Zara Case Analysis

1535 words - 6 pages

Zara is a retailing chain of Inditexthat specializes in high-fashion at reasonable prices. In the last 12 months, Inditex’s stock price has increased by 50% despite bearish market conditions. The 50% increase is due to the investor expectations of Inditex’s growth. Inditex’s growth can be contributed to the decisions it has made in creating a vertically integrated centralized process. The centralization of its vertically integrated operations in Europe provided it with its competitive advantage; however, I believe it will also make it fail if it decides to grow substantially into other markets. Financial Analysis compare to competitors In comparing Inditex financial performance against its competitors, it is apparent that Inditex is performing extremely well compared to its competitors in terms of productivity of its workforce, net revenues and cost of goods sold. Their return on investment is also significantly higher than others. Success Factors The vertical integration of Zara was successful because of the following key tactical decisions: Ownership and control of production: Unlike many of Zara’s competitors, Zara decided not to outsource most of its production. Instead the majority of the production was performed in Europe. By having operations in close- proximity to its headquarters allowed for better and faster communication between functional areas for faster decision making. It also provided an added sense of quality to the product as the tags would be labeled with“made in Europe” rather than “made in China”. More importantly, Zara owned many of the fabric dying, processing and cutting equipment that provided Zara added control andflexibility to adopt new trends on demand. The added flexibility helped Zaraon two fronts: shorter lead times and fewer inventories. Because the production was done in house and just in time, Zara was able to shorten its lead to less than a month compared to the 4-6 months of other retailers. Zarawas able to catch a trend while it was hot thus customers were willing to pay a higher premium for the product increasing their gross margin. In addition, Zara did not have to commit to its suppliers several months in advance of a season on the style and amount needed unlike its competitors. Zara was able to create in smaller batches, thus decreasing risk by limiting the amount of inventory on hand. The downside of owning and controlling production is that it often leads to higher costs of labor compared to labor in developing countries (south-east Asia). To lessen the costs, Zaradecided to outsource the main commodities of apparel such as the undyed fabric, buttons and zippers. Because these were basic ingredients to any apparel it did not affect the final product and cut down cost. Also, 85%-90% of their styles were standard across stores and countries which benefited from economies of scale. Lastly by playing both role of manufacturer and retailer Zara is able to get profits on both sides. The short-lead...

Find Another Essay On Zara Case Analysis

Strategic management: Case ZARA Essay

864 words - 3 pages 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

ZARA case study

1012 words - 4 pages companies. They also have a very efficient communication system between local store managers and headquarters, because of this system there's a very fast communication so they can quickly react to new customer demands and trends.Political factors: because Zara outsources certain activities to low-cost developing countries they are often accused of child-labour and 'slavery'.SWOT analysis, after analysing Zara's internal and external factors, we can

Zara case study

968 words - 4 pages )-the amount earned from an expenditure-of any such effort (i.e., what will we get for our money and how long will it take to receive payback?)3- Designers need to thoroughly test the system before deployment5-The Zara case shows two things - 1. IT can impact every single management discipline and 2. A firm need not be the highest IT spender in its industry to use IT effectively. Provide reasons and examples from the case that show why these two

SWOT Analysis: Zara´s Managers

646 words - 3 pages Inditex is the largest fashion retailer in the world, it has seven chains, they are Zara, Pull and Bear, Massioino Dutti, Stradivarius, Bershka Oysha and Uterque. SWOT analysis might help the executive to understand the opportunities and threats in the environment with the strengths and weakness of Inditex; thus help the executive to evaluate existing strategies and formulate the new master strategies (growth strategy, stability strategy and

Zara: Global Expansion

1385 words - 6 pages Zara is one of the world’s largest fashion retailers; it’s a Spanish clothing and accessories retailer. It is the flagship company of Inditex, a holding company which includes seven other brands, and was founded in Artexio, Spain in 1975 by Amanico Ortega and Rosalia Mera. Just this year Forbes named Ortega the 3rd richest man in the world. “Zara contributes about 80% of Inditex's revenues, which have grown by 27% per year on average since 1998

ZARA: Fast Fashion

2018 words - 8 pages prototype, would develop the company brand awareness in the new country.In contrast to the advantages of their international expansion policy, the price of ZARA products in USA is more than double same products in Spain ;moreover, as the case stated, what worked with 1000 stores will not work with 2000 stores and the centralized supply chain might collapse or become a real problem . Accordingly, a competition might find a window of opportunity in that

INDITEX (ZARA) Jordi Llena Vila 90892 Operations Strategy Pär Åhlström

3485 words - 14 pages INDITEX (ZARA) Jordi Llena Vila 90892 Operations Strategy Pär Åhlström Stockholm School of Economics Index Index 2 History and description 2 The resource perspective 3 How does Inditex reach its customers? Different brands 4 Management 5 Marketing 5 Decision Areas 5 Capacity 5 Supply networks 6 Process technology 6 Development and organisation 7 The market perspective 7 Market Requirements 7 Competitors and market positioning 7

Compare and contrast the supply chain management approaches take by H&M, Benetton and Zara

2717 words - 11 pages to work on products that have similar processing requirements" (Chase et al., 2001, p. 189). In our case of course the role of machines are taken by different tasks of designing, choosing patterns, colour and material; whereas women, men and children's lines have similar processing requirements.Zara's design department is organised differently. As with Benetton and H&M, Zara employs number of designers, market specialists and buyers who are

IT for Fast Fashion Case Study

1823 words - 7 pages IT for Fast Fashion Case StudyZara is a flagship store for the Spanish Inditex Group, one of the largest fashion retail groups worldwide and currently contributes to 65.6% of its sales. The company has 1520 stores (as at end of 2008, including Zara Kids) and opened 159 stores in 2008 (Inditex 2009). Its stores are located in cities across Europe, America and Asia, present in 72 countries, offering up to date trends in international fashion. It

Branding and Positioning

2452 words - 10 pages Identity Prism. After which, the brand's segmentation, targeted group and positioning was identified. A SWOT analysis was done in order to reinforce the information obtained from secondary research and the conducted analysis.After this was done the points of parity and points of difference was done between Mango and its two main competitors Zara and H&M. In this section, the brands similarities were identified as well as the distinction of

badm 449 syllabus

6723 words - 27 pages responsible for covering specific aspects of the case within 30 minutes, leaving 10 minutes for questions from the class. Note: Power Point Slides are due by e-mail attachment two days before the presentation.Group #1: Coke &Pepsi Industry-level analysis (e.g., 5-Forces Model)Group #2: Coke &Pepsi Business-level strategy (e.g., Coke's strategic plan)Group #3 Zara Industry-level analysisGroup #4 Zara Business-level strategy (e.g., Zara's value

Similar Essays

Zara Case Essay

1988 words - 8 pages . Instead, a technology steering committee, including Ortega and Castellano Rios, is responsible for initiating new technology initiatives. Even with this high-level attention to the opportunities offered by information systems, no cost/benefit analysis of IT projects is undertaken and there is no formal procedure for determining which projects will be undertaken. All of the company’s IT employees work from the company headquarters. Zara prefers

Zara Fast Fashion Case Essay

2235 words - 9 pages from existing stores to better understand the consumers and dynamics. Zara should use this insight to decide on the most appropriate business model for North America in case of a future expansion. According to the volume it expects from this market, Zara should analyze needs for distribution centers, transportation or production requirements. Inditex should also consider if other Inditex chains can be successful in North America. North America is

Zara Fast Fashion Case Essay

3953 words - 16 pages and fashion accessories through 1,284 stores around the world under many brand names. Zara is an apparel chain owned at operated by the Inditex. It specializes in fast fashion and offers women's, men's and children's fashions at affordable prices.This report analyzes the case Zara: Fast Fashion and the problems associated. The report covers the detailed study of Zara's:•Situational Analysis, which includes factors such as the environment

Zara: Fast Fashion Essay

3881 words - 16 pages expansion.Launching store manager training programAccording the case writes, store managers decide which merchandise to order and which to discontinue, coupled with transiting customer data and their opinions to Zara's design, providing potential demand sense for new products. It is store managers' acute observation that enables Zara to decide which items to be removed or replenished. Since store managers are the souls of retailer stores, it is important