Quality Management ZARA

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Quality Management ZARA

  1. 1. An Introduction of Quality Management Studies // Lecture: Dr. Ir Hazmand Zusi MSc. // Trisakti Master Management 2010 Case Study : Presented by: Abraham Ardiles Firmans Nur Gafy
  2. 2. ZARA is the flagship chain store of Inditex Group owned by Spanishtycoon Amancio Ortega , who also owns brands such as MassimoDutti, Pull and Bear, Oysho, Uterqüe, Stradivarius and Bershka. Thegroup is headquartered in A Coruña, Spain, where the first ZARAstore opened in 1975.It is claimed that ZARA needs just two weeks to develop a newproduct and get it to stores, compared with a six- month industryaverage, and launches around 10,000 new designs each year. ZARAhas resisted the industry-wide trend towards transferring fast fashionproduction to low-cost countries. Perhaps its most unusual strategywas its policy of zero advertising; the company preferred to invest apercentage of revenues in opening new stores instead. About ZARA ZARAAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  3. 3. About ZARAThis case focuses on the Spanish retail giant,Inditex and how its largest retail chain ZARAhas been so successful through its simplebusiness model of speed, flexibility, and highfashion. As of 2002, Inditex operated sixseparate chains: ZARA, Massimo Dutti, Pull &Bear, Bershka, Stradivarius, and Oysho.ZARA developed a business model thatincorporated the following three goals forOperations :1. Develop system the requires short lead times2. Decrease quantities produced to decrease inventory risk3. Increase the number of available styles and/or choiceAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  4. 4. AGENDA : Competitive Advantage, Strategies and Objectives International Strategy : • Market Selection • Market Entry • Marketing approach Financial Position Compare to Competitors SWOT Analysis Resolution to Grow the ZARA chain in bestAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  5. 5. Amancio Ortega Gaona, the founder of Inditex,thought that consumer would regard clothes as aperishable commodity just like yoghurt, bread or fishto be consume quickly, rather than stored incupboards, and he has gone about building a retailbusiness that provides “freshly baked clothes” Competitive Advantage, Strategies & Objectives ZARAAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  6. 6. Competitive Advantage, Strategies and Objectives : Competitive Advantage : • Cost Leadership • Fashionable (quality) at reasonable product • Based on Product Positioning : “ZARA is cheaper price than Benetton and GAP, and still being fashionable” • 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.An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  7. 7. Competitive Advantage, Strategies and Objectives : (cont’d) Competitive Advantage : • Low Level of Inventory • Efficient Distribution System • Turnover of Product is HighAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  8. 8. Competitive Advantage, Strategies and Objectives : (cont’d) Objectives : • Maximize Profit • Maintain and ability to go further fashionable (quality) at reasonable price  ZARA positioning Transform Before Objective/Expectation + Price + Price + + - ZARA fashion - Fashion ZARA - - (New)An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  9. 9. Competitive Advantage, Strategies and Objectives : (cont’d) Strategy : ZARA are placed on board market scope. ZARA provided cost leadership and differentiation strategy combined it to win the competition. ZARA compete at reasonable price by build cost leadership startegy, 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). Narrow Segmentation Market Strategy Scope Broad Differentiation Cost Market Strategy Leadership Scope Uniqueness Low Cost Competency CompetencyAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  10. 10. Competitive Advantage, Strategies and Objectives : (cont’d) Objective : Continues & posibly to go further with time cycle of generate design, finishes product & distribute it. Creative Departments; Three areas, Delivery; garment s Samples; prototypes 200+ staff Arrive in store within Made in-house and 48 hours of ordering By suppliers Design, Product And market Cycle; Shipping; from Mattress; material for Logistics centres to Final design : 1 day Garments laid out in stores, road & air Manufacture : 3-8 days layers and marked Transport : 1 day Selling : 17-20 days Total : 22-30 days Finishing; garments Cutting; a machine Are pressed, dressed Cuts the fabric according and quality checked Sewing; cut fabric is To the patterns Shipped to workshops to be stitchedAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  11. 11. Competitive Advantage, Strategies and Objectives : (cont’d) Strategy : Value Chain Framework MIS Production Objectives Marketing DesignAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  12. 12. Competitive Advantage, Strategies and Objectives : (cont’d) 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 • 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 new trends • Ability to Produce New Design & TrendAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  13. 13. Competitive Advantage, Strategies and Objectives : (cont’d) Value Chain : MIS Production : Store Store MIS Factory & distributor Store Store Inventory Store Check the Material availability then deciding How much this Close watch product will be On trend and Produce Buying Behaviors Commercial Team Marketing : Design Market Research MIS & designer and Analysis MISAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  14. 14. ZARA was described by Louis Vuitton fashion director DanielPiette as "possibly the most innovative and devastatingretailer in the world." ZARA has also been described as a"Spanish success story" by CNN International Strategy ZARAAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  15. 15. International Strategy : ZARA International Strategy : • Good In International Strategy • Combined of Strategy : • Cost Leadership is usualy capture in mass production (mass product, less differentiation)  Standardization • Differentiation Strategy is ussualy capture to produce goods that has more value added  fashionable, fast delivery  customization • Good Consideration in market sellection , marketing, and market entryAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  16. 16. International Strategy : (Cont’d) ZARA International Strategy : Market Sellection International Marketing Market Entry Strategy ApproachAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  17. 17. International Strategy : (Cont’d) Market Sellection: • Consideration • Labor cost and productivity, distribution cost and shipment cost of raw materials (suppliers) Labor Cost Value added EU Countries German 18 23 Spain 7 11 Italy 14 20 Portugal 4 6 UK 11 13 Major Suppliers Turkey 2 12 China 0,4 na India 0,4 2 Egypt 0,7 2 Others Major Market US 10 20An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  18. 18. International Strategy : (Cont’d) Market Sellection: • Consideration • Characteristic or behavior of Consumers Country Character of Consumers French More Fashionable (Quality Oriented) German Price Sensitive Italian More Fashionable USA Less Trend Japan More Trendy British Stores Based on Social AffinityAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  19. 19. International Strategy : (Cont’d) Market Entry: Economics Factor Market Entry Market Entry Government Consideration Barriers FactorsAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  20. 20. International Strategy : (Cont’d) Market Entry: • Consideration • Economics • Macroeconomics Factor : • tax, political condition, export tariff • Microeconomics Factor : • Local Competitors • Demand • Location of Store • Government • Regulation from Government • Barriers • Local producers protection issuesAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  21. 21. International Strategy : (Cont’d) 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 storesAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  22. 22. Financial PositionCompare to Competitors ZARAAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  23. 23. Financial Position Compare to Competitors: At the end of 2001, ZARA operated 507 stores around the world (40% of Inditex), posted EBIT of 441M Euros (85% of Inditex), and sales of 2,477M Euros (76% of Inditex). Currently, H&M is Inditex’s major competitor. The ratio analysis below shows H&M and Inditex’s competitive standing in the industry. GAP H&M Benetton Inditex Net Margin -0.06% 9.60% 7.05% 10.46% Asset Turnover 1.82 1.96 0.74 1.25 ROA -0.11% 18.78% 5.25% 13.05% ROE -0.27% 24.85% 11.93% 22.88%An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  24. 24. SWOT Analysis ZARAAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  25. 25. SWOT analysis: Internal Factor Analysis : Weight Strength Weight Rating Score Cost Leadership (Standardization) 0,2 4 0,8 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, 0,3 4 1,2 Design & Trends Weaknesses Centralized Distribution System 0,1 3 0,3 TOTAL 1 5,4An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  26. 26. SWOT analysis: External Factor Analysis : Weight Opportunities Weight Rating Score Global market penetration 0,2 4 0,8 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 3,35An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  27. 27. Resolution to grow the ZARAchain in best ZARAAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  28. 28. Resolution to grow the ZARA chain in best : • Change the system • Centralized  Transform  Decentralized • Build decentralized distribution & Production in each region (Asia, Europe & America, more is better) to highly penetrate new market & trend to decrease the complexity of process • Moreover, would tend to fastest in producing new product (design, production & distribute) • Keep maintain the value chain, nothing to change but it should be expanded in each district/regionAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  29. 29. Resolution to grow the ZARA chain in best : Value Chain in each Region : MIS Production : Store Store MIS Factory & distributor Store Store Inventory Store Check the Material availability then deciding How much this Close watch product will be On trend and Produce Buying Behaviors Commercial Team Marketing : Design Market Research MIS & designer and Analysis MISAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010
  30. 30. Terima kasih Thank You Vielen Dank ありがとう Gracias 감사합니다 ZARAAn Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

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