ZARA

Zara

Zara

Zara is a very advanced and technology based company, offering quality services to its customers. It has a unique strategy of running the business that has made it so successful. It is a technology based company that has broken all the rules in the fashion industry and is being run in his own unique and competitive style. The other industry players typically rely on outsourcing, however; Zara has been able to provide quality products and services with the help of in house production as it is a vertically integrated company.

The Company is undergoing relentless expansion, and the firm tripled its size between the periods of 1996 to 2000 and skyrocketed to $13.6 billion in 2007. The expansion of the company is quite evident as it is a major industry player in terms of expansion. It efficient business operation is leading to world wide popularity of the business.

However, the company also faces certain issues. In a retail store, you cannot keep inventory for a very long period as it creates severe issues for the company. The products company sell are seasonal, hence the company has to be very careful about the extent of inventory held in the company. Hence, the company sometimes has to bear the loss as the maintenance cost of inventory is very high (Phizacklea, 1990, pp. 123-126).

Moreover, the company hires labor on the basis of contract which also creates issues for the company as the company has to hire labor again and again. The basis for hiring labor on contract is to get cheap labor, but hiring labor on a contractual basis is not an easy task to perform as the company has to look for skilled labor again and again which may eventually lead to higher cost.

There are certain factors, which the company has to take care of in order to succeed in the industry. It includes factors like short lead time, lower quantities and different style products.

The short lead time helps the company in bringing out more fashionable clothes, which is why; the company is able to bring trendy and fashionable close to its stores in such a short span of time. Zara has the ability to identify a fashion trend and can bring it into the market once it is identified. This is the reason this factor is a success factor for Zara. People who are involved in recognition of trends ensure that they have the appropriate information also ensure that they get the clothes to the store at the right time.

Zara's distinctive strategy of producing products in small quantity is a way of creating demand. Zara does not produce the same product in bulk quantity. This strategy creates an artificial scarcity in the market, due to which people demand the product more and more. The less the product will be available in the market, the more it will be desirable.

Out of the three generic strategies of Michael Porter, ZARA is following the cost leadership strategy. The company is focusing a broad market and ...