...Zara International is considered a high end clothing store that is affordable. Due to its quality in fashion, low prices and immediate availability, popular stores such as Gap and H&M fail to keep up with Zara’s success. Zara’s well known tactic of fast fashion has separated them from their competition. The ‘fast fashion’ objective is to distribute top trends of fashion within the runway to customers by selling them in local stores. Zara has been able to achieve the fast fashion perspective by hiring approximately 200 people that will assist in getting these trends out in stores within a matter of weeks. Zara International adopted the classical management style by abiding by the five administrative principles. This company was able to ‘foresee’ its successes by creating a plan they could achieve in the future. So far, Zara has been able to keep up and surpass its top competitors. In one year, the company was able to bring in $2 billion of revenue. Secondly, Zara arranged an ‘organization’ that allowed them to obtain the resources in order to foresee their company. They understood the demand for the quality and quantity of workers to be able to uphold their mission of the fast fashion technique. Not many retailers are savvy enough to create and/or imitate trends within a matter of weeks, get the items to their stores within a matter of hours, sell at an affordable price and restock these items as needed; Zara has been able to accomplish all of these. By doing so, the stores...
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...In what ways are the elements of the classical management approaches evident at Zara International?Frederick W. Taylor’s first principle, motion study is the science of reducing a job or task to its basic physical motions. It was indeed clearly evident in Zara International’s case. Inditex Group, the Parent company, shortens the time from order to arrival by a complex system of just‐in‐time production and inventory reporting that always keeps Zara at the forefront of the competition. It is only possible for a well-trained set of employees who have the abilities for their jobs and resulting Zara distribution centers to have items in European stores within 24 hours of receiving an order, and in American and Asian stores within 48 hours. This shows the presence of elements of guiding principles 2 and 3 of scientific management here. At the same time a sign of careful planning is also noticed which smoothing the way as they perform their jobs consistently.Administrative principles of classical approaches of Henri Fayol were also seen in case of Zara’s operational line of attack. The leaders generated a single plan to ‘go fast’, which turned into proper action resulted an awesome US$10 billion sales due to unity of direction as well as superb initiative to undertake work with zeal and energy.Finally it can be concluded that Fayol’s five “rules” of management, which give impression of four functions of management are more or less visible in Zara’s case. In elaboration, ‘planning’ seen...
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...approaches evident in how things are done at Zara International? ~The classical management approach is evident at Zara International. The three branches of the classical management approach include scientific management, administrative principles, and bureaucratic organization. The concept of scientific management can be seen in Zara International because time is the main factor instead of production costs and advertisements. Zara only spends 0.3% of sales of ads compared to their competitors who typically use 3 to 4%. The administrative principles are expressed through controlling design. At Zara, most of the clothing lines are not replenished. Instead they are replaced with new designs to create scarcity value so shoppers cannot be sure that designs in stores one day will be available the next. This will get shoppers to buy the item now instead of waiting. Bureaucratic organization is evident through clear division of labor. Zara International is a very efficient organization. Because of the clear division of labor, the organization can run smoothly. There were also elements of the behavioral management approach that was evident in Zara International. Zara’s management team focused towards the human factor as a key element in their organization. They paid close attention to what fashions the public was demanding. Even though their clothing designs are coming fresh off the runway they still make it very affordable for the public. Zara used Mary Parker Follett’s idea of organizations...
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...society, technologies and trends make the big fashion companies to propose not just a brand but also a fast fashion brand accessible to all eager customers. One of companies “…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” (Berfield & Baigorri, 2013) is Zara International. Zara International belongs to, “…Spanish retail giant Inditex owns some of Europe's most popular clothing stores and is rapidly expanding around the world” (Inditex Group (Zara), n.d. para.1). After releasing the company Zara International by Index Group, parent company, Zara’s brand becomes one of the most popular in clothing industry worldwide and continues to keep the position despite of the fierce competition. The study case Zara International: Fashion at the Speed of Light would reveal and emphasise the main characteristics of the popularity and particularity of the fast fashion industry through analysis some of the aspects and rules of the Spanish company, Zara International. DISCUSSION OF FINDINGS It is well-known that every organization would like to excel in some criteria specific to their sphere of activity. Due to fast changing trends, the management should acknowledge that they should continuously improve and motivate all working parts of the company. Because the main purpose of an organization is to achieve the established objectives, the management...
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...Political 4 5 Economic 4 6 Social 5 7 Technological 6 8 Environmental 6 9 Legislative 8 10 Conclusion 8 References 9 Introduction The global apparel market is a consumer-driven industry. Also, globalization and new technologies have allowed consumers to have more access to fashion. As a result, consumers are changing, competition is fierce, and companies are evolving to meet these demands. Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to maintain that advantage and growth they must confront certain challenges and face traditional retailers in the apparel industry. So, now our group will analysis the PESTLE of Zara Company. (Lopez & Fan, 2009) Overview Zara is one of the largest international fashion companies and belongs to Inditex, which is one of the largest fashion retailers worldwide. Inditex operates in textile design, distribution and manufacturing. (Inditex, 2011 b) Zara operates in 78 countries worldwide with 1557 stores in the world’s largest cities. (Inditex, 2011 c) The company is founded in 1975 by Amancio Ortega, located in Spain and had in 2010 a net sale of 8.088 million of euro. (Inditex, 2011 a) The have worldwide 1557 stores in 78 different countries. (Inditex, 2011 a) Aim: democratize fashion, offering latest fashion, medium quality and moderate price (Lopez & Fan...
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...ZARA Word count: 3799 Table of Contents Executive summary 2 Zara background 3 External factors and competitive forces 3 PESTEL 3 Porter’s 5 4 Internal factors 6 Resources and capabilities 6 Manufacturing 8 Logistics 8 Public relations crisis and their effect on peformance 8 Evaluation of strategic options and recommendation 10 References 12 Appendixes 13 Executive summary This project aims to provide an in-depth analysis of external and internal factors affecting performance of world leading retailer Zara. First of all, the brief background on Zara is provided in order to familiarise reader with the business model they implement. Secondly, the PESTEL framework is utilised as the base for analysis of external environment and its potential effects on company’s performance. Further, the Porter’s 5 forces are identified in order to assess where the competitive advantage stems from. After assessment of external environment, this paper provides the overview of internal factors which might be crucial for success, as well as drawbacks of Zara’s internal organisation. Assessment of internal environment starts from the evaluation of Zara’s resources and capabilities, followed by the critical analysis of manufacturing and logistics processes. Further discussion of the PR issues and its effects on company performance is provided. In addition, the benefits of corporate socially responsible policies are discussed. Overall conclusions on Zara strategic...
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...outsourcing is denied by Zara. This is a good approach towards owned working force and not to get involved in activities that may lead to unethical concerns. Organization has developed a smooth image for quality management process implications in industry and now it is time to unleash new domains for organization. It is not recommended that company should start activities in outsourcing that may led to questions and confusions in current quality management and employee relationship management, but a healthy process that leads to internationalization should be considered. Another option that has been followed by management in last years is to become eco friendly and development of such sales points. The Inditex group has achieved eco-efficient and friendly certificates; a major one is LEED (Leadership in Energy and Environmental design). LEED is a famous and one of the acknowledged certificate and Inditex had got it for Zara Barcelona. Inditex management has mentioned this in its mission statement and following this objective will create a competitive advantage. Competitors are in process of getting this milestone and the group has to make new plans and create more benchmarks in this eco friendship race. Zara has spread a common concept of fast fashion. New style ranges are frequently introduced in market and thus Zara is moving parallel to market trends. Sales persons at stores with PDAs communicate and inform “The Cube” so fast that enables Zara to respond market...
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... America Asia and the rest of the 12% world 18% Net profit 2,500 1,946 1,741 1,258 1,262 1,322 2,000 1,500 1,000 500 0 2007 2008 2009 2010 2011 Number of employees 0 20,000 40,000 60,000 80,000 100,000 120,000 2011 2010 2009 2008 2007 79,517 109,512 100,138 92,301 89,112 Inditex´s Annual Report addresses its economic, social and environmental performance for the purposes of achieving the maximum transparency in its relationship with all its stakeholders annual report 2011 index 06 54 Letter from the Chairman | 08 Business model | 10 A look back over 2011 Customers Milestones for the year. International presence | 22 Suppliers | 70 Employees | 84 Retail formats. Zara. Pull&Bear. Shareholders. Economic Massimo Dutti. Bershka. Stradivarius. Osyho. Zara Home. Uterqüe. | 42 Community | 100 and financial report....
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...Zara: Staying Fast and Fresh Wance Tacconelli Donghua University Shanghai Contents • • • • Historical background Overview of the Inditex Group Zara’s business model The competitive landscape – The Gap, H&M, Fast Retailing (Uniqlo) • Zara’s global store and online expansion • Questions Zara Case Study 2 Corporate history (1 of 2) • 1963: establishment of clothing production company in A Coruῆa, Spain • 1975: first Zara store opens in A Coruῆa • 1985: Inditex Group is established • 1989: first international Zara store opens in Portugal Zara Case Study 3 Corporate history (2 of 2) • 1990s: acquisition of brands Massimo Dutti and Stradivarius • 2001: Inditex IPO • 2006: first Zara store opens in China • 2010: first Zara store opens in India • 2010: Zara launches first online store Zara Case Study 4 Inditex’s performance indicators, 2012 • Net income totalled 2.3 billion euros, an increase of 22% from 2011 • 6,009 stores, 482 more than a year earlier • Online store network covers 23 markets, with new launches in China and Canada • Creation of 10,802 new jobs in 2012, bringing workforce to 120,314 employees Zara Case Study 5 Inditex Group Brand Portfolio (1 of 8) Zara • Fashionable, yet affordable clothes for a wide range of people, cultures and generations, who, despite their differences, all share a special fondness for fashion • 1751 stores in 86 countries • www.zara.com Zara Case Study 6 Inditex Group Brand Portfolio (2 of 8) ...
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...World’ is ZARA. Fashion is more than clothing; it’s a part of our live. We live in Fashion. ZARA is a member of the INDITEX group, a Spanish group. ZARA have established its stores all over the world, Europe, America, the Middle East, Asia Pacific and among its 5000+ stores (from the INDITEX group), Hong Kong shares 8 ZARA stores from the whole wide world. Zara offers the latest trends in international fashion in an environment of thought-out design. Its stores located in the main commercial areas of cities across the Europe, America and Asia, offer fashion inspired in the tastes, wishes and lifestyles of today's men and women. Zara’s clothing has identified a significant underserved segment within it. Zara’s clothing is uniquely positioned to serve this segment of the market because of its fast paced fashion ideas, its latest technology, its efficient business strategies and its affordable prices. Due to the growing of the clothing industry and the enormous unmet need in the clothing market we see the long-term expansion and potential of Zara throughout the world. We are visionaries who see Zara as an extreme financial launch. By achieving its sales targets, Zara will position itself for exceptional profitability and self-funded growth. ZARA’s Plan is to maintain and develop its position in the market by giving well in time response to changing trends in consumer tastes through creating new designs that are suitable for all customers at an affordable price. “Zara constantly...
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...CASE STUDY ZARA 1. Which theory is internationalization? the best representative of Zara’s (Inditex’s) In the case of Zara, the Uppsala model can be considered as the best representative theory concerning their internationalization strategy. The Uppsala model is an organic growth model, which aims to minimize psychic distance through small incremental steps in the internationalization process. Zara opened its first store in La Coruna in 1975 and focused on the domestic market in the early stages. Gaining experience from the home country before entering a foreign market is characteristic for the Uppsala model. The expansion of Zara was first limited to Spanish cities with more than 100,000 inhabitants. Due to the maturity of the Spanish market, Zara was aiming to expand to the international market. Because of the geographic and cultural proximity to Spain they started their foreign operations by opening a store in Portugal. This enabled a gradual learning-by-doing process, concentrating first on countries close to Spain. Subsequently they preceded the internationalization process by entering different European markets. The intention was to keep a low level of psychic and cultural distance in order to internationalize step-by-step. After obtaining more knowledge and experience in foreign markets, Zara started expanding to other regions more rapidly and out of consideration for geographical or cultural proximity. In general, the internationalization strategy of Zara can be best...
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...1. Inditex/Zara history (Explain) Amancio Ortega Gaono began Inditex as a way to bring high fashion apparel to the market at an affordable price. After years working in the apparel retail industry in la Coruña, Spain, Ortega left his job in the early 1960’s to being manufacturing trendy designers pieces in cheaper materials and selling these items to local shops. In 1975, Ortega opened his first retail store, Zara, drawn by its inexpensive, fashionable merchandise, and Ortega expanded the Zara chain quickly. 1980’s Ortega joined with computer expert Jose Maria Castellano to design a highly responsive supply chin that could quickly produce the latest fashions. A team of designers would replicate popular items, nearby factories would produce them, and they would be shipped from a central warehouse to stores. In 1985’s, Ortega restructure the company and named it Industria de Diseño Textil S.A., o Inditex. In 1990’s, Inditex expanded internationally and diversified its brand portfolio. Zara had added childrenswear, and four new brands had been added to the portfolio; Pull & Bear, Massimo Dutti, Bershka and Stradivarius. 2. How important is Zara for Inditex group internationalization process? Explain and make comments Mainly, Zara is the first brand that Inditex had, it have been successfully accepted into the market in different countries and provide a huge opportunities to Inditex to grow up continuously. The limited market growth opportunities at home was the...
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...GHEMAWAT JOSÉ LUIS NUENO ZARA: Fast Fashion Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind. — Georg Simmel, “Fashion” (1904) Inditex (Industria de Diseño Textil) of Spain, the owner of Zara and five other apparel retailing chains, continued a trajectory of rapid, profitable growth by posting net income of € 340 million on € revenues of € 3,250 million in its fiscal year 2001 (ending January 31, 2002). Inditex had had a heavily € oversubscribed Initial Public Offering in May 2001. Over the next 12 months, its stock price increased by nearly 50%—despite bearish stock market conditions—to push its market valuation to € 13.4 € billion. The high stock price made Inditex’s founder, Amancio Ortega, who had begun to work in the apparel trade as an errand boy half a century earlier, Spain’s richest man. However, it also implied a significant growth challenge. Based on one set of calculations, for example, 76% of the equity value implicit in Inditex’s stock price was based on expectations of future growth—higher than an estimated 69% for Wal-Mart or, for that matter, other high-performing retailers.1 The next section of this case briefly describes the structure of the global apparel chain, from producers to final customers. The section that follows profiles three of Inditex’s leading international competitors in apparel...
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...I – Company Profile (ZARA: The Technology Giant of the Fashion Word) Historical Background Zara is the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega. The first Zara store opened in 1975 at A Coruna, Spain. Its first store featured low-priced lookalike products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega started opening more Zara stores in Spain. During the 1980s, Ortega started changing the design, manufacturing and distribution process to reduce lead times and react to new trends in a quicker way, in what he called "instant fashions" or “fast fashion”. The company based its improvements in the use of information technologies and using groups of designers instead of individuals. In 1988, the company started its international expansion through Porto, Portugal. In 1989 they entered the United States and in 1990 France. This international expansion was increased in the 1990s, with Mexico (1992), Greece (1993), Belgium and Sweden (1994), etc. until the current presence in over 70 countries. Zara stores are company-owned, except where local legislation forbids foreigner-owned businesses. In those cases, Zara franchises the stores. III – Questions for Discussion 1. As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase. - Zara makes about 40% of their raw material (fabric). The remaining 60% is outsourced from within Spain, mostly from the...
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...Zara Zara is one of the world’s most successful and dynamic apparel businesses. It is the flagship of Inditex, a vertically integrated retail and manufacturing group based in Galicia in north-west Spain. The first Zara store opened in the city of La Coruna in 1975, the brain child of Amanico Ortega, owner of a small clothing factory. Ortega was looking for a better way to run his business, one which would avoid the inefficiency of making clothes that might not sell. In the intervening decades more than 600 Zara stores – most owned directly by the company – have opened throughout Spain and 43 other countries worldwide. Zara produces and sells highly fashionable apparel for men, women and children, but its core customers are fashion conscious 18 – 35 year-old women. It offers them the very latest design trends at affordable mass-market prices. Physical product quality is good enough to see out the season, but not necessarily longer. By then the same customers will have moved on to the next “hot” look. The customers are loyal, frequent shoppers who visit a Zara store on average 17 times per year. To retain their interest, stock is constantly varied and updated. New deliveries arrive on a twice weekly basis. Few products are available in store for more than a month, adding a sense of exclusivity and urgency to buy. The stores themselves are sited in fashionable prestige locations; their interiors are smart, fresh, modern and regularly refurbished to retain their contemporary...
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