Zara is considering expanding internationally and must decide which new market to enter. It is analyzing entering the Chinese market starting with Shanghai. China represents a large opportunity due to its growing population and rising disposable incomes. Fast fashion is popular in China and production costs are lower there and in Bangladesh where Zara could source garments. The recommendation is for Zara to set up a joint venture in Shanghai, use an "oil stain" approach to expansion, source from Bangladesh, and establish a new distribution center in China to enable its expansion in Asia over three years.
The project is a study on how Vertical Integration as a supply chain strategy has worked for Zara in emerging as a fast fashion system. It also focuses on analyzing the competitive advantages and the challenges of implementing Vertical Integration for Zara.
HBR Case Study - Fashion retailer ZARA has achieved spectacular growth via a distinctive design-on-demand operating model. This case describes this model and outlines a number of challenges facing the company, with a particular emphasis on its international expansion. Includes color exhibits.
Case study for Zara for the brand management process; competitors and positioning in the market, brand wheel and 4P strategy and historical development process of the company articulated.
The project is a study on how Vertical Integration as a supply chain strategy has worked for Zara in emerging as a fast fashion system. It also focuses on analyzing the competitive advantages and the challenges of implementing Vertical Integration for Zara.
HBR Case Study - Fashion retailer ZARA has achieved spectacular growth via a distinctive design-on-demand operating model. This case describes this model and outlines a number of challenges facing the company, with a particular emphasis on its international expansion. Includes color exhibits.
Case study for Zara for the brand management process; competitors and positioning in the market, brand wheel and 4P strategy and historical development process of the company articulated.
Zara, the leading clothing and accessories brand based in Spain, is ruling the fashion market for more than 40 years now. Zara now has become synonymous to fast and affordable fashion items.
For ZARA stores to be able to offer cutting edge fashion at affordable prices requires the firm to exert a strong influence over almost the entire garment supply chain.
The presentation is create use as a material to the final case study presentation in Supply Chain class at Faculty of Engineering, Chulalongkorn University.
**All images use in the slide are from google images**
Zara- Case Study
Known for its fast, affordable fashion, retail chain Zara has built up a multi-billion dollar brand through listening and reacting quickly to its customers
H & M COMPANY PROFILE SUPPLY CHAIN MANAGEMENT H&M: Organization of Supply Cha...Ajeenkya D Y Patil
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Founder : Erling Persson
Founded on : 4th October, 1947
Headquarters : Stockholm, Sweden
Products : Clothing, Accessories
Areas served : Worldwide
Industry : Retail
Founder : Erling Persson
Founded on : 4th October, 1947
Headquarters : Stockholm, Sweden
Products : Clothing, Accessories
Areas served : Worldwide
Industry : Retail
Founder : Erling Persson
Founded on : 4th October, 1947
Headquarters : Stockholm, Sweden
Products : Clothing, Accessories
Areas served : Worldwide
Industry : Retail
Founder : Erling Persson
Founded on : 4th October, 1947
Headquarters : Stockholm, Sweden
Products : Clothing, Accessories
Areas served : Worldwide
Industry : Retail
Managing Supply Chain of Zara. It defines what a supply chain is and outlines the steps that makes up the chain. It Explain the factors that affect its design and understands the processes of designing and managing the supply chain. It outline the benefits of effectively managing supply chains
Zara, the leading clothing and accessories brand based in Spain, is ruling the fashion market for more than 40 years now. Zara now has become synonymous to fast and affordable fashion items.
For ZARA stores to be able to offer cutting edge fashion at affordable prices requires the firm to exert a strong influence over almost the entire garment supply chain.
The presentation is create use as a material to the final case study presentation in Supply Chain class at Faculty of Engineering, Chulalongkorn University.
**All images use in the slide are from google images**
Zara- Case Study
Known for its fast, affordable fashion, retail chain Zara has built up a multi-billion dollar brand through listening and reacting quickly to its customers
H & M COMPANY PROFILE SUPPLY CHAIN MANAGEMENT H&M: Organization of Supply Cha...Ajeenkya D Y Patil
Â
Founder : Erling Persson
Founded on : 4th October, 1947
Headquarters : Stockholm, Sweden
Products : Clothing, Accessories
Areas served : Worldwide
Industry : Retail
Founder : Erling Persson
Founded on : 4th October, 1947
Headquarters : Stockholm, Sweden
Products : Clothing, Accessories
Areas served : Worldwide
Industry : Retail
Founder : Erling Persson
Founded on : 4th October, 1947
Headquarters : Stockholm, Sweden
Products : Clothing, Accessories
Areas served : Worldwide
Industry : Retail
Founder : Erling Persson
Founded on : 4th October, 1947
Headquarters : Stockholm, Sweden
Products : Clothing, Accessories
Areas served : Worldwide
Industry : Retail
Managing Supply Chain of Zara. It defines what a supply chain is and outlines the steps that makes up the chain. It Explain the factors that affect its design and understands the processes of designing and managing the supply chain. It outline the benefits of effectively managing supply chains
Strategic issues in Readymade Garments Supply Chain Management: A Study on Mo...Md. Adib Ibne Yousuf
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Course: Strategic Supply Chain Management
Course Code: SCM 6405
Prepared for
Lt Col Md. Tauhidul Islam (Retd.),
Associate Professor, Faculty of Business Studies
Bangladesh University of Professionals
Prepared by: Md. Adib Ibne Yousuf
MBA in Supply Chain Management
Bangladesh University of Professionals
Companies are relocating manufacturing and sourcing to regions with lower labour costs to stay competitive. This affects the efficiency of warehousing and distribution. But which elements, in particular, will be strategically important in the next two years?
Markets are changing â as are customer and service requirements. You may have implemented a new manufacturing and supply chain setup, but customers are asking for more frequent and faster deliveries.
The key to staying competitive is how quickly you can get your products from the warehouse to your customers. This can challenge your operations and calls for a review of your warehouse and distribution setup.
We asked our international clients which themes, within warehousing and distribution, they believe will have the most strategic relevance within the next two years. Here are the top five.
Group project for Global Sourcing and Supply Chain Management in China.
We learned an immense amount about e-commerce and fast fashion to supply chain (turnaround rates, warehouse management, etc).
Crimson Publishers - Who Made Our Clothes Under Which Conditions? A Call for ...CrimsonpublishersTTEFT
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Who Made Our Clothes Under Which Conditions? A Call for Ethical Standards in the Fashion Supply Chain by Anna Kathrin Sebald* in Trends in Textile Engineering & Fashion Technology
When a business goes through significant changes, it's important to take others along with you. Good strategy is important, but execution is table stakes.
3. Executive Summary
3Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
Highly competitive, fragmented $900Bn global apparel industry
ZARA performing well, but Inditex challenged with high growth expectations
Situation
Which market should ZARA enter next and how?Problem
Pursue Asian market, starting with Shanghai, China
Setup JV with local partner, âoil stainâ approach, new distribution centre
Source from China & Bangladesh
Reco
Large market opportunity; population, disposable income growing, trendy fashion
Fast fashion garments at lower price points popular in China
China and Bangladesh has lower labour inputs and rents, cost to manufacture low
Rationale
4. Situational Analysis â Highly competitive, fragmented
$900 Bn global apparel industry (Year 2000)
⢠Buyer-driven apparel global chain â fragmented, research & design
important
⢠ZARA is highly profitable; primary driver of Inditexâs positive results
⢠Inditex (ZARA) challenged by investors expecting high future growth
⢠Many global competitors competing on price/fashion (ex. 1)
⢠GAP
⢠H&M
⢠Benetton
4Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
5. Situational Analysis â Industry trends
⢠30% of worldwide apparel production is exported
⢠50% from developing countries (lower labour costs)
⢠Per capita spending on apparel fairly inelastic as per capita income
grows
⢠Significant local variation in customersâ attributes and preferences
⢠Within a region
⢠Within a country
⢠Differences between regions is greater
⢠Richer communication links affect global and local trends (pop culture)
5Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
6. Core Issue â Marketing and Sales Problem
As ZARA grows internationallyâŚ
Which market should it enter and how?
6Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
7. Situational Analysis â Key Criteria
7
Market selection
Population and market
opportunity, per capita spend
on apparels, design
alterations, local preferences
Logistics /
Proximity to suppliers
Reduce shipping costs and
lags, QR practices, landed
costs, labour input costs, rent
expense
Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
9. Why China - The Golden Opportunity
9Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
⢠2001: China became an official WTO member
⢠Lowered tariff rates
⢠opened its domestic retail and distribution market to foreigners
⢠granted access to funds for new foreign retailers
⢠Shifting towards a market-based economy
⢠rural to urban migration increasing
⢠market segregated into first-tier, second-tier, and third-tier cities
⢠first-tier cities are most attractive â metropolises located along
coast-line
⢠Proximity of cities easy for the Oil Stain strategy
⢠Why Shanghai? Shanghai sets the fashion trend in China
10. 10
Shopping is very important for Shanghai residents
Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
Beijing and Shanghai rank
Shopping as the most important
leisure activity
Shanghai pays more attention
to fashion information
11. Shift in Consumer Trends
11Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
⢠Significant increase in individualâs disposable income
⢠Fast fashion with lower price points becoming extremely popular
⢠Rising number of working women â significant increase in demand for
womenswear
⢠Estimated that womenâs office wear and business casual wear will be
the fastest growing segments
Total Annual Savings (1 RMB = 0.14 EU)
Year 1990 2000 2001 2002 (projected)
Total (RMB Billion) 712 6,433 7,376 9,000
Total (EU Billion) 100 901 1,033 1,260
12. How to move forward
12Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
Joint Venture Strategy
⢠Only 2 types of department stores in China
⢠State-owned
⢠Joint venture
⢠Land is very expensive in China ď hard to secure prime retail space
Source from Bangladesh
⢠Cheaper labour
⢠Looser legislations
Plan to set up new DC in China
⢠Lower costs and ensures JIT
⢠Foundation for Asia expansion
13. Risks & Mitigation
13Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
RISK:
Zara products entering
the black market
MITIGATION:
Hard to imitate trends
and low price points
HIGHLOW
HIGHLOW
RISK:
Failure to create an
impact in China
MITIGATION:
Starting with major
cities. Starting with
Shanghai minimizes
risk
RISK:
Quality of the material
used for production
and risk of âsweatshop
tradeâ and Multi Fiber
Agreement
MITIGATION:
Develop strong
relationship with
suppliers and have strict
regulations against wrong
practices
RISK
MITIGATION
14. Implementation
14Agenda
Executive
Summary
Situation
Analysis
Core Issue
Recommend
ations
Risks &
Mitigation
Implementa
tion
Rationale
Search and finalizing the
location of the flagship
store in Shanghai â
Nanjing Road
Find a Joint
Venture
Partner
Change in marketing
plan depending on
results
Years 1 2
Evaluate the success of
the first store
Find the supplier in
Bangladesh
Advertisements using
European Models
Store launch
Depending on the
success, plan out store
launches in other cities
(SuZhou) or others in
Shanghai
3
Plan to set up a
distribution center
Find distribution
centers to support the
next phase of
expansion
Market Research -
Have people on
the ground to
know the latest
trends
16. 16
Exhibit 1: Product Market Positioning Map
Fashion - Fashion +
Price -
Price +
Benetton
GAP
H&M
ZARA
ZARA: Medium quality fashion
clothing at affordable prices
17. 17
Exhibit 2: ZARA vs. Key Competitors
GAP H&M Benetton ZARA
Production Outsourced Outsourced In-House
40% In-House
60% Outsourced
Production
Lead Times
High High High Low
18. 18
Exhibit 3: ZARAâs Business System
ZARA
Design
Sourcing
&
Manufac
turing
Distributi
on
Retailing
19. 19
Exhibit 4: ZARA Competitive Advantages
⢠Strong business model integration
⢠Decentralized store management; managers determine products to sell
and return or re-distribute
⢠Returns from other stores quickly re-routed
⢠Quick Response (QR pull demand system)
⢠Small batch production due to low product pre-commitments vs.
industry (short forward order book)
⢠High product turnover, limited quantities reinforce âbuy now or lose itâ
⢠Central DC with strong IT system
20. 20
Exhibit 5: Product Pre-commitments; ZARA vs. Industry
S
A
L
E
S
M
A
R
K
D
O
W
N S
S
A
L
E S
15%INTERNAL MANUFACTURING 85%
SEASON
ZARA
M
A
R
K
D
O
W
N S
65% 35%
55%
DESIGN AND RAW MATERIAL
SOURCING
EXTERNAL MANUFACTURING 40-50%
SEASON
DISTRIBUTION AND SALES
Traditional
Industry VISIT TO
EXHIBITIONS
DESIGN
INTRODUCTION
TO COLLECTION
MANUFACTURING
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER 5TH QUARTER