Other firms also choose to outsource with the objective of enabling the firm reduce its costs through specialization and creating efficiency in the labor and resources of the firm (Porter 1996). Other firms also in the efforts to achieve the same try to gain control over the whole firms through as many departments as possible. This they are likely to achieve by the analysis of its value chain. Such firms are said to have gained such controls over the total production process by initiating in-house production hence and achievement of shorter lead times in production and supplies. Zara is one of the fastest growing cloth retailers and it holds a number of shares in the giant Spanish Inditex Group (Folpe 2000). This part of the group in the clothing industry in Spain has developed a unique business model which has enabled it to qualify as one of the vertically integrated retailers. This it has achieved through the identification of its lines of competition over the rest of the retailers. It shapes such competitive edges into strategic issues an act which has enabled the industry to obtain control of every step of the value chain while only outsourcing only cloths with a longer shelf/fashion lifetime (Birger and Stires 2006). The competitiveness and an organization’s focus on strategic issues in the modern business environment has become of age in strategic management of such organizations. A renowned author in this field is Porter through his five forces of competition where he introduced the ideas of competitive strategy, competitive forces and competitive advantage. This model is based on the fact that an organization’s internal environment that is the resources, capabilities, value addition to the value chain are the components of the organization that are most of the time used to account for its core competencies (Birger and Stires 2006). According to Porter’s model; cost and differentiation are the initial two competitive forces that result into competitive advantage to any given organization. Low cost strategy is derived from the vast cost leadership strategy that is coupled with efficiency and stringent controls to costs (Folpe 2000). For example the high profitability and growth that is witnessed in the Zara industry over time is as a result of lower costs of advertising while adopting a flat organizational structure with superior organization systems and well laid down logistics coupled with efficient use of capital. All these are directed towards provision of efficiency (Porter 1996). The company also adopts differentiation as a competitive forces and strategy to make a difference in its operations. As a source of advantage differentiation ensures that unique brands of the products are offered as well as technology, customer service and products all these aimed at making the firm gain a bigger share of the market. Zara industry as one of the famous and fast growing firms in Spain is based on its strengths and speed in designing and merchandising the products in stores. As compared to other firms in the turbulent fashion industry, Zara products are able to reach the stores in a record time of only 5 weeks as opposed to nine months of other firms in the industry (Folpe 2000). This fast response to the market is achievable due to the differentiation strategy in the
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Date 1. In-depth analysis of competitive forces and strategic issues shaping Zara industry For any company to sustain long term profitability and growth, it wise for such a company to have the ability of responding strategically to competition hence the need of such a company to identify its competitive forces and shape them strategically…
Zara Case Study. Zara is one of the largest retailers of fashion industry, owning stores in high streets and shopping mall in the world. Zara produces the most unique fashion designs in the industry. The success of Zara has been accredited to the use of distinctive business models in the fashion and retailing industry.
This paper endeavors to demonstrate the effectiveness of Zara - the largest flagship in Inditex in accessing a supranational context in pursuit of the three goals of efficiency, flexibility and learning, by indicating the enterprise’s overall strategy and the particular tactics it used in pursuing each and its comparative success in doing so.
This requires concentration on the various processes of sourcing including trend and concept, product design, specifications, supplier selection, production, delivery, consumption and as appropriate ongoing customer support. These days even the most vibrant retail stores operate on razor thin margins and wrong guesses about trends and customer tastes can have an immediate and devastating impact on profits and ultimately the viability of running the business.
Zara is now one of the most valuable and the 2nd leading brands in the world. It has successfully raised its brand significance by adopting several new brand strategies like offering ultimate fashion at a low cost. The company attracts the customers through product rotation, that is, it frequently changes the style of its products and also introduces several new products in the market.
The supply chain also exists for the customer, as the customer is the one that adds the value to this process. Proper control and management of the supply chain, particularly for organisations operating in the service industry is important as it is responsible for the improved customer experience, reduced inventories, lower operating costs and improved use of fixed assets (Braithwaite 2002).
Zara now is world’s second largest clothing retailer and has expanded to more than 72 countries woth outlets that are strategically positioned to attract cuustomers automatically rather than spending huge amount in
The business system starts with the Zara’s designers who continuously track preferences of the customers and changing trends in the market thereby coming up with effective designs. These designs are manufactured into final products by both internal and external