ZARA CASE STUDY

Zara Case Study

Zara Case Study

Introduction

In 1974 came the first Zara store, owned by the Inditex group, founded by entrepreneur Amancio Ortega Gaona Galician. This is a Spanish name known internationally and has led some to talk about the phenomenon of “Zaramania” (Rohwedder & Johnson, 2008).

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. Vertical integration has made the company earn a lot of profits and remain ahead of its competitors in the market. This was because 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 (Tokatli, 2007).

Discussion

The core competencies of Zara have been discussed below:

Quality and design

ZARA offers a quality product and innovative design. They provide the latest fashion because they have hundreds of scouts all over the world looking for new trends and new designs created from the brands found in stores in less than two weeks. This is a major advantage of the organization's business formula (Dutta, 2003).

Control over the entire value chain

ZARA is distinguished by a unique business model in the retail sector of the fashion which vertically integrates all the main activities of the value chain including design models, production of garments, the logistics of input and output, and sales in stores. This control provides a very important strength of speed and flexibility over their competitors. The rest of the manufacturing processes are outsourced to about 2000 workshops (external equity) so that costs are lowered. It is a strategy from the purchase of fabrics to the final sale to the customer, which usually takes 15 days; a minimum production time compared to its competitors (Dutta, 2003).

Just in time

Zara use the Just-in-time inventory system, which make sure that the desired inventory is available at the right time. This saves a lot of time and costs for the company.

Instant Purchase Culture

With the high turnover of products, ZARA has managed to instill a new philosophy in their clients in Spain and other countries, of buying at the moment because the models are removed if not sold and replaced with new ones. In this way, consumers are enticed to purchase the product without delaying their buying decision (Lopez & Ying, 2009).

Prestigious brand

Another strength of the company is the brand ZARA, has a high reputation around the world which makes it more valuable

Strong international presence

By consolidating itself as a leading brand in the Spanish market, Inditex was able to enter the international market and thus further increase its growth because the market got saturated. Internationalization was a success. It is representative of the fact that during the first nine months of ...