Zara is expanding its global market by decentralizing operations and intensifying its franchise model. It plans to enhance operations through a new operating model that includes localized plants and logistics in Vietnam and future locations to access lower costs and trends. Maintaining cultural values and open communication will be important as the franchise model is reinforced in new Asian markets.

1. ZARA
Introduction
Contents
- SWOT Analysis
- New Operating Model
- Operation Enhancement
Conclusion
Premier 13 / Cairo

2. Zara 21st Century Task Force:
Zara global & Franchise Culture |
Search
Value Chain Expand Global Market
- No inventory - Decentralization
Operational Efficiency Intensify Franchise
- Vertical integration - Conditional integration
Culture Culture
- Open communication - Spread innovation
- 20th - - 21st -

3. Analysis Current System SWOT
S W
Overdependence on the
Vertically integrated European market
Short turnaround period Low cost competitiveness
Strategic initiatives to expand
international presence Local/Global Competitors
Positive outlook for Asia- Economic slowdown in Euro
Pacific apparel retail market
O T

4. New Operating Model
Spain HQ Vietnam Branch
From Sourcing to Sale Same organization
Planning - In-house & sub-contracting manufacture
Marketing for trendy garments
- create quality control organization
Design
Sourcing Sourcing
Mfg Mfg Only Trendy
Distribution Distribution
Sales Sales

5. New Operating Model Supply management
 Local Supplier @Vietnam
 Low Cost Fabric (China / Vietnam)
 Material transportation fee ↓
 Quality
 In-house Dyeing system
 Producing Equipments, Dye, etc from H.Q.
*. Quality Management Team to Fabric/Assembling (like HQ)
Local Garment
Supplier Fabric In-House Manufacture pieces
Out-
Dyeing Cutting Assembly sourced
H.Q. Dye Sewn &
Assembled
< Vietnam >

6. New Operating Model Manufacture/Logistics
 Manufacture at Asia
 Closer to the Asian Retailer & Quick Response – Geographical advantage
 Lower cost garments – Low labor cost & transportation fee
 Simplify Logistics @ Europe / Asia
 Europe & East America @Spain
 Pacific region (Asia, West America) @Vietnam
Trendy & Basic
Trendy
Basic
Manufacture Plants
Distribution Center
Retails

7. New Operating Model
Future Expansion
 Establish New Base Camp for Southern Hemisphere
 Where? Chile
 What? Manufacturing, and distribution center
 Why? Lower labor cost, politically stable, pacific cost
 When? 2 years later
 How? Following the Vietnam system Brand Turnover Area
Pull & Bear 161 154
 Strategy to implement ZARA system to Sister Brands
Massimo 184 182
 Integrate manufacturing, distribution system
Bershka 125 347
 Increase hypermarket & department store sales
 Create & operate Inditex shop Stadi 67 212
 Implement Zero inventory strategy ZARA 2,422 908

8. Operational Enhancement
Conditional Disintegration
 New Policy for New Market
 Adopt franchise policy for Asian market
 Maintaining Cultural Value
 Reinforce education system for franchise owner
 Free communication channel between local production manager & HQ
HQ
Edu/Design Edu.
Feedback Trend
Feedback
VB FO
Goods

9. Summary – Asian/Pacific market
• Localized Plants (Trendy) & Logistics
Model • Market coverage : Asia / Pacific (west USA)
• Secure raw Material
Benefit • Lower cost Manufacture & Distribution
• Access easily “Market Trend” @Asia
Concern • Franchise : keep culture & reinforce communication