Through this paper we will break down the strategic decisions that Zara has made to create this revolutionary competitive advantage within the fashion industry.

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European Business School

International University Schloss Reichartshausen

Group Case Study of Zara

To obtain the academic degree

Bachelor of Commerce

Fast Fashion Lessons

Donald Sull and Stefano Turconi

London Business School


Introduction

Over the past 13 years Zara has revolutionized the fashion retailing through something called fast fashion. Fast fashion is a competitive advantage created by the efficient functioning and coordination of many operational areas. Zara can produce, market, and sell high fashion look-a-likes at extremely reasonable prices faster than any traditional retailer.  Through this paper we will break down the strategic decisions that Zara has made to create this revolutionary competitive advantage within the fashion industry.

 Strategic decision in Supply Chain

Zara favours local production; as a matter of fact, labour intensive operations are outsourced to local subcontractors. Fifty percent of Zara’s products are manufactured in Spain by 22 factories and subcontractors which are located in Galicia. Despite cheaper labour costs, Zara avoids sourcing production in Asian countries to avoid waiting long lead times for products they need produced. It is noted, that seventy percent of Zara’s production is in Europe to help minimize lead times.

Other areas of operative production are vertically integrated within Zara. Large investments in computer guided cutting equipment ensure efficiency. With some areas of production being sourced and other areas, such as computer guided fabric cutting, being done in-house Zara maintains a steady stream of information sharing. Almost all areas inside and outside the firm receive information simultaneously. (Exhibit 1)

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To facilitate this great supply/production chain, Zara also has a great advantage in logistical power. Products that pass through the logistic platform of La Corogne represent 1 million products a week. There are more than 200 kilometres of cable and a surface of around 400000 m² in this entirely automatic distribution centre. Even more impressive, two times a week the centre is emptied and new turnover replenishes the old inventory.

Due to the high volume of products and information that needs to be shared between all areas of the firm, Zara retains ninety percent ownership to avoid ...

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