract new customers. The corporate aims of the business are to maintain an environmental image while also trying to profit maximize. This can be achieved when the difference between the total revenue of the business from

  2. Starbucks expansion into China

    Products In China, Starbucks, like other coffee shops, supplies classic coffee products, such as whole bean coffee, ground coffee and instant varieties. It also has looked to expand offerings with other coffee alternatives which are cappuccino, latte, flat white, iced coffee.

  1. Analysing Job sectors in Canada. Identify trends in employment and occupational demand patterns for ...

    Dental services are not included as Medicare services under the national Canada Health Act, however dental services provided in hospitals are covered under Medicare, however these and other public dental services represent a very small proportion of the overall dental services in Canada.

  2. IB BM Case Study

    One likely reason is that the competitors entry into the market has proved that profits in their current market is very little, b) How can Fun Air react to the threats posed by their competitors? Fun Air can provide better and/or new services directed to school age children to attract consumers.

  1. Business Leaders on Managing Organizational Change: the case of British Airways

    Leaders' influenced by behavioral patterns under the concern for people style make sure that their followers' needs are met, their interests are stimulated and conflicts are resolved. In so doing, the productivity of the people involved in the project will increase.

  2. Managing Change

    However, in NBO's case the third option is completely unreasonable, due to the fact that those employees obviously do not possess what is required to carry out the change and even if they do, they did not do it on time, which resulted in a decrease of organizational performance.

  1. Analyse Reasons for Zara's Success in the Fashion Retailing Business

    For example if a customer request a certain colour or style, the store manager advises the company regarding the request which enters an appropriate data system called ?Cassiopeia? used for placing orders where the marketing team straight away starts developing the request based on clothing availability, sales patterns together with

  2. Barilla Case. To make Barilla, the number one manufacturer of pasta Barilla employs ...

    Pre-JITD for the CDC: the daily demand average is 400 units with a standard deviation of 158 units. The cycle stock is 1600 units, safety stock is 727 units, and pipeline stock is 2000 units. 4. After the new JITD implementation: The total inventory in the system is 8770 units.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work