Microsoft power point zara strategy case

2. There are three steps to being a successful fashion
company
1. Make clothes that people want to wear
2. Sell enough clothes for more than you made them
3. Do it again, and again, and again

3. Analysis of Competitive advantage
Inventory management
• Focus on reducing response time
• Launched approximately 11,000 new items per year, compared
to 2,000 - 4,000 for H&M and Gap
• Zara holds 6 days worth of inventory, while H&M holds 52
days, and Spanish retailer Cortefiel holds 94 days of inventory

4. Transportation
• Effective and efficient transportation network
• Fast delivery time
• Coordinates with all aspects of logistics
• Quick response in supply chain
• Ability to distribute merchandise within 2
weeks
• Final step in order fulfillment
• Promotes service quality

5. Technological advantage
Technological advantage through the use of a very effective and artificial
information system integrated into its stores. On a daily bases, store
managers provide feedbacks to the system about costumers behaviour
and wanted styles. Thus, in-house designers have updated information
and get down to patterns quickly, those will be sent to the factory and
get produced in a short period of time.

6. Variety of products
As it does not define its target by segmenting ages and lifestyles, it has an
advantage over traditional retailers by having a much broader market. It is
targeting both genders, adults and children alike; providing them with clothes,
accessories and shoes. Even broader, it has home furniture segment, where
rugs and home accessories are sold.

7. Prime locations
Zara does not spend much on advertising (0.3% of revenue)
compared to traditional retailers (up to 5%), Zara reach’s its target
market by locating their stores in busy locations.

8. Value chain

9. 1. R&D
 300 designers design more than 11000 items
per year compare to 2000 to 4000 by rivals
 Zara has developed a supply chain
which is efficient of getting a trend
from the catwalk to the stores in
period of one month, while it takes
from four to twelve months for its
company competitors.

10. 2. Production
 Suppliers are all close to their
factories
 The majority of Zara’s
production sites are based in
Spain. Zara has resisted the
trend to outsource to East Asia
where costs of production are
lower.
 Just In Time production
reduces storage costs

11. 3. Marketing and Sales
 The stores are always located in prime locations of
the city and have attractive window displays
 Marketing and sales is based on delivering products
that match customers' tastes and preferences and
exceed their expectations in terms of design, service
and quality.
 Twice a week supply to every Zara store possible that
causes rapid product turnover
 Minimized marketing spending: less than 1%
compared to 3-4% of competitors

12.  The exchange of
information
between store
managers and the
designers and
production staff
helps research full
range of costumers
preferences.
 The level of
customer service at
Zara is taken very
seriously. Zara aims
to provide a high-
end store
consumer
experience whilst
selling their
clothing and
accessories at
affordable prices.
4. Customer service

13. 3. Generic Building blocks of
competitive advantage
Example of Zara

14. Building blocks of competitive advantage
Competitive
advantages:
- Low;
-
Differentiation.
Superior quality
Superior
customer
responsiveness
Superior
innovation
Superior
efficiency

15. Superior efficiency
•High-performance
workforce.
•Quickly update the
collection.
•Operational
management.

16. Superior quality
•Collections were created ,
extended and modified over
time.
•Ability to design and finish
goods in stores till two weeks.
•Ability to launch new trends,
design and variation of
product.
•Zara is cheaper price than
Benetton and GAP , and still
being fashionable.

17. Superior customer responsiveness
•The devise team of
Zara has skills to
produce the clothes
according to the
needs of the
consumer at the
current moment.
•Fast feedback.

18. Superior innovation
•18 000 new
products designs a
year

19. Analysis of Competitive Advantage and Profitability
Competitive advantage is defined as superiority of an
organization with regard to at least oneproduct attribute over relevant
competitors. When a firm sustains profits that exceed the averageof its
industry, the firm is said to possess a competitive advantage over its
rivals. The goal ofbusiness strategy is to achieve a sustainable
competitive advantage, which is very difficult task. Fashion industry is
very competitive and subject to rapidly evolving fashion trends.
Inside a business model we can see a strong vertical integration
and wellorganized supply chain, which combined with organizational
structure gives to Zara flexibility torespond, adapt and deliver
merchandise faster than its competitors. Unlike their competitors
suchas H&M, Mango, United Colors of Benetton in Europe, Zara has
disintegrated decision-makingmodel. And above all, the price of
merchandise is affordable.

20. Analyze the internal environment of the Inditex
(Zara)
Analyze the internal environment of the Inditex (Zara) structured in a
series of four questions:
1) Question of Value
2)Question of Rarity
3) Question of Imitability
4) Question of Organization

21. 1) Inditex rather as a combination of resources, so themost valuable resource we
would put is the vertical integration. Instead of relying on thirdparties, the
company manages all design, warehousing, distribution and logistics function
itself.Doing that they are more flexible and faster than competitors and we know
what these two wordsmean in apparel industry. Along with the vertical
integration which also reduces operating costsit has excellent conceived
organizational structure and values that all employees must respect.The reward is
great autonomy that store managers have. Some skeptic persons could ask
whetherthis value could be used in future? Our answer is probably yes, as Zara
carefully follows changesin consumer tastes and due to flexibility and speed it
can adapt. Second justification could be thatit follows world trends and it might
outsource more from Asian markets to reduce its costs.
2)Zara is able to produce new items anddeliver them to its stores in less than
three weeks rather than the average six months needed for luxury brands and in
terms of production, but in a typical season it produces about 11000
differentitems while competitors would produce typically between 2000 and
4000.

22. 3)Nowadays almost everything is imitable. Thequestion is how long it takes
to imitate. In the case of Inditex we freely assume that ifcompetitors were
to copy Zara business model, they could, but only in a long run. It would
take afew years to establish vertical integration model with that kind of
supply chain and even more tocreate organizational structure (culture) that
Zara has. We should also take into considerationenormous costs that those
firms would incur in order to copy the model, which are oftenimpossible
for firms to incur. Although if this is supposed to happen, we think that in
meanwhileZara would probably progress more in other segments, because
as we saw they make smallchanges very often.
4)If we look at the annual reports we can see that they areconstantly
increasing sales and profits. Merit for this goes to top management, but
also to everyindividual engaged in every process of Inditex. We shouldn’t
forget that section managers haveautonomy and that they together with
the DT’s, HR managers and commercials contribute tosuccess. Here lies
their strength. Possibility of coordinating all those people despite the fact,
thatthey have some kind of autonomy in decision-making process.”1917
Although Inditex combines it also with labor – intensive industry ( doing
that they are more flexibleand faster in producing garment )

23. How dynamic is the industry
• Zara is in a fast changing fashion industry
• Manufactures fashion-sensitive products
internally
• Zara re-invents to maintain the ever changing industry
• Designers pay close attention to customer feedback

24. Barriers to Imitate
 Quick response system- composed of human resources and information technology
• Accelerated IT software for the transfer or design and communication
• High company attributes- means beneficial employee package
• Maintains secrecy of computer network linking System
• Vertically integrated

25. Zara’s industry life cycle

26. Thank you for attention