REPORT

Management Report

Management Report

Introduction

Zara is a key subsidiary of its parent company Inditex, based in Spain. The company was established in 1975 in Galicia, Spain. The brand gives an alternative viewpoint to the business model of fashion retail industry by rejecting blow out sales and media advertising, and maintaining the volume of its in-house production procedure instead of outsourcing to low cost countries. Regardless of the seemingly counter-perceptive business model operated by Zara, it has become one of the world's leading fashion retailers.

Certainly, Spanish based transnational fashion retailer and manufacturer Zara belongs to the most recognized and popular brands. This brand is one of the world's most successful fashion retailers operating in 59 countries. It is remarkable to disclose that a poor, ship building town of La Coruna that is situated in Spain's northern part is the place of establishment of the highly developed retailer of the fashion industry. However, one can find here that “The Cube”, the revolutionary central office of the Inditex Corp. (Industrias de Diseno Textil), that is believed to be the originator of the clothing giant, Zara. The organization is renowned for the implementation of the revolutionary and modern approaches and technologies in the industry (Lopez, & Fan, 2009).

Therefore, this paper will discuss about the detailed analysis and investigation of the existing strategies of the management of Zara, the main feature and distinctiveness of its operations in the exceedingly competitive fashion and the potential viewpoints for the nearest future.

Analysis of Zara

Organizational Analysis

Organizational abilities of Zara incorporate the procedures that turn its intangible and tangible assets into valuable productions. Its just-in-time- (JIT) inventory framework in association with the organizations' vertical integration has permitted Zara to minimize expenses of storage for the inventory. Most goods are held for few hours in the warehouse, with a maximum period of three days. Vertical integration has assisted the business develop shorter cycle times, which in turn permits it to invest to product lines for a period longer than its main contestants. The procedure of merchandising and production are unique and flexible because risky, new things are first produced in small number and tested in a few number of stores; just if there is an optimistic answer from customers then they are produced in mass quantity (Acemoglu, Griffith, Aghion, & Zilibotti, 2010).

This has resulted in failure rates for products to be a simple 1% and reduction of price to be rare. Zara makes sure that products which are price sensitive are purchased externally whereas time sensitive outfits are produced internally. Zara identifies and caters to the differentiations in demands of consumers, instead of continuously using one method and creating a trade-off. Half of the material bought is not dyed in order to maximize flexibility in renewing seasonal colours. Expertise and observations are expected to be utilized by the store managers through interactions with customers to keep the designers informed on the latest trends. It is the responsibility of the store manager to make a decision about what products should be discontinued ...