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ZARA CaseQuest - Assignment Example

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ZARA CaseQuest

Using centralized manufacturing, the company has maintained standards within the global arena as products available anywhere exhibit no discrepancies in quality. This has contributed significantly to the high levels of customer satisfaction, leading to customer loyalty. The company continues to maintain customers through ensuring similar levels in product quality, hence assuring customers of quality in Zara products. High quality products have in turn brought high sales placing the company in a global market leadership position. Combinations of other business strategies aimed at strengthening the company position have also had influence in maintaining the company’s position, globally. Business Model (GAP) Gap Company has taken the approach of outsourcing manufacturing in different Asian countries. Outsourcing in these countries aims at utilizing the cheap labor available in Asian countries. The company hopes to reduce production costs through utilization of cheap labor, and achieve significant profit margins (George & Bock, 2012). The outsourcing model of manufacturing presents several risks to the business in standardization of numerous business elements. Standardization of products and service delivery becomes extremely difficult for the company to control. This could be attributed to the different manufacturing technologies and management styles available in different countries. In some countries with limited technological advancement, required product standards might be difficult to reach. This method also presents the risk of fake products being introduced into different international markets using the Gap trading name. Gap invests heavily on advertising because of the approach taken in manufacturing. The outsourcing approach could lead into product quality compromise that necessitates intensive advertising, aimed at convincing doubting customers. The intensive advertising conducted by Gap aims at creating product awareness in the different countries where the products are available. The availability of the product shall be notified to the customers through advertising. The company shall be able to conduct market analysis aimed at improving distribution channels utilized and creating policies regarding product improvements. The advertising process can also enable the company to effectively undertake competitor analysis, and created a competitive advantage over them. Gap company does not have specific times when new products can be introduced however, most introductions occur during the month of August. The company takes as a trend setter approach, therefore, decisions regarding new products result from market analysis to identify existing gaps. Introduction of new products follows the need to create a unique design, resulting from market research indicating need for such design. The company receives its income through the sales achieved from the subsidiaries. The subsidiary businesses have to undertake internal financial analysis and establish the profits experienced during a trading period. The profits from different subsidiaries become the company’s income. The subsidiaries must make deductions of all subsidiary expenses incurred before arriving at profit remitted to the parent company as income. The core competency of Gap remains the capability to coordinate diverse manufacturing plants in delivering globally standardized products (Galunic & Rodan, 1998). Diversification in manufacturing locations remains a fundamental core competency for the company. The competitive advantage for Gap remains the utilization of cheap labor in Asian counties, ...Show more

Summary

The Zara Company operates globally in the apparel industry and is identified as a market leader. This comes as a result of various business strategies adopted by the company in undertaking globalization of operations. The company constitutes of a single manufacturing plant located in Spain, where all products are manufactured (McAfee, Dessain, & Sjoman, 2007). …
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