...Running Head: Zara Case Study Zara – IT for Fast Fashion MGN 562 Team: The Change Agents Drejer Simon ID 315273004 Sharnjeet Kaur ID 315271003 Bilal Khalid ID 315276006 JR Rattaporn Srinok ID 315373001 Zertab Quaderi ID 315276001 Stamford International University, Bangkok February 2016 Table of Contents Abstract 3 Company Overview 4 Current Situation 5 Process Performance Analysis 5 Capacity 7 Efficiency 8 Flexibility 11 Quality 11 Operations Strategy Analysis 15 Root Cause Analysis 16 Cost Benefit Analysis 17 Multi Criteria Decision Making 20 Implementation Strategy 20 Recommendations 22 Conclusions 24 List of references 25 Appendix 26 Team Charter 26 Abstract The case study on Zara is set in August 2003 when the head of IT and the technical lead for the POS system are arguing about whether or not to upgrade the operating system of the POS terminals from DOS. The paper examines the operations management of Zara to see whether an updated IT system should be in place or not. It analyses the operations design and strategy of Zara in detail to justify an upgradation of their IT system. It also examines the areas where an updated IT can add value to the operations and ultimately, to the consumers. Several tools and methods have been applied to arrive at a decision. Recommendations and implementation strategy are outlined for better management decision making. Company Overview Inditex, the holding company of Zara, was founded...
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...FACULTY OF BUSINESS, GOVERNMENT & LAW Assignment Coversheet Student ID number U3131451 Unit name International Business G Unit number 6241 Name of lecturer/tutor Dr Michael Corliss Name of Assessment Assignment 1 Due date 22th November 2015 Word Count 2.385 Student declaration I certify that the attached assignment is my own work. Material drawn from other sources has been appropriately and fully acknowledged as to author/creator, source and other bibliographic details. Such referencing may need to meet unit-specific requirements as to format and style. I give permission for my assignment to be copied, submitted and retained for the electronic checking of plagiarism. Signature of student: Felix Yuwono K. Date: 22 November 2015 Background...
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...Chapters | Cases | Core Curriculum Course Modules | Simulations | Video Harvard Business Publishing serves the finest learning institutions worldwide with a comprehensive catalog of case studies, journal articles, books, and elearning programs, including online courses and simulations. In addition to material from Harvard Business School and Harvard Business Review, we also offer course material from these renowned institutions and publications: ABCC at Nanyang Tech University Babson College Berrett-Koehler Publishers Business Enterprise Trust Business Expert Press Business Horizons California Management Review Crimson Group USA Darden School of Business Design Management Institute European School of Management and Technology (ESMT) Haas School of Business Harvard Kennedy School of Government Harvard Medical School/Global Health Delivery HEC Montréal Centre for Case Studies IESE Business School Indian Institute of Management Bangalore Indian School of Business INSEAD International Institute for Management Development (IMD) Ivey Publishing Journal of Information Technology Kellogg School of Management McGraw-Hill MIT Sloan Management Review North American Case Research Association (NACRA) Perseus Books Princeton University Press Rotman Magazine Social Enterprise Knowledge Network Stanford Graduate School of Business Thunderbird...
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...the headquarters of Zara, the company that introduced the idea of fast fashion some two decades ago, then developed a highly centralized and often studied—but rarely duplicated—design, manufacturing, and distribution system. The building is officially known as the Cube. Those who work there think of it as the brain. The Cube is central command for a fashion empire built on an unconventional idea: speed and responsiveness are more important than cost. Zara is renowned for its ability to deliver new clothes to stores quickly and in small batches. Twice a week, at precise times, store managers order clothes, and twice a week, on schedule, new garments arrive. To achieve this, Zara controls more of its manufacturing than do most retailers: About half its clothes are made in Spain or nearby countries. For Zara, its supply chain is its competitive advantage. Zara’s expanding global reach could finally put its Iberian Peninsula-based ecosystem to the test. Spain has always been its biggest market. But in 2013, China surpassed France to become its second-largest in terms of the number of stores (142). Expansion in China offers challenges for every retailer. And it could put the Spanish clothier in a singular predicament, because Zara is a global company that doesn’t act locally. “The secret to their success has been centralization,” says Felipe Caro, an associate professor at the University of California at Los Angeles’s Anderson School of Management and a business adviser to the company...
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...INTERNATIONALISATION OF THE SPANISH FASHION BRAND ZARA Carmen Lopez Ying Fan Brunel Business School Journal of Fashion Marketing and Management (2009), 13:2, 279-296 INTRODUCTION Zara is one of the world’s most successful fashion retailers operating in 59 countries. However, there is little research about the firm in English as the majority of publications have been written in Spanish. This paper seeks to address this gap in the literature by examining the internationalisation process of Zara. This study adopts an in-depth case approach based on extensive secondary research. Literature published in both English and Spanish has been reviewed, including company documents such as annual reports. The paper starts with a brief overview of the global textile and clothing industry, followed by the case study of Zara. The main part of the case examines the key aspects in the internationalisation of Zara namely: motives for internationalisation, market selection, entry strategies, and international marketing strategies. In the final section, comparisons are made between Zara and two of its main competitors, H&M and Gap. The global textile and clothing industry The removal of all import quotas in the textile and clothing industry from January 2005, involving the unrestricted access of all members of the World Trade Organization (WTO) to the European, American and Canadian markets is considered a key driving force in the development of the clothing sector (Keenan, et al., 2004). This...
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...Zara Case Study Fast Fashion Zara’s success story begins by offering a product range capable of catering for men, women and children, providing affordable and stylish clothes whatever the season. Coupled with this, is their keen eye for discovering new fashion trends and translating these trends from the catwalk to the high street, both quickly and affordably. Zara boasts a marketing strategy of firstly product variety with a focal point of ensuring speed to market (Capell). At present, Zara launch 10,000 new articles per year across their portfolio of stores. Finally, store location, as any marketing is left to store location rather than advertising. Opting for a strategy of minimal advertising provokes the consumer into having to visit their stores. Zara is the most profitable brand of Inditex SA, accounting for 75% of the overall profit. Zara has remained focused on its core fashion philosophy that creativity and quality design together with a rapid response to market demands will yield profitable results. One of Zara’s many approaches is fast fashion. A contemporary term used by fashion retailers to acknowledge that designs move from catwalk to store in the fastest time (2weeks!) to capture current trends in the market. This "fast fashion" system depends on a constant exchange of information throughout every part of Zara's supply chain—from customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers...
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...and manufacturing with distribution, when creating ZARA in 1975 in la Coruña, Spain Zara came under the holding company Inditex in the year 1985 and is today the biggest fashion brand of the group. Zara believes that the prime factors for running a successful business are quick response to customers, use of computers, and disintegrated decision-making (McAfee, Dessain, & Sjoman, 2007) Inditex has a total of 1,558 stores operating in 45 countries out of which 550 stores are of Zara. Inditex’s major sales contribution is Zara accounting for 73.3%. Zara presents new style clothes for Men, Women, and Children along with reasonable prices. (McAfee, Dessain, & Sjoman, 2007) Women clothing accounts for 60% of Zara’s revenue. It has built up a business model to sell the garments by following trends and style, with virtually no advertising and trust the choices of store managers which is called as "commercials" on what garments should to be in stores. (McAfee, Dessain, & Sjoman, 2007) Value Chain Model: Zara currently uses the value chain model (concept originally proposed by Michael Porter), which is helpful to access areas of weakness and strengthen them to achieve profit and competitive edge. This model helps decision-making that can implement IT or add value to the products and services. The chain mainly consists of six Primary activities and three Support activities. (Kroenke, 2012). Problems that Zara might face in its primary activities when its operations...
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...INTERNATIONALISATION OF THE SPANISH FASHION BRAND ZARA Carmen Lopez Ying Fan Brunel Business School Journal of Fashion Marketing and Management (2009), 13:2, 279-296 INTRODUCTION Zara is one of the world’s most successful fashion retailers operating in 59 countries. However, there is little research about the firm in English as the majority of publications have been written in Spanish. This paper seeks to address this gap in the literature by examining the internationalisation process of Zara. This study adopts an in-depth case approach based on extensive secondary research. Literature published in both English and Spanish has been reviewed, including company documents such as annual reports. The paper starts with a brief overview of the global textile and clothing industry, followed by the case study of Zara. The main part of the case examines the key aspects in the internationalisation of Zara namely: motives for internationalisation, market selection, entry strategies, and international marketing strategies. In the final section, comparisons are made between Zara and two of its main competitors, H&M and Gap. The global textile and clothing industry The removal of all import quotas in the textile and clothing industry from January 2005, involving the unrestricted access of all members of the World Trade Organization (WTO) to the European, American and Canadian markets is considered a key driving force in the development of the clothing sector (Keenan, et al., 2004). This...
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...Zara Case Study 1. Case Summary The Zara case study is a case of the fundamental of whether or not to upgrade an IT system which already works, in this case a POS operating system that uses DOS, to more modern operating systems that includes more functionality to meet new demands. Zara is a chain fashion store around Europe, Middle East, Africa, and South America that was founded by Amancio Ortega, in 1975. The first store and main headquarters was found in La Cournia, Spain. Mr. Ortega believed and implemented his business model that: Retailing and manufacturing needed to be closely linked. This created the backbone for Zara’s everyday functionality to have all the stores communicate with the main distributors and distribution centers (DCs) which in turn communicated directly to the manufactures. As a result, supply was meet with demand with ease and little latency. This was all made possible through the use of technology and Zara’s IT department. Salgado Badas, the head of the IT, along with Bruno Sanchez Ocampo, were the main decision makers and brains behind the IT of Zara. For the past decade, Zara has implemented POS systems in each store that would have a direct connection via modem to the main headquarters in La Coruna. Managers on a daily basis transmit comprehensive sales information and other data back to La Coruna. In 2003, PDA’s were also used for ordering and also for tasks such as handling garment returns to DCs and transmitting...
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...Summary 2 Introduction of Zara 2 Porter’s Six Forces model in Zara 3 Existing competitors 4 The bargaining power of suppliers 4 The bargaining power of customers 4 Potential competitors 5 Alternative products or services 5 The power of cooperative dealer 6 IT is the heart of ZARA mode 6 Track fashion with the information base 6 Information standardizing and optimizing design 7 Zara’s competitive advantage – based on value chain perspective 8 Design 8 Marketing 9 Conclusion 12 ZARA's Informational Rapid Response Mechanism and Fast Fashion Summary In recent years, with the unique marketing strategy, fast fashion apparel business has developed rapidly in the world. Some of enterprises engaged in the fast fashion business have obtained considerable sales and global business expansion, it can be said that fast fashion has been become one of the most valuable fields in the clothing industry, and carrying out fast fashion business has become an ideal choice for clothing enterprises to develop rapidly and create performance (Hayes & Jones, 2006). In this paper, it chose an international fast fashion clothing brand--ZARA of Spain, which is characterized on marketing and has won widely recognized worldwide, as the research object. Through the analysis of the brand's marketing strategy, it interprets the universal business model used the fast fashion clothing brand to do business. This paper adopts the method of case study, first makes detailed analysis...
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...In 1975, appeal giant Inditex set up the first Zara store in La Coruna, in Northwest Spain. By 2006, Zara had owned 723 stores which hold a selling area of 821,100 square meters around the world. With sales of 3.7 billion dollars in the business year 2005, Zara had developed into Spain’s the most famous fashion brand and the leading brand of Inditex (Kumar, 2006). Zara is one of the most outstanding apparel retail businesses in the world today. Although it is not the biggest, its marginal profits and rates of growth are leading the industry. The purpose of this essay is to analyze what sort of innovation Zara used on its way to success and make comparisons of competing products or processes with its competitors. By analyzing and comparing, it is obvious that the company's success depends on conducting a series of innovations at each one of the parts in the business: fashion-forward design, unique branding strategies, in-house production processes and centralized distribution system. Basically, this essay has been divided into four parts: the first part focus on describing how Zara makes its designs more innovative compare with other appeal retailers. Then, what sort of innovation used in their branding strategies will be discussed. Next, it will consider Zara’s innovation of production process and show an apparent difference of this process among Zara, H&M and the Gap. Finally, it will look at how Zara promotes innovation on their distribution process in to become more fast...
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...Zara Case Study - Answer the following questions using both the case in the text and online research. Citations (within the text) and a bibliography are required. Be sure to provide an overview of the case in a short paragraph prior to answering each question. List the question you are answering prior to your answer. Vertical Supply Chain Zara uses a vertical supply chain, which is an uncommon strategy in the fashion industry. A company that operates in a vertically integrated strategy has total control of the various business activities, such as designing, manufacturing, sourcing, and to distribution to retail stores. This gives the company total business management. 1. As completely as possible, explain the supply chain for Zara from raw materials to consumer purchase. (5 points) Zara makes about 40% of their raw material (fabric) and produces more than half of its own clothes. (Kotler and Armstrong). The remaining 60% is outsourced from within Spain, mostly from the La Curuna. Designing of clothes at Zara is done by creative teams of over 300 professionals at the headquarters in La Curuna, Spain. (Supply Chain Brain). After the designers complete a design they are sent to Zara’s production system to cut the fabric. The design is then sent for sewing by one of several hundred local cooperatives. After sewing, the clothes are returned to Zara’s facilities for ironing by an assembly line of workers. After this, the items are wrapped and transported on conveyor...
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...Title of the Report: Zara Case Study Report Name: SeJun Lee Executive Summary Zara is one of the largest international fashion companies in the world, and it belongs to Inditex, one of the world‟s largest distribution groups. This study reviews Zara`s external environment and analyses its internal organisation to make recommendations for improving its core competencies against competitors such as H&M and GAP. This study first reviews the Zara enterprise in terms of PEEST environmental factors, Porter‟s Five Forces and the fast fashion industry life cycle (ILC). The liberalisation of European Union import quotas has had a positive political impact on the fast fashion retail industry. However, rapid style changes generate waste. In addition, recent financial crises have made customers more sensitive to price and tending to buy lower priced goods. However, young people and new Asian customers are more attracted to fashionable clothes. Also, new technology is quickly adopted to survive in a fast-moving market. Using Porter‟s competitive analysis of five forces, the threats of new entrants and substitution are low, and customers‟ and suppliers‟ bargaining power are moderate. However, the intensity of competitive rivalry is quite high because similar fashion firms are competing. Fast fashion has a shorter life cycle for products than most industries. This spurs both creativity and product innovation but demands more efficiency and advanced technology to reduce...
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...at Urbana-Champaign College of Business Department of Business Administration BADM 449: STRATEGIC MANAGEMENT / BUSINESS POLICY (FALL 2015) Section J: Tuesday – Thursday 11:00 A.M. – 12:20 P.M. BIF 2041 Name: Shinjinee Chattopadhyay Visting Assistant Professor Office: 465 Wohlers Hall Office Hours: Tuesday, 2-3.20 pm (Or by appointment) Office Phone: 217-300-1033 Email: schattop@illinois.edu Website: Maintained on Illinois Compass 2g INTRODUCTION AND COURSE OBJECTIVES Strategic management deals with decisions that fundamentally influence the direction of the organization and effective implementation of the direction chosen. Strategic management addresses the organizational structure, resources & capabilities, and the strategic positioning of the organization to create, capture, and sustain competitive advantage. In addition to economic value creation, management also must make decisions concerning the distribution of this economic value across stakeholders. In BADM 449, you will develop your skills at: • Understanding how firms create, capture, and sustain competitive advantage; • Analyzing strategic business situations and formulating strategy; and • Implementing strategy and organizing the firm for strategic success. Success ultimately depends not only on the soundness of the formulated strategy, but also on effective implementation through appropriate organizational choices. This capstone business course focuses on strategic decisions...
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...the headquarters of Zara, the company that introduced the idea of fast fashion some two decades ago, then developed a highly centralized and often studied—but rarely duplicated—design, manufacturing, and distribution system. The building is officially known as the Cube. Those who work there think of it as the brain. The Cube is central command for a fashion empire built on an unconventional idea: speed and responsiveness are more important than cost. Zara is renowned for its ability to deliver new clothes to stores quickly and in small batches. Twice a week, at precise times, store managers order clothes, and twice a week, on schedule, new garments arrive. To achieve this, Zara controls more of its manufacturing than do most retailers: About half its clothes are made in Spain or nearby countries. For Zara, its supply chain is its competitive advantage. Zara’s expanding global reach could finally put its Iberian Peninsula-based ecosystem to the test. Spain has always been its biggest market. But in 2013, China surpassed France to become its second-largest in terms of the number of stores (142). Expansion in China offers challenges for every retailer. And it could put the Spanish clothier in a singular predicament, because Zara is a global company that doesn’t act locally. “The secret to their success has been centralization,” says Felipe Caro, an associate professor at the University of California at Los Angeles’s Anderson School of Management and a business adviser to the company...
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