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Summarise the strategic options that are appropriate to ZARA and make definitive for ZARA to sustain its future position in the - Essay Example

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Summarise the strategic options that are appropriate to ZARA and make definitive for ZARA to sustain its future position in the

This difficulty of the imitation is one of the foundations the leadership strategy relies on. Zara has managed to successfully exploit its economic of scale through its size and volume of production. Passemard observes that there is a relationship between firm-size measured in terms of volume of production. Based on this understanding, and considering that Zara sells medium quality fashion clothing at affordable prices, its unit production is minimum. The optimum volume of production is reached when the average cost per unit production is minimal. (Passemard, 2006). Zara has also managed to sustain the leadership strategy because of its volume of production. Passemard, points out that with a high level of production, a company is able to purchase and use specialized manufacturing tools which other small companies are not able to afford (Passemard, 2006). The study indicates that the merchandize in the rain facility has a capacity of only 45,000 folded garments per hour and that this facility has its limitation unless more capacity can be created elsewhere. A further study by Adams observes that cost advantage may be associated with division of labor, which apparently is one of the key ingredients of Zara efficiency of work. The study indicates that at Zara, the design collections are developed by creative teams rather than groups of designers. In general implementation of leadership strategy requires firms that are able to produce relatively simple standardized products and at the same time are able to sell those products at comparatively low prices. This mechanism contrasts other companies who pursue business or corporate strategies from Zara. Zara has managed to keep its low cost production by ensuring that they maintain the supply and provide the variety to the taste of the supplier. The study points that Zara stores is stocked with items tailored to the taste of the local clientele and that one would never end up looking like someone else. According to Adams, for the cost producer strategy to work best, buyers must be able to use the product in the same way and have much same needs and requirement when buyers are large and have significant bargaining power (Frankl & Rubik, 2000). This is underscored by Porter in his analysis of the buyer power while examining the Porter’s Five forces. Porter points out that this strategy will be efficient if the industry’s product is a standard product which is readily available from variety of sellers. In the case of Zara, there are several outlets providing almost the same ambience all over Northern Spain and the rest of the world. In observation of the Porter Five forces, Zara has been able to protect itself from the rivals, buyers, suppliers, potential entrants and substitutes. The study reveals that Zara has managed to keep off the new entrant by sheer reduction of prices for artificial purposes as well as using its dominance and economies of scale to contain the competitors like GAP. Identify the corporate level strategies In identifying corporate growth strategies, this paper will consider that use of Ansoff matrix. Zara has exploited the use of the matrix.Ansoff matrix portray alternative corporate growth strategies. This strategy explores the present and future potential growth of the business based on the products and markets. While looking at the position of Zara, it is important to points out that ...Show more

Summary

COMPANY ANALYSIS (Author’s name) (Institutional Affiliation) Identify the business level strategy of Zara: Zara is noted to be one of the world’s fastest growing manufacturers of affordable fashion clothing this can be attributed to Cost leadership business level strategy…
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Summarise the strategic options that are appropriate to ZARA and make definitive for ZARA to sustain its future position in the essay example
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