ZARA CASE STUDY

Zara Case Study

Zara Case Study

Introduction

Zara has been the trend setter in the fashion industry. Since the launch of the company, it has been very successful. The company has been successful because of the technology that it has adopted. The company's success depends on the blend of the technology that the company has adopted and has been able to break all the rules that the fashion industry was following (Smith, 2008, 54). Vertical integration has made the company earn a lot of profits and remain ahead of its competitors in the market. This was due to the fact that the company was able to reduce its cost and increased the barriers for the potential new entrants in the industry, which is why; the company is the market leader in the industry (Roux, 2011, 12-16).

Zara's position in the market is due to the strategies that the company has adopted. The company has policies that are making it the leader. The profits of the company tripled in the years between 1996 and 2000 and have even increased between the years 2001 to 2007. The company has been earning revenues from $2.43 billion to $13.6 billion in these years, and this is the reason the company was able to move ahead of the market leader, Gap (Putzger, 2011, 32-34).

Discussion

Zara Inditex Group is one of the most recognized global retails that offer the latest international fashion trends but holding tight design. It also stands out because it reverses the rules of managing the supply chain and has a high speed network and significant profit margins in the sector.

It is a system that reinforces itself and is based on three principles:

Close the circle of commercial activity.

Keep the pace of product flow and information.

Leverage capital assets to increase the flexibility of the supply chain.

Closing the circle of commercial activity

Customers can always find new fashionable clothes and other products in the Zara's stores, but they are limited, enticing the buyer to purchase them. The tents are spacious; there is a sense of exclusivity that calls for action to purchase. For example, there is a product on the shelf, "if you do not buy now, I will lose the opportunity” (Mcguire, 2008, 36).

This concept of sale depends on the constant creation of small lots of products and their rapid replacement. Each year, there are around 40,000 new designs that are created by their designers. Zara's system has to deal with an average of 300,000 stock keeping units each year. This depends on a continuous communication network between each aspect of the supply chain (Capell et al., 2006, 38-39).

The design and production centre is located in La Coruna, which is adjacent to the headquarters of Inditex. It consists of three spacious rooms, one for men's clothing line, another for clothes for women and another for children's clothing. Each line of clothing has its own design teams, sales, supply and production planning (Crawford, 2010, 23-29).

In each room there are windows from floor ...