Strategic Management: Case Zara Essay

864 words - 3 pages

Discussion Questions:1.What type of generic business strategy is Zara pursuing?Zara has a low price strategy because they can use a lower cost structure than their competitors. The quality of the products is lower and they can cut costs so offer a lower price. So we can speak of a cost leadership strategy, low cost what gives low prices.On the other hand, Zara has also a differentiation strategy. They are unique in a what that they see what the new fashions clothes are and that they are able to produce those clothes and bring them in the shops in a couple of weeks. Zara also has a creative design team who give differentiation. So we can say that Zara is a story who gives design clothes with a normal quality for a very good price.2. How did Zara's business strategy allow the company to respond to the opportunities andthreats in the external environment? To answer this, you may need to first chooseappropriate set of international competitors listed in the case and think about Zara'srelative "operating economics."We use the Business Strategy Diamond model to give an image of Zara's opportunities and threats in the external environment. This model will helps us to exam Zara's strategy with regard to competitors like Gap, H&M and Benetton.-Arenas: in the text is written that Zara chose for areas of production, for women, for men, and for children. This chosen area is big enough to protect her against threats and actions of the competitors. Again her possibility to change her products so quickly is a strong strategy who offers a lot of solutions for problems.-Vehicles: the use of the vehicles depends on the type of the markets. When there is a more stable market, Zara is able to expand with the help of company-owned stores. When the market has more cultural differences and therefore more risks full, Zara uses franchising to compete. Last but not least, the use of joint ventures in markets where there are barriers to entry.-Differentiators: Zara differentiate with low prices, up to date design, the speed to bring products on the market.-Economic logic: the most important are economic of scale, Zara has stores whole over the world, and is so more defended against competitors and can benefit from opportunities. Also economies of scope are essential for the strategy.3. What evidence do you see of this strategy in Zara's value chain? What is Zara's corecompetence? How specifically do the distinctive features of Zara's business model affectits operating economics?The increase of the level of Technology is essential in the support strategy of Zara's Value chain and the...

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