Zara Case Study

Slide 1: ZARA Case Study

Slide 2: You can download this presentation at: www.greatlesson.com Please visit www.greatlesson.com for more presentations on marketing, strategy and case solution

Slide 3: AGENDA Competitive advantage, Strategies and  Objectives  International Strategy Market selection • Market entry • Marketing approach • Inditex’s Financial Position Compare to  Competitors  SWOT Analysis  Resolution to grow the Zara chain in best

Slide 4: Competitive advantage, Strategies and Objectives Competitive advantages   Fast Production • Ability to design and finish goods in stores within 4 to 5 weeks. • Very quick to get designer-influenced products into their stores.  Product variation • Ability of Zara to launch new trends, design and variation of product.  Cost leadership • Fashionable (quality) at reasonable product. • Based on product positioning: Zara is cheaper price than Benneton and GAP, and still being fashionable.

Slide 5: Competitive advantage, Strategies and Objectives  Competitive advantages  Low level of inventory  Efficient distribution system  Turnover of product is high

Slide 6: Competitive advantage, Strategies and Objective Objectives   Maximize profit Maintain and ability to go further • fashionable (quality) at reasonable price  Zara positioning

Slide 7: Competitive advantage, Strategies and Objective Transform Before Objective/expectation + + Price Price + + - Fashion Fashion ZARA ZARA (new) - - -

Slide 8: Competitive advantage, Strategies and Objectives •Porter’s Generic Strategy:

Slide 9: Competitive advantage, Strategies and Objectives • Porter’s Generic Strategy: Zara are placed on board market scope. Zara provided cost leadership strategy and differentiation strategy, combined it to win the competition. Zara compete at reasonable price by build cost leadership strategy, so even they set at reasonable price they still could gaining reasonable margin. And develop differentiation strategy, in this case ability Zara to design and finishes product within 4 to 5 weeks (unique competences).

Slide 10: Competitive advantage, Strategies and Objectives • Objective • Continues and possibly to go further with time cycle of generate design, finishes product and distribute it.

Slide 11: Competitive advantage, Strategies and Objectives “Fastest” 4 to 5 weeks Transform

Slide 12: Competitive advantage, Strategies and Objectives • Strategies Value Chain Framework MIS Production Objectives Marketing Design

Slide 13: Competitive advantage, Strategies and Objectives Strategies   Production & Distribution Maintain quality • Cost leadership • High bargaining power to supplier • Distribution system  Fast distribution •  Marketing Market penetration • R&D • Market, location of stores, consumers behavior analysis •

Slide 14: Competitive advantage, Strategies and Objectives  MIS (management information system) Order information flow  stores’ ordering system • Improving inventory system • Product distribution system •  Design Coordinate with R & D and also with stores itself to get • the new trends Ability to produce new design and trend •

Slide 15: International Strategy • Market Entry  Consideration • Economics – Macroeconomics Factors: » Tax, political condition, export tariff. – Microeconomics Factors: » Local competitors » Demand » Location of store • Government – Regulation from government • Barriers – Local producers protection issues

Slide 16: International Strategy • Marketing Approach – Consideration • 4 P consideration  Product, price, promotion and placement. Each country has different marketing approach. – Product  local preferences, design, trends. – Price  different pricing strategy for each country. For example: Italy and Paris has no problem for price but quality-oriented, but German has sensitive price. – Promotion  different promotion strategy for each country. – Placement  efficient distribution, location of stores

Slide 17: SWOT Analysis Internal Factors Analysis Strength Weight Rating Weight score Cost leadership strategy 0.2 4 0.8 (standardization) Different Strategy (customization, 0.2 4 0.8 unique competences) Efficient distribution 0.1 3 0.3 Information Tech 0.1 2 2 Fast delivery of new products, design 0.3 4 1.2 and trends Weaknesses Centralized distribution system 0.1 3 0.3 TOTAL 1 5.4

Slide 18: SWOT Analysis External Factors Analysis Opportunities Weight Rating Weight score Global market penetration 0.3 4 1.2 Online market 0.1 2 0.2 Distribution center in the US 0.05 2 0.1 Threats Local Competitors 0.1 3 0.3 Global competitors 0.3 4 1.2 Product cannibalism 0.05 1 0.05 Lack of vertical integration 0.1 3 0.3 TOTAL 1 3.35

Slide 19: Resolution to grow the Zara chain in best MIS Value Chain Production: in each MIS Factory Store Store region & Distributor Store Store Inventory Store Check the material Close watch availability on trend and Than deciding buying how much this behaviors product will be produce Marketing: Market MIS MIS Commercial team Research and Design & Designer analysis MIS

Slide 20: Resolution to grow the Zara chain in best • Change the system: • centralized  transform decentralized – Build decentralized distribution and production in each region (Asia, Europe and America, more is better) to highly penetrate new market and tend to decrease the complexity of process. – Moreover, would tend to fastest in producing new product (design, production and distribute) – Keep maintain the value chain, nothing to change but it should be expanded in each district/region.