INTB 200 001
Assignment 1
Jiaxing Chen

Zara is a chain store of Inditex Group owned by Spanish tycoon Amancio Ortega. Zara is claimed to require only two weeks to develop a new product and distributed these products to the various outlets worldwide, where the industry standard is about six-month. Being in the fashion industry, Zara not only aims to offer good quality merchandise, it also tries to provide good customer service by understanding what its customers want. Zara has developed a supply chain that enables the brand to provide fashionable clothing at affordable prices. A supply chain includes all activities and information flow within an organization, transformation of goods and services from the raw material stage to selling the finished products to the end user. One of Zara’s key advantage lies in its process that allows Zara to operate efficiently. Zara employs subcontractors for all sewing operations, which allow the company to stay focus on its core competencies - designing, distribution and retailing of its products. Zara also exploits advance technology and knowledge, by developing customized system to operate its distribution center and creating a hand-held device to manage its ordering system scheduling and inventory management from the different outlets. These strategies have allowed Zara to operate at minimal cost as staying focus, enable Zara to continuously improve on its system to operate even more efficiently. Moreover, technology used in the organization, a huge investment, has minimize the need for paper work and reduce the unnecessary interactions between parties along the supply chain. Being in the fashion industry, Zara also understand the efficiently in terms of both cost and time pressure, it cannot depend only on a single or small number of suppliers. Therefore, Zara has about 260 suppliers, which reduce its dependency on any single supplier. It allows Zara to order in small quantity too and enable these suppliers to respond quickly to Zara orders. In other words, suppliers have no bargaining power over Zara. Zara, in contrast, may compare prices and quality of the materials to ensure that garments produced are of acceptable or high quality. Zara has in-house team designers, which allow Zara to respond quickly to current trend in the market and the requirement of its customers. This has also allowed Zara to maintain a consistent fashionable look in the market place. Zara had many “keys” to open and being successful in the global market. Being an established brand all over the world, Zara has successfully maintained its image that is easily identifiable by its customers from all across the world. From its store locations to its store layouts, Zara has a consistent image. At the same time, Zara mix its products together to encourage customers to buy combined outfits. This strategy help to boost Zara€sales, as customers are exposed to a variety of items at the same time and also to assist customers to mix and match garments. Zara outlets all over the world are always stocked with new products every two weeks, which encourage its customers to return to its outlets more frequently. This is especially important as Zara spend very little on advertising and rely on word-of-mouth and invested on its locations to retain existing and attract new customers. Zara’s advantage also lie in its ability to control the product quality. Zara spare no expense to manage its product quality from the first step of designing the product, where only a quarter of the designs are selected to be produced. In the production stage, machines and skilled workers are employed to control quality and finally, sampling is used to control quality of products procured from external source. These steps are to ensure that Zara can get back its return on investment, as any product line failure or merchandise with defect will affect Zara brand image. As mentioned above, Zara depends heavily on its existing customers word-of-mouth to attract new customers. To enter a new market, Zara use the strategy of pursuing a joint venture and franchise. Zara also give people the idea of e-marketing which fill the needs of consumers all over the world. There are many ways to grow Zara chain internationally, and China would make most sense. The first things to do is understand the fashion industry competitiveness. It needs to assess the possible substitutes to its products against existing brands like Jeanswest, Blaeno. These brands have been around in China for a long time and there are brand loyalists among these brands. Zara needs to know how to appeal to its target market. Zara also needs to consider its marketing strategy when entering China. Firstly, its products need to appeal to the Chinese, in terms of both quality and design. Zara may need to spend time studying Chinese culture and the local fashion sense to capture the market well. Not only in China, to grow the Zara chain internationally, Zara always needs to know the competitors and the local fashion culture of that certain region. The last thing is pricing. Its pricing needs to be considered as reasonable price to maintain its fashionable and affordable image. Zara needs to consider the transportation costs to deliver its goods to China and the rental cost of its retail outlet that it needs to cover.