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Zara Fast Fashion from Savvy Systems - Essay Example

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Zara Fast Fashion from Savvy Systems

However, economic downturn has threatened sales, which has been a cause of worry for the investors (Rohwedder & Johnson, 2008). Competition in international apparel industry has become rampant after the removal of quota in the sector. Thus businesses today operate in real-time in the global market place and they have to leverage comparative advantage (Ferdows, Lewis & Machuca, 2004). Thus, tapping into the foreign markets and the process of market entry, in addition to the innovative practices and technology can give a firm comparative advantage. Zara needs to ascertain the strategy for the way forward. 2.0 Present Vision, Mission and Corporate Objectives The organization has a customer-focused vision since the beginning and this continues to be the defining feature. Their challenge is to live up to customer expectations. The group philosophy can be summed up as “good designs and good quality at affordable prices” (Business Week, 2004). They have total control over the fashion process right from designing to manufacturing and distribution. The company aims to differentiate itself because of its fast fashion approach but intense competition has diluted this advantage. 3.0 Situational Analysis To alter the strategy an organization needs to evaluate its position compared to its competitors. This requires a review of its internal and external business environment. The external environment is being evaluated based on the PESTILE and the industry analysis is based on Porter’s Five Forces. 3.1 Environmental Analysis PESTILE Political The Political condition of the nations were Zara enters is fairly stable and its mode of entry depends upon the local/regional situation. Accession of Spain into the EU benefitted Spain as the export policies were revised and tariff deregulation took place (Bonnin, 2002). Economic The clothing and apparel industry contributes to the economy of Spain and several small manufacturers have emerged in the sector that can supply clothing at low cost (Bonnin, 2002). This helps in providing employment thereby positively impacting the nation’s economy. Social Zara has to educate the market and influence consumers’ shopping habits (Lopez & Fan, 2003). The country-of-origin usually adds positive value to the product but Zara has not been able to take this advantage in Spain. Technological Zara continues to rely on human intelligence, on information gathered from their store managers through the PDAs to facilitate informal exchanges (Ferdows, Lewis & Machua, 2005) but this is an obsolete version of Ms-Dos (Diaz, 2005). They have not invested in data analytics software or in POS data which can reduce the workload of the store managers. Innovation Zara is adopting technology to facilitate the store managers to display and order merchandise faster. They are also adding cargo routes for shipping goods (Rohwedder & Johnson, 2008). Legal Zara uses a different entry mode for each country depending upon the legal regulations prevalent in that market. For instance, in countries such as Cyprus and Poland it entered through franchising but in stable markets such as Germany and Japan they entered through joint ventures (Ghemawat & Nueno, 2003). In China they did not enter as a luxury brand but caters to the casual-wear segment (Fong, 2006). They use prime locations and take care in presenting their store fronts but they have very limited stores in almost all countries against their competitors who have expanded presence. Environmental Zara has eco-friendly stores and produce less waste. They have reduced energy consumption by twenty percent. They support organic farming and ...Show more

Summary

Described as the most innovative and devastating retailer in the world (CNN, 2001), Zara, the Spanish clothing company, breaks all rules of the apparel industry through its low-cost approach (Heyden, 2007). It believes in just-in-time production and is able to respond to the changes in customer demand at the shortest possible time-frame in the industry…
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