Your SlideShare is downloading. ×
Zara
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply
0 Comments
4 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
7,883
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
278
Comments
0
Likes
4
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • Centre at HQ consists of three spacious halls—one each for women's clothing lines, men's, and children‘sZara makes a point of running three parallel, but operationally distinct, product families. Accordingly, separate design, sales, and procurement and production-planning staffs are dedicated to each clothing line. Though it's more expensive to operate three channels, the information flow for each channel is fast, direct, and unencumbered by problems in other channels—making the overall supply chain more responsive The physical and organizational proximity of the three groups increases both the speed and the quality of the design processThe cross-functional teams can examine prototypes in the hall, choose a design, and commit resources for its production and introduction in a few hours, if necessary
  • Centre at HQ consists of three spacious halls—one each for women's clothing lines, men's, and children‘sZara makes a point of running three parallel, but operationally distinct, product families. Accordingly, separate design, sales, and procurement and production-planning staffs are dedicated to each clothing line. Though it's more expensive to operate three channels, the information flow for each channel is fast, direct, and unencumbered by problems in other channels—making the overall supply chain more responsive The physical and organizational proximity of the three groups increases both the speed and the quality of the design processThe cross-functional teams can examine prototypes in the hall, choose a design, and commit resources for its production and introduction in a few hours, if necessary
  • Transcript

    • 1. Strategy Analysis & Implementation
    • 2. About ZARA• Founded in 1975 by Amancio Ortega andRosalía Mera• It is the flagship chain store ofthe Inditex group• The fashion group also owns brands suchas Massimo Dutti, Pull and Bear.•Total of 1659 stores, majority in Europe•This Brand has different styles, from dailyclothes, to casuals up to formals, therebyproviding a complete one stop fashionsolution for women, men and children.
    • 3. Strategy AnalysisZARA focus uses on the HybridModel of Strategy .The brands product developmentcapabilities results in fasterdeliveries.Brands differentiation lies in thefact it delivers products of highquality at relatively low prices.
    • 4. Strategy Analysis Pressures for local responsiveness Low High Localization Low International Strategy strategyPressures for cost reductions Global Transnational High standardization strategy strategy • ZARA reaps cost reduction benefit from Economies of Scale • NO customization in marketing strategy, spends 0.3% of total revenues • Low Cost & High Quality Strategy on Global Scale • Zara did not follow any localization in the countries where it was present and provided only standardized products.
    • 5. Strategy Analysis • Compete in existing market place •Beat the competition •Exploit existing demand •Created Strategic Differentiation through excellent delivery system and low cost
    • 6. Strategies ImplementedLow priced lookalike products of more popular, high endfashion brand at affordable prices.How does ZARA achieve this ??Fresh fashion: 3 pillars - Short Lead time = More fashionable clothes - Lower quantities= Scarce supply - More styles = more choice, more chances of getting it right Amancio Gaona, regarded clothes as a perishable commodity, just like vegetables. “Rather than making products that can be stored in Cupboards, I have build a retail business that provides freshly baked clothes!!”
    • 7. Strategies Implemented 3 pillars supported by certain other values – •Ownership and Control of Production •Centralized Design and Production Centre •“React rather than predict” Philosophy •Information Technology Excellence Core Competence: Supply Chain Management
    • 8. Short Lead Times: Keeping up with fashion • By focusing on shorter response time the brand ensure that stores have the products that the consumer want as that time • Zara can move from identifying a trend to having clothes in its stores in 30days. • Other take 4 – 12 months and hence they try to forecast trends rather than adopting a trend • A large design team is dedicated towards identifying the prevailing trends and designing styles to match those trends Market research Trendidentification • Basis for Competitive advantage Sales reporting • Co ordination between sales managers and design team • Strong MIS system
    • 9. Reducing Risk: Lower quantities• Reducing the quantity manufactured in each style• Reduces exposure to any single product and also createsartificial scarcity• With all things fashionable, the less its availability, the moredesirable it becomes More Choice• 12000 styles a years – once a style sells out, a new style isready to take up space• Merchandise is delivered to store twice a week – new stockevery 3 – 4 days
    • 10. Ownership and Control of Production• 80% of Zara’s production is carried out in Europe, muchwithin a smaller radius from its HQ in Spain• Gives control, however cost around 10 times more than thatof Asia• Inditex is a vertically integrated group, with up to dateequipment for fabric dyeing, processing, cutting and garmentfinishing• The group has processing capacity available ‘on demand’ toprovide the correct fabric for new styles• Does not own the stitching but controls it through a networkof subcontracted workshops in Spain and Portugal
    • 11. Centralized Design and Production Centre• The physical and organizational proximity of the three groupsincreases both the speed and the quality of the design process•The cross-functional teams can examine prototypes in thehall, choose a design, and commit resources for its productionand introduction in a few hours, if necessary
    • 12. Centralized Design and Production Centre•Centre at HQ consists of three spacious halls—one each forwomens clothing lines, mens, and children‘s•Zara makes a point of running three parallel, but operationallydistinct, product families.• Accordingly, separate design, sales, and procurement andproduction-planning staffs are dedicated to each clothing line.•Though its more expensive to operate three channels, theinformation flow for each channel is fast, direct, andunencumbered by problems in other channels—making theoverall supply chain more responsive
    • 13. Supercharged Product Development Designing• Information from • Each style would visiting give 200,000 of colleges, discos to • Designing team retail sales (far less observe what based in Spain – than other retailers) people are wearing 1000 new styles/ • Cost realized by• Daily feedback from month higher margins stores and sales • Employ 200 people report • Each person to Market produce 2 styles a Product Research week Development
    • 14. React rather than predict• Built its business around reacting swiftly ratherthan forecasting•Market research helps it analyze the wants of thecustomer• Typically takes one month to make that products• A traditional models takes around 9 – 12 monthsto manufacture a new design• Reduction in lead time is important for theindustry since fashion changes very quickly• Forecasting is done on procuring the rawmaterial, which is a safer bet since it can be usedfor all kind of clothes
    • 15. Keeping Costs Down• None of Assembly workshops owned by company•Average salary of a seamstress in the workshop lessthan $ 500 a month•Zara relies more on having prime location for storesrather than advertising•Zara spends 0.3% of sales revenue on advertisingcompared to competitors , spending 3.5 %•Strategy of low volume per style , & quick changing ofproducts reduces costs•Two clearly time-limited sales during the year ratherthan constant mark downs•Strategy of following designer collections means lowspending on product development & design
    • 16. Quick Bake recipe• Beginning of Zara is responding to actual needrather than forecasting for a distant future•Based on store demand , designers conceptualizenew garments•Since fabrics already at Zara warehouses , samplingtakes very little time•Approvals taken quickly as entire team in sameplace•Cutting done in high tech automated cuttingfacilities, assembly in small workshops in northernPortugal, taking no more than a few days•Garments shipped to stores within 48 hours
    • 17. Information Technology Excellence
    • 18. Information Technology Excellence Advanced IT helps the Designers access this information to beInformation collected information in real accessed by alland fed into the time productiondatabase departments State of art distribution management Products are functions with minimal human stored in IT intervention. Optical reading devices sort enabled out and distribute more than 60,000 items Warehouses in an hour
    • 19. Increasing sales per unit
    • 20. Inventory Management• Production centers: Location Production share Spain 50% Rest of Europe 24% Asia 26%• Each retail center is sourced from the near by production centre, thereby reducing the procurement time• Each center is closely linked with the network of the Inditex groupthereby not compromising on the quality of the products
    • 21. The Zara Supply Chain• Shortened conventional supply chain from 5-7 months to 2.5 months•Small and frequent shipments keep inventory fresh & scarce, thusmaking customers come back again to see whats new•Twice a week deliveries to replenish stock•Lines that are not selling well are quickly removed & popular itemsreplenished•A quick turn around on merchandise helps generate cash, reducesinventories and eliminates the need for significant debt•In house IT simple & effective Vendors and suppliers report that people are accessible and answers canbe obtained quickly.Controlling Bottlenecks :a large investor in a dye and finishing plant—a notorious bottleneck. Itscontrol allows them to oversee the dyeing processMostly uses contractors for sewing process
    • 22. Global Level Strategy• Exporting: Zara exported its products to afew markets where opening up amanufacturing facility would not have beenprofitable•Franchising: Zara also opens up stores invarious locations through franchised dealsavoiding development costs•Wholly Owned Subsidiaries: To takeadvantage of the controls that it couldexercise in those countries.•Joint Ventures: Over a period of time Zaraentered various markets by forming JointVentures to take advantage of the partnersknowledge of the foreign country.
    • 23. Peer Comparison: Customer Perception-Benetton perceived to be high price& does not deliver on fashion content-Benetton is more known for itscontroversial ad campaigns thanlatest designs -Zara is in tune with Price + customer. Latest trends & tastes -It is perceived as high fashion at Fashion - Fashion + affordable rates Price -
    • 24. Peer Comparison: Customer Perception Zara BenettonPrice Lower- Middle Middle- HighQuality Middle – High Middle High“Fashion” Content High LowTarget Age Group 10- 40 years 15- 40 yearsType of Clothing From Casual to formal CasualBrand Recognition Under Development High & GlobalProduction 60% in house, 40 % In House outsourcesProduction lead time Low High
    • 25. Why did it work? Zara gain competitive advantage by: Short Lead Time More fashionable & trendy clothes Lower Quantities - create artificial scarcity - leaves not much to be disposed at end of year saleVertical integration : -Total on all activities from production, sourcing to distribution to retail stores -Focus on building of brand image & product image
    • 26. Why did it work?Information Technology – -Collection of info in consumer needs -Trend info flows daily & designers act accordinglyDistribution management: -distribution facility functions with minimal human intervention to ensure each order reaches its right destination. -Optical reading devices sort out and distribute more than 60000 items of clothing an hour.
    • 27. So What do we learn From ZARAZara Strength lies in its Supply Chain Management dared to move away from the traditional model ofapparel brands : Adopt Prevailing trends rather thenCreateBrands philosophy helps it to generate revenuefrom regular prices rather than discount pricesStrong MIS insures swift & effectivecommunication throughout all departments
    • 28. Recommendations for the Brand  Designer collaborations could help the brand move into newer markets  Different trends in the local markets  Develop its e-commerce site Zara.com further to enhance customer engagement & shopping experience  By leveraging on Social Media platforms Maintain its hold on the production & distribution system. This is the base that makes Zara as a brand effective & must not be allowed to be diluted by way of increase outsourcing.
    • 29. Thank You ! Group 7 : Akshat Jain Kartikey Bhargava Mahima Walia Sidhansh Kakkar Rishi Shah

    ×