Zara it for fast fashion

INTEGRATED CASE STUDY ANALYSIS OF
ZARA: IT FOR FAST FASHION
BY
UPUL DHAMMIKA SAMANTILLEKE
L0292KDKD0211
ST20017983
|
Presented as part of the requirement for the award of
MBA at Cardiff Metropolitan University (CMU)
|
December 2011

Integrated Case Study Report / MBA3 CS-5/ CMU - ST20017983 / LSC – L0292KDKD0211
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CONTENT
ACKNOWLEDGEMENT IV
EXECUTIVE SUMMARY V
CHAPTER 01 – INTRODUCTION
1.1 FASHION INDUSTRYOVERVIEW 01
1.2 ZARA’S PROFILE 01
1.3 BUSINESS MODEL 01
1.4 CHALLENGES IN THEINDUSTRY AND ORGANIZATION 02
1.5 MAIN ISSUES 03
1.6 MAIN FOCUS AREAS 04
CHAPTER 02 – THEORETICALCONCEPTS
2.1 PORTER’S GENERIC VALUE CHAIN 05
2.2 PESTLE ANALYSIS 06
2.3 SWOT ANALYSIS 07
2.4 PRODUCT LIFECYCLE 08
2.5 MARKETING MIX 09
2.6 VALUE CREATING 09
CHAPTER 03 – ANALYSIS
3.1 SITUATIONALANALYSIS
3.1.1 STRATEGIC MANAGEMENT ANALYSIS –SWOT 10
3.1.2 INFORMATION SYSTEM ANALYSIS – SWOT 14
3.1.3 INFORMATION SYSTEM ANALYSIS – SUPPLIER CHAIN 15
3.1.4 INTERNATIONALBUSINESS ANALYSIS – SWOT 18
3.1.5 INTERNATIONALBUSINESS ANALYSIS – PESTLE 19
3.1.6 INTERNATIONALBUSINESS ANALYSIS – CULTURAL 20
3.2 COMPETITIVEANALYSIS
3.2.1 COST LEADERSHIP STRATEGY 22
3.2.2 PRODUCT LIFECYCLE ANALYSIS 24
CHAPTER 04 – PROBLEMS AND FINDINGS
4.1 STRATEGIC MANAGEMENT FINDINGS
4.1.1 SPAIN CENTRIC BUSINESS 25
4.1.2 SHORT PRODUCT LIFECYCLE 26
4.2 INFORMATION SYSTEM
4.2.1 POS SYSTEM IN DOS MODE 26
4.2.2 E-BUSINESS REQUIREMENT 26

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4.3 INTERNATIONALBUSINESS
4.3.1 MARKET DIVERSIFICATION 28
4.3.2 COMMONCULTURE 28
4.4 MARKETING MANAGEMENT
4.4.1 MARKETING CONCEPT 29
4.4.2 ADVERTISING CAMPAIGN 29
CHAPTER 05 – RECOMMENDATION AND IMPLEMENTATION
5.1 RECOMMENDATIONS 30
5.2 LIMITATIONS 32
5.3 SCOPE FOR FURTHER ANALYSIS 32
REFERENCES 33
APPENDIX 34

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ACKNOWLEDGEMENT
I would like to give a huge thanks to my supervisor Dr. Uma Mohan, who gave me a lot of
encouragement and suggestions in my entire writing process and appreciate her hard work on
the revision of it. I also would like to express my grateful appreciation to all those who kindly
took part in and supported this integrated case study analysis.

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EXECUTIVE SUMMARY
This project aims at understanding the system, analysing current issues and find methodologies
for implementing them followed by the fast fashion collection manufacturing company Zara,
Spain. It takes into consideration of Zara’s profile and its characteristics in apparel
manufacturing industry and on what factors that effects its future growth. For better
understanding its future, considered and analysed company’s Information system, its strategic
management systems and international business situation. Then the report moves on to concrete
on the various key factors of success of Zara.
Mainly considered SWOT analysis for Zara’s Strategic management, Information technology
and International business movements for better understand its past experience and future
growth. The product life cycle of Zara, what it offers to its customers including the
customer segmentation has been considered. Then the value chain mechanism has been
considered at length. These include the methodology used to react to its production methods,
distribution methods and use of information technology at various stages of supply chain. Then
the PESTLE analysis used to analyse thoroughly what factors effected to the Zara when
globalising their business. Marketing mix touched for better understanding of its marketing
movements with its international business. Finally, it is discussed whether the competitive
advantage that Zara has is sustainable or not.
Zara’s one of the main issues is Spain centric business system and it should partly decentralized
for better growth in future. Short lead time too another issue in strategic management and that
increased production cost. Zara’s management has scared to upgrade Information technology
systems and not willing to move web hosting with e-commerce. With high technology
globalization it must be prime requirement and high time to upgrade. When analysing macro
environment in international business history, it was cleared that they were missed Asian
market especially Indian and Chinese that they covered considerable part from the world
economy. Most of the fashions are European cultured and another main issue that found with
Zara is common culture that would not accepted by some regions. Finally, to lead the world
market, need to consider on regional cultural effects.

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CHAPTER 1 --- INTRODUCTION
1.1 Fashions Industry Overview
Unlike other any industry, the global apparel market is a typical consumer-driven industry.
Also, globalization and new technologies have allowed consumer to have more across to
fashion. As a result consumers are changing, competition is fierce and companies are evolving
to meet these demands. And also cultural effect to the fashion and apparel industry is
considerable than any other industry and so that is affecting when running global business.
With this situation Zara makes profit as well as running global business successfully.
1.2 Zara’s profile
Zara, a strategic unit for Inditex group which is leading apparel manufacturer, founded in 1975
by Amancio Ortega, who is richest man in Spain (2003), in La Coruna in Spain and now
perhaps the world’s most successful clothing chain. They have expanded operation over 35
countries with 531 stores located in most up market, high traffic and prestigious locations in
Europe, Asia-Pacific, America and Middle East and it is more than one third of all Inditex
group stores. Oxford Street in London, the Champs Elysees in Paris and Lexington Avenue in
New York are most upscale location where Zara used for their business. (Zara case p05)
Inditex (Industry de Diseno Textile), which formed as holding company atop ZARA, is one of
the principal fashionable distributors of the world that have more than 1500 stores with six
commercial formats. Zara is the most profitable brand for Inditex and Massimo Dutti, Bershka,
Pull and Bear, Stradivarius and Oysho are other Inditex commercial formats.
Zara used needs-based positioning, targeting a specific segment of customers and providing a
tailored set of activities that can serve those needs best, in developing its business model.
Mainly targeting group is price-sensitive fashion-conscious customers with have frequent
shopping behaviour.
1.3 Business model
One of the popular examples for “Blue Oceanic” strategy is Zara’s business model, not like all
other international branded competitors; Zara is selling at their retail shops latest cat walk
designs while others are selling normal designs and public fashions. And also all others are
manufacturing bulk garments to reduce manufacturing cost as well as transportation cost but

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Zara’s only producing tiny quantities with very high fashions that with very high demand,
under low product life cycle.
Zara’s business model identified as a high degree of vertical integration compared with other
potential competitors’ business models. It covers total supplier chain such as research and
development, design, manufacturing, storing, logistics, distributing, retail and feedback
monitoring. Not only fashionable design with low cost but also strong customer focus is the
main advantage to rapid customer growth comparatively other international competitors.
Ordering, fulfilment, Design and Manufacturing is main operation that maintain by Zara and
mainly they made links among manufacturer, distributor and consumer. Men, Women and
Children are its main selection areas and twice a week Zara ordered to La Coruna and they take
maximum effort to fulfil the order. Shipping cloths to stores is doing by another group of
commercials at La Coruna and their main target is to distribute garments as per demand of
distribution centres. Zara introduced new design collection at the start of winter and summer
buying periods. Zara introducing 11000 more designs within a year while key competitors
introducing average 2000 to 4000 per year.
Zara spent only 0.3% of its revenue on their advertising campaign compared with most
specialty apparel retailers it is negligible as others spent 3-4%. It relied on centralization of
store window displays and interior presentations using the stores to promote its market image.
Its new items were displayed in stores. The rapid turnover reflected the freshness of its
offerings, the creation of sense of scarcity and an attractive ambience around them and finally
creates a positive word-of-mouth.
Zara is a fashion imitator, it focused consumer’s requirement by observing and understanding
them and delivering it rather than promoting predicted seasonal requirements and like others
do.
Zara fashion’s product life cycle is not greater than 2 weeks and so shortens product life cycle
make greater success in meeting consumer preferences.
1.4 Challenges in the Industry and Organization
Global fashion industry is dominated by leading names such as Zara, H&M, Gap, Benetton etc.
It would be difficult for Zara to enter a market away from Europe such as Middle East and
Asia, since it would cause longer lead times and less quicker response. If Zara does not replicate

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the business model in new market, it can face diseconomies of scale. However, replicating the
Europe, Spain Centric model in other countries can be very difficult due to culture, language
and infrastructure differences.
Finding space in premium locations is getting tougher in many international markets. Even
Zara developed their business in almost all premium locations in the world; still they have
never touched some high business areas. Other main challenge Zara has to face is capable staff
in international environment and it can be possible failure in that country.
Price undercutting by low cost strategies also another challenge that can be fails in such market.
Another main challenge is to upgrade with new technologies. To maintain leading position
among competitors, Zara too must have to go with new technologies and existing technology
upgrading.
1.5 Main Issues in this Organization
While doing success and leading in apparel industry, Zara not upgraded their information
technology system among the chain. Zara’s operation system fully computerized but Point-On-
Sales (POS) terminals which using POS software for Zara stores still in DOS mode and that
system further not supporting with newly operating systems such as Windows. Information
system is the most value added service in the industry as it increases total revenue and keep
customers with them. (Zara case p 03)
Entering to the new market away from Europe is another business difficulty for Zara. Due to
cultural and geographical aspects sometimes Zara has to change their design as per existing
country. For example even Zara has more popular European fashions; they have to design
Indian cosmetics for Indian market and African cosmetics for African market etc.
Unlike any other industries, Zara controls all supply chain such as design, manufacturing and
distributing its products and also everything with Just-in-Time operation system. In this case
Zara needs more attention for every step and have to use more staff to handle this system, but
all other apparel industries franchised few supply chain steps and concern more for design.

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1.6 Main Focus Area
Good Strategic management, proper information system and doing success with international
business is Zara’s main areas that effecting to the business for success.
Zara was always leading global apparel industry by its commitment to Information
Technology. Its information system were clearly supported to link all its supplier chain such as
suppliers, manufacturers, warehouses, stores, etc using its IT infrastructure. Especially physical
count is easily can take on time as with Zara’s IT system. It is understood that even though
Zara makes profit with using existing information technology, there may be able to wipe out if
they not upgrade or move to the new technological system. What are the issues with existing
Information system in Zara and it’s and how can Information System supported for effective
decision making in Zara?
Zara is doing their business successfully among European and American continents. Why Zara
not moved effectively through Asian and Middle East market? And what are Zara’s
international business strategies? And how effective have they been?
Zara’s most of products are moving maximum 02 weeks product life cycle. Most of strategic
management decisions among Zara chain are completely different with other all apparel
manufacturing industries. What are the secret strategic management decisions behind Zara and
how effectively supported strategic management decisions to develop Zara’s business?
Zara has strong International Business environment. They optimize their marketing mix such
as product, price, place and promotion. High quality product they offer at reasonable price in
premium locations in the world and only 0.3% they invest for promotions. (Zara case p17) But
for promotion campaign is not satisfy as they only targeting word-to-mouth system by
screening fashions among their stores. It may not correct for every country. How Zara is doing
its marketing management and how effective it is?
1. What are the Zara’s strategic management decisions and how effectively supported those
decisions to its business development?
2. How Zara’s Information System supported for its effective decision makings?
3. Why Zara has not moved effectively to the Asian and Middle East market?
4. What are Zara’s international business strategies?

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5. How effective have they been in International market?
6. How effectively Zara does its marketing management system?
CHAPTER 2 --- THEORETICAL CONCEPTS
Zara is a leading fashion retailer in most of countries and they are doing business successfully
in lot of countries. But there are several differences in USA and European countries fashion
with Asian as well as Middle East fashion. Communication, culture, geography etc are directly
effect to the business and when starting in such country, Zara has to evaluate lot of facts.
2.1 Porter’s Generic Value Chain
Porter identified there are two activities in an organization named Primary and Supportive that
used to understand the firm’s development of competitive advantage as well as create share
holders value.
Inbound Logistics, Operation, out bound Logistics, Sales and Marketing and Service are
Primary activities and Human resources, Infra Structure, Technology, Procurement are
Supportive activities.
Fig.2.1 Value chain Analysis
Source - Porter M., (1998)

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Primary Activities – All Value added services that directly involve with final product which
delivering to the consumer (e.g. Garment manufacturing); and
Support Activities - Activities that not directly involve to final product but effectively
supported to increase efficiency of finish good. E.g. human resource management recruited
correct man power to deliver its good effectively. It is rare for a business to undertake all
primary and support activities.
Value Chain Analysis is one way of illustrating which involvements and movements are best
undertaken by the relevant business and identify which are best.
2.2 PESTLE Analysis
PESTLE factors are the main methodology of analysing its external environments factors.
Political, Economical, Social and Technological, Legal and Environmental factors are known
as PESTEL analysis. To start any business or for any type of market penetration, Political
decisions are most important in relevant country and it should analysis before starting and
ongoing. To business made success it needs to analyse Economical factor. Social factor is the
factor which highly supported to the product growth, and so it must analysis. It must analysis
technology before and ongoing else if technologically back, product would sweep from the
market as no movement to the forward as customers are moving with new technology.
Environment factor is same important to do sustainable business development and have to
analysis how affect legal factors important to the conduct business.
Fig.2.2 PESTEL Analysis

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Source – Grant M., (2005)
2.3 SWOT analysis
Fig.2.3 SWOT Analysis – Illustration for SWOT analysis in Business
Source - Bamford C., West G., (2010)
SWOT is the important and basic analysis in an organization, it need to analyse when product
launch, when market penetration, when product development or product diversification. It
needs to identify all internal factors such as its strength and weakness of organization and
opportunities and threats to the organization as external factors. And this requirement is very
important when market diversification to complete new country as well as keep market leading
position in existing market.

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2.4 Product Life Cycle
Product launch, growth, maturity and decline are main elements of the product life cycle. The
sales and profit of a product following life cycle during its life time. Cycle’s each stage
represents a different product profile of risk and return. Each product have life cycle and the
time duration for the product is decided by the product managers. Market penetration, Market
diversification, Product development and Innovation are main strategic systems to maintain
product without decline.
Fig.2.4 Product Life cycle
Source - Bamford C., West G., (2010)
2.5 Marketing Mix
Marketing mix is the combination of Product, Price, Place and Promotion for any business
venture. Quality of the product and brand image is important to maintain product in the market.
Market situation, economy condition, buyer behaviour etc fluctuates the price in product but
price decide by the management. Place is the important and it make no sense if the market is
not willing to buy or no consumers available. Promotions can change brand image to keep the
product without decline. However marketing mix is very important to any product in the
market.

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Fig 2.5 Main elements of Marketing mix.
Source - Kotler P., Amstrong G., (2010)
2.6 Value Creating
Companies generate value either by manufacture their products for a lower cost than their
competitors in the market (low-cost leadership strategy) or making those goods that customers
are willing to pay a premium price for them(differentiation strategy).
2.6.1 Low-Cost Leadership.
This strategy targets a broad market and pushes a firm to sell its products either at low to
average market prices to earn a higher profit than rivals or at lower than average prices in order
to increase market share. This strategy is a key advantage in highly competitive industries.
Cost leaders are well positioned to withstand price wars in the industry.
2.6.2 Differentiation.
This strategy requires the development of products that offer unique attributes that are highly
valued by customers and demand a price premium. The uniqueness that companies generate
must be difficult to copy if the differentiation strategy is to be successful.
Product
The featuresandappearance
of goodsandservices
Price
How muchcustomerspay for
the product
Place
The pointwhere productsare
made available tocustomers
Promotion
How customersare informed
aboutproducts
Marketing Mix

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CHAPTER 03 --- ANALYSIS
Analysing Zara’s profile and its characteristics with using mentioned tools to find issues and
factors effect for its future growth. For better understanding analysis chapter has separated
into two main sections as Situational Analysis and Competitive Analysis.
3.1 Situational Analyses
Target of Situational Analysis is broadening investigation of Zara’s profile and process. The
situational analysis mainly targets the way Zara use below subjects,
 Strategic Management Analysis with using SWOT Analysis
 Information System Analysis with using SWOT and Supplier Chain Analysis
 International business systems Analysis with using SWOT, PESTLE and
Cultural Analysis,
3.1.1 Strategic Management Analysis - SWOT
Strengths
Zara is the largest chain of Inditex (Zara case p1) which is one of leading apparel manufacturers
in the world. Only in Europe, Zara has extended their business in 411 prime locations till 2002
and it was almost one third from Inditex retail chain. As well as, in America’s half of Inditex
stores belong to Zara, it was 75 among 145 Inditex stores in 2002 and similar in Middle East
and Asian regions. On the other hand all Zara stores established in highly recognised prime
locations and most of the locations are in tourism based cities, hence it make another strategic
advantage to lead the industry.
The mother company, Inditex, is one of the leading apparel industries in world; hence it is an
enormous strength to Zara. Inditex has confirmed that they are in top of the industry by their
financial analysis. Net margin, which is net income percentage against net operating revenue,
is in top range with Inditex and it indicates that its strategic management decisions are beyond
other competitors, and it makes competitive advantage to Zara as it’s her mother company. In

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2001 net margin was 10.49% when Gap was below zero and when Inditex increased till 11.02%
in 2003 but Gap reached till 3.3% which is very low. (Stengg, W 2001)
Fig 3.1.1.1 Inditex Financial strength – Net Margin level compared with competitors
Graphical analysis by the author – Source, Zara Case
Inditex is one of the top financially success apparel manufacturer and it shows strong financial
growth rate, considering its 1996 to 2002 financial reports. Its net operating revenue 1008.5
Euro millions in 1996 and it reached to 3974 Euro millions in 2002, it is very high growth
among competitors during just within six years and net margin increased from 7.21% to
11.02% (Zara case p16). It’s an extensive strength to Zara as they can run its business journey
with financial strong highly recognized mother company.
-2
0
2
4
6
8
10
12
14
Inditex Gap H&M Benetton
Net Margin- Compared in 2001 & 2002
Year 2001 Year 2002

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Fig 3.1.1.1 Net Income growth of Inditex –Zara’s mother company, 1996-2002
Graphical analysis by the author – Source, Zara Case
Fast fashion is one of the Zara’s foremost strength and it makes Zara to lead the market.
Diversified product range, 11000 more fashions introducing per annum and hence customers
have more confidence with Zara. Zara monitors fashion and trends versus guessing at trends
and market them very fast. Each style of clothing relates to a specific trend.
Zara has its own manufacturing plants and so they can change fashions very fast as lead time
for change item is very low. It saves time to market by not outsource the manufacturing of
products. And also Zara has strong distribution channel and it increase Zara’s strength. It deals
with mostly supply chain. Do not delay any order such as other apparel industries, which are
normally out sourcing stores requirements and hence Zara Do not depend with third party
manufacturer.
Short lead time gives more strength in the market as design changing such a speed might attract
customers. With short lead time, that is 4-5 weeks maximum; Zara can market only few items.
High fashion with low product volume increase high demand and less chance to the consumer
to hit it, therefore loyal customers buy once they catch by the eyes.
Zara has Low cost and high quality fashionable supply chain. The Company provides cost
leadership strategy by targeting its efficiency and cost reduction on final goods. Competitive
advantage makes more profit, they are ion cost leadership but with differentiation with frequent
changing fashions.
0
50
100
150
200
250
300
350
400
450
500
1996 1997 1998 1999 2000 2001 2002
MillionsofEuros
Financial year
Inditex net income growth chart

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Zara has many stores around the world and especially all places in Europe. Each store wants
customer comment and opinions and store managers is given full authority to change fashion
trend and request as per current market trend.
Weaknesses
The other hand, centralized distribution system has several weaknesses for Zara. For example,
it will be a major reason to increase prices of all garments among several regions due to
transportation cost that varies from country to country; it may be messed up more orders reach
from different regions, etc. Once dealing with regional or local garment manufacturers instead
Spain Centric business, Zara can increase profit margin by reducing transportation cost and
increasing its customer’s feedback responding time, but they are using Spain head office for
everything and it is a significant weakness.
Never trying for media advertising campaign that generally using all other competitors and
they spread their name around the world. Electronic media, nowadays, covers whole world,
consequently it is an advantage if they use for marketing but that is considerable weakness with
Zara.
They are not producing classic cloths at any reason. (Zara case p4) it would be a weakness in
other way, even fashionable society too may search for classic items once in a way. With all
the items in hand, customers can keep at any occasion. At times, once fashionable loyal
customer changes his or her track, Zara would not answer for them, but other all competitors
willing to drag them. That may be a disadvantage.
Opportunities
First mover advantage is one of the main opportunities at Zara. Zara changing their fashion as
per current situation is their first mover advantage and so Zara makes 11000 different fashions
annual as 3000-4000 fashions doing others.
Growth fashion market and diverse cultural area are valuable opportunities to Zara. Especially
in Europe and America’s changing fashion market daily hence it create opportunity to widen
the business.
Threats

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Power of buyers and suppliers are making considerable threat to the industry because it’s
varying with the consumers and supplier economical situation, such as even though the design
is latest, if the product is not a demand one among the customers around, that make unnecessary
threat to Zara store managers when they sell.
Competition is increasing daily in locally and globally in fashion industry and also with
existing and upcoming potential competitors makes considerable threats to Zara.
Potential competitors can duplicate Zara’s strategies that lead to lead the current market.
Duplicating prime mover concept is common in any industry and only solution is upgrading or
changing concept else duplicator may be succeeded better than originator and that will be
coming as a threat.
Rising transportation cost is another threat as Zara’s production are Spain Centric and that
effect to the production cost and have to bear it by the consumer.
3.1.2 Information System Analysis
Zara chain has strong information system and hence their value chain too effective and
efficient. Head office of Zara is the nervous centre of the system. It linked to the suppliers,
stores, shipment centres, etc. Commercials decide which cloth will be designed and produced.
Ordering, designing, Manufacturing and fulfilment is their communication system. Annually
11000 more different products they are manufacturing and selling.

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Fig 3.1.1 – Zara’ Information System – Supplier Chain Analysis
Graphical illustration by the author, source – Zara case
The entire process of information system is completely different compared to its potential
competitors, it’s very unique. Communication with commercial managers, stores managers,
suppliers, designers and customers are very speed and everything grab within 2-3 weeks and
such design removing from stores after 5-6 weeks. So their value chain is very tight and
effective. Commercial managers and designers are starting their work on design of cost, raw
material, suppliers, fabric, quality and quantity of raw material, effective selling rate,
production planning etc soonest possible time that they received guides and instructions from
store managers worldwide. (Pirona,C. 2010) Finally Zara’s information system need to ensure
that there is nothing fashions lying around head office and all distributed within their time
frame. Hence Zara’s information system target to acknowledge that designs move from
catwalk to stores within 2 weeks to capture latest fashions to its customers.

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Fig 3.1.2 Zara’s Primary activities in their Value Chain
Source - Pirona C, (2010)
3.1.3 Information System Analysis - SWOT
Strengths
Information system is the life line in any organization as each and every process under Zara’s
value chain is completely depends on its information system. Speed decision making is one of
the main strengths of information system. Every order will be reached to its head office with
less than 24 hours, with using information technology.
Point of sale (POS) system allows Zara to monitor trends at each store. Taking physical count
is easy and hence it helps to take strategic management decisions such as change product life
cycle etc. Remarkable revenue growth is the success of Zara and it is a competitive strength to
them.
The whole information system made simple after receiving Personal Digital Assistants (PDAs)
to stores in 1995. It made fewer errors than manual communication among organization chart
and it has increased efficiency.
Zara can trace the place and the date that item sold with items sold price, with using their
information system, which contained PDAs, when customer reached to any of Zara’s stores to
exchange an item, same time they can find item’s history such as it was a theft item from
another stores or it’s a genuine purchase.
Weaknesses
Zara’s main weakness is they are scared to upgrade or change technology even whole world is
changing. POS system is in DOS operating system and while changing all other systems from
Materi
al Tea
m
Desig
n
Team
Testin
g
Stores
Product
ion Faci
lity
Sales
Networ
k
An end
custome
r

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DOS to Windows Zara not agreed to change their system. Hence it may lead to huge loss as
the entire world moving with new technology and DOS may not support to future.
Once starting business with high-tech, there is no backward walk, only option is to upgrade
with latest technology, then it create additional investment once in few years as day by day
technology is transforming to new versions and no option other than run with technology, else
it may be the reason to squeeze the market share.
E-business or online business is nowadays most popular business system and it’s the current
trend but Zara had decided not to touch online business (Zara case p5). Today, world
information systems and information technology is in sky, hence Zara’s this weakness cannot
keep for long time. To save time, more people in the world, especially American and European
region, willing to do everything online. Hence if Zara not willing to move with new technology,
it may chance to lead competitors.
Recruiting just pass out students to handle information system, (Zara case p8) during their
training period, information accidents can be occurred and that may lead to wrong information
among stores and head office and it create unnecessary problems.
When handling all information system by the head office, there may accidents can occur while
handling several orders that receiving from Zara stores in several regions. For example if they
mixed orders in different continents, the store managers have to face all difficulties that arising
when selling items, on the other hand they can discuss wrong shipments with other store
managers and can exchange but it increase non-value added cost, which comes once
transferring, that cannot recover at any chance.
Opportunities
Head office at La Coruna is the main controlling point for Zara and hence the information
system is the main requirement for them to communicate all 531 stores around the world. With
upgraded new technologies make operation simply; physical counting, spot inventory check
etc are not make troubles with technology. Such technologically high performed updated
Personalized Digital Assistant (PDA), hand held unit, made an opportunity to lead the industry
with speed decision making and speed up all process around the world. For example once they
need new design, the respective store manager inform it to the head office with using hand held
unit, which is enormous opportunity that Zara has used.

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Zara’s business completely driven on information system; they have to inform customer
demand to manufacturer as well as manufacturer to distributor. Hence they need highly
recognized information system. Existing information system is such system and there is an
opportunity to upgrade it with new technology.
Threats
Malware threat is common threat for information systems. Computer Viruses, Trojans, key
loggers and spyware can be attacked to the whole system at any occasion. Viruses not only
deleting the entire system but also changing the information system that currently using, then
the requirements and information passed on, will be changed and therefore even loyal
customers are not dealing with anymore. Hence, once they completely depend with information
technology, Zara has to keep updated backup, however it is a significant threat to the
information system.
Another common threat available in the computer world is that the computer hackers can
approach to the information system and direct to potential competitors. Nowadays, computer
world more and more computer hackers moving through others web sites and computerized
and personalized system, to find out secret information and then potential competitors can use
it. On the other hand, once using and depending on computer system, such as POS system,
system can be destroyed with using Sabotage. It is another threat that is common in information
system. Either back door or logic bomb may change full or part of information system.
Natural disaster, such as Tsunami, earthquake, flooding, etc can be destroyed the informatio n
system and it may lead to sweep the whole company from apparel industry. To overcome
natural threat , once implementing new technologies or upgrading information system, it is
compulsory to have to have back up system in completely different location to run the business
without destroying customers even physically stores completely washed out from locations,
otherwise not only physical inventory fade away but also total business would be in risk.
3.1.4 International Business Analysis - SWOT
Strengths

19
Zara’s business has globalized and it has covered almost all prime locations in America and
Europe. It is a strong strength to its international business, because they can analyse for market
development or market penetration as they established in key places.
Internationally recognized brand is very easy to relocate, market penetration or market
developments. Therefore at any occasion, that Zara needs to upgrade, they can easily upgrade
as Zara’s stores around the world. International business strength is the success of everything.
Weaknesses
Euro-Centric models are common in Zara. It is globalised fashion maker therefore it has to
think cultural effect on the market. Once market leads to euro centric may lose some market
even in Europe.
Risk factor is very high with Spain Centric business. Whole global business on risk and could
shut down once head office in Spain fall trouble due to bad weather, natural disaster, terrorism,
political unrest etc.
Opportunities
Opportunity to market diversification as prime mover advantage make blue oceanic market in
global market, especially in Asian market where no one touch with fashion concept; instead all
others have marketed garments with classic items.
Threats
Currency value in Euro hurts global competitiveness and fluctuations in exchange rates make
threat to its international business as Zara is a globalized brand.
Manufacturing based Spain considerably high as labour cost and material cost is higher and
even low cost strategy too not success as low production cost can find from different places
like China or south Asia.
Apparel industry is potential over saturation in Europe. Garment manufacturing and retail
industry is a red ocean in all countries in Europe.
3.1.5 International Business Analysis - PESTLE

20
PESTEL Analysis is the main important external environmental factor that must consider
before market penetration in international business.
Effects on Political Situation - Political Situation is directly effecting to any industry when
starting international business. It is not much effecting to the European or American market
but directly effect when moving to China, India or other south Asian countries. Indian and
Chinese markets are considerably large and also open and government willing for foreign
investments. But political situation of other south Asian countries and African region is varying
and might effect to the business.
Economical Situational Analysis - Economical Condition is turbulent in African, Asian
countries and consumers simply changing life style as per economy. Consumers are always
trying to cut down expenditures of stylish fashionable and moved to low cost low fashion when
economy falls. In this case while doing international business, Zara must think to change their
strategies according to existing countries economy. In this case Zara may have to use local
designers and commercial managers to change cost and fashion with effect on current economy
as well as they have not to depend on head office.
Social factors effect - Social factor is very important as fashion is for social. Zara’s most
fashions are based on European and American stylish as their head office is in Spain and most
stores are in said regions. Region cultural aspects may affect to social behaviour and hence
fashion and styles too varying as per them, Zara then have to monitor it and design.
Technological situation - Technological factor is the main important to their business as
everything maintain by the head office and before market penetrating internationally, Zara must
do survey on technology situation and usage for selected country. It is impossible to find
similar European and American technology within African and South Asian countries and
when selecting international business Zara must consider information technology and
transportation system as to maintain similar strategic management system in international
business. Zara still not captured China, India and Pakistan market (in 2003) even the markets
are considerably large. It may be the reason as transportation from raw materials and finish
goods within the country must be effective else they couldn’t keep same life cycle as in Europe.
Environment and Legal effects - Zara is respected as one of most responsible fashion
manufacturer. Therefore Zara’s international movements not effect to local environment as

21
their business is sustainable. Nothing found that Zara makes trouble to relevant countries
environments, even most of the apparel manufacturer doing harm to environment.
Legal factors effect in international business especially in communistic countries the threat of
losing privet run company to the local government is very real. Hence global expansion bears
problem in terms of legal securities and political stability. Legal factor is highly important
when doing business in Middle East countries, especially Saudi Arabia. Here in those countries,
women cannot go for any fashion whatever they like but only approved by the law. In this case
Zara’s European fashion not useful and have to change as per their law, but Zara is doing
success in Middle East, means they work according to the legal factor.
3.1.6 International Business Analysis - Cultural Effects
International culture is highly considerable factor for market penetration internationally. Even
Zara’s more stores in Europe and American region but very few in Asian and Middle East.
Zara’s Spain Centric just in time manufacturing model directly effect to Middle East and Asian
market as their culture is completely different. Indians do not change their wardrobe too often
and short life time strategy not effective for Indian market. And also vast amount of fashion
changes can see across India as it has divers culture. South Asians and Chinese customers are
very price conscious and hence some strategies couldn’t use for them. Most of countries are
western wear concepts are catching on but traditional still dominates. Europe and American
almost same culture but cultural aspect directly effect when operating Asian and Middle East
countries. Currently Zara operating 30 stores in Middle East and 08 stores out of that is in Saudi
Arabia.
0
50
100
150
200
250
300
350
400
450
Europe Middle Esast Asia America

22
Fig 3.1.6 Zara’s store development among the world- 2003
Graphical illustration by the author, source – Zara case
Fig 3.1.7 Zara’s store development among the world- 2001 to 2002
Graphed by the author,source – Zara case
3.2 Competitive Analyses
It is understand that Zara’s main competitive advantage is cost leadership when comparing
with its other international potential competitors, such as Gap, H&M, etc. Competitive analysis
targets a broadening investigation of all competitive advantages that use by Zara and raised
issues while their way and moved up advantages with opportunities that opened when they
keep their path in that way.
Zara’s Products - they manufactures clothes, shoes, cosmetics etc for men, women and
children. They are marketing, annually, 11000 more different products among their stores.
Zara’s products are fashionable stylish high quality. With using low cost strategies Price is in
competitive level. (See Appendix 1)
0
50
100
150
200
250
300
350
400
450
Europe Middle Esast Asia America
NoofStores
2001
2002

23
Zara’s pricing system and its issues - as the concept of Zara is to provide its commodities to
the less cost earning people so its prices are very sensible that everyone can afford for its latest
fashions. No authorities to change or decide prices for garments even in individual stores,
product managers in head office were determine them in Euros. It is a good system but on the
other hand for some regions prices might higher than competitors. Zara is Spain Centric
business and hence price defines with the cost of transport and hence the distance is increasing
the price of same product.
Fig 3.2.1 T-shirt price varying in Zara’s stores across their stores in different regions
Graphical illustration by the author, Source – Zara case
Segmentation Strategy - Zara’s Place selection is very competitive and it increases their
strengths and popularity. Oxford Street in London, the Champs Elysees in Paris and Lexington
Avenue in New York are most upscale location where Zara used for their business. Hence Zara
is not worrying with Promotion. Currently Zara have expanded its operation over 35 countries
with 531 stores located in most up market, high traffic and prestigious locations in Europe,
Asia-Pacific, America and Middle East and it is more than one third of all Inditex group stores.
Hence selecting Place, Zara is taking its promotional advantage as its promotion is store
oriented instead advertising campaign.
Promotion system and issues - Zara has very unique Promotion system compared to other
competitors in apparel industry. While competitors spend 3-4% of their total revenues for their
0
25
50
75
100
125
150
175
200
225
250

24
marketing campaigns; virtually no advertising with Zara and it is major advantage over its
competitors. (Zara case p4)
Zara spent a lot on its store locations and store arrangements as it is the way they make
promotions, all stores located in prime high traffic locations. Windows display highly uses to
promote latest fashions. Rearranging store layouts four to five times a year and changing
windows displays frequently are their main promotion methodologies.
Zara using their website, www.zara.com, as digital window display which is another marketing
system and they are using their web site only as a marketing tool, because they are not willing
to start e-business at any time as of the management’s idea is that e-business will be increased
material return quantity. It is very low cost marketing system as only they have to bear web
space cost and web maintaining annual cost which is very cheap considering other media
channel advertising campaign.
Zara’s fairly short life span strategy keeps any latest fashion for three to four weeks maximum
hence most of the times shoppers rare to see the same fashion in next visit. It implies much
advertising propaganda make no sense and more than enough that their window display and
store arrangement advertising system.
Zara not producing classic cloths that would not stylish, then they need not to concern much
on remote business which usually classic oriented. As of having main city oriented stores in
most of countries that Zara operates, they would not much consider on advertising as city area
covers by window displace and store advertising.
3.2.3 Product Life Cycle Analysis
Quicker delivery by reducing lead time of products, from designer to customer, is another main
competitive advantage of Zara. And with short product life they cycle they are trying to keep
customer mind about them fresh and surprise at every season and occasions. Generally the
product life cycle curve in any industry including fashion retail industry, sales decreases as
product moves across the times line. But Zara’s product life cycle curve is totally other way
round as they are removing fashions from their stores before maturity or while ending growth
stage and keeps maximum 5-6 weeks time line. So such strategic management decisions made
Zara fresh always and increase market share and market strength. Most of the items removed

25
from stores and replace with new items and most of the times cannot pick the same items when
customer’s second visit, as it is such a small life time. This is a Blue Oceanic strategy in apparel
industry as no one willing to do such small product life cycle as it may waste finish goods if
items has not moved from retailers.
Fig 3.1.2 Zara’s Product life cycle curve
Source - Pirona C, (2010)
CHAPTER 04 --- PROBLEMS AND FINDINGS
1. What are the Zara’s strategic management decisions and how effectively
supported those decisions to its business development?
2. How Zara’s Information System supported for its effective decision makings?
3. Why Zara has not moved effectively to the Asian and Middle East market? What
are Zara’s international business strategies? And how effective have they been?
4. How effectively Zara does its marketing management system?
Innovation
Growth
Maturity
Decline
Time line
Sales

26
4.1 Strategic management decisions
4.1.1 Spain-Centric business
Zara’s business completely driven by its head office at La Coruna, all manufacturing process
such as designing, manufacturing, distributing and all other arrangements will be covered and
handles by the Spain head office hence all the garment orders would be manufactured in Spain
with mostly European concept. In this case they spent unnecessary production cost as they can
easily find low cost manufacturing regions within their store located countries. For example,
they are designing and manufacturing garments for middle east and Asian markets in Spain
and finish goods are delivered to the locations by cargo, but if Zara can change manufacturing
plants to the somewhere in India or China for Middle East and Asian markets, they can save
massive cost by reducing labour cost, as in Indian and Chinese production cost is substantially
lower than Europe cost.
Fig 4.1.1shows Labour cost compared with different regions, Dollars per hour in 1998. (See
Appendix 2) By looking below table contents, it is clear that labour cost is very cheap in Asia
and so it will be more profit to the Zara if they could consider Asian manufacturing plants at
least for Asian and Middle East market. And also they can analyse to build a manufacturing
plant in Turkey for European market for cost reduction as well as other regions too.
Not only Asian or Middle East market, if they can produce garments even for American region,
most probably they will be save money even transport cost is higher than from Spain head
office.

27
Fig 4.1.1 Country wise labour cost variation
Graphed by the Author - Source - Ghemawat P., Nueno J., (2006) (See Appendix 2)
Not only labour cost when manufacturing garments in Asia for Asian and Middle East market
Zara can save non-value added cost, such as transportation cost, information system cost,
communication errors, etc. Below table illustrates manufacturing cost per large men shirt in
Spain and Asia and it is clear that the cost of production is very low in Asian region.
Fig 4.1.2 Manufacturing cost variation in Spain and Asia
Graphed by the Author - Source - Ghemawat P., Nueno J., (2006), (See Appendix3)
0
2
4
6
8
10
12
14
16
18
20
AverageLabourcost$/hr
Country wise average labour cost variation in 1998 - $/hour
0
5
10
15
20
25
30
35
40
45
Fabric purchasing cost Transportation cost Labour cost Total
Manufacturing cost variation - Spain Vs Asia
Manufactured in Spain Manufactured in Asia

28
Due to transportation and other distribution costs, price of same item is varying across their
stores (refer Fig 3.2.1), once the stores is far end from the head office, their customers have to
bear it. Hence it is clear that once with Spain-Centric business increase unwanted transport cost
to the product and it increase the item price. If Zara use Asian region manufacturing plant for
Asian and Middle East market they can reduce this price and can increase popularity further.
4.1.2 Short product life cycle
Zara product’s “product life cycle” limited to its maximum duration around 4-5 weeks, by its
management and hence every 4-5 weeks its stores display their new designs. They boom new
stylish fashions at any occasions. Altogether 11000 more new fashions are moving across all
Zara stores. Zara’s strategy is more fashions with less quantity. Less quantity leads to high
demand. And more styles leads to more choices and more chances to hitting it. More styles
leads to more choices for consumer and it increase frequent visits, also increase customers.
But, on the other hand it might lead to increase waste of money, hence no competitors trying
to copy this strategy.
In this case Zara will not producing bulky quantities, such as others, but only few quantities
that with high demand and they target retail shops to clear all fashions within this short time
frame as it will be a support to them because low supply of product naturally high demand.
4.2 Information system
4.2.1 POS system in DOS mode
POS system is still in DOS mode and if they not change operating system, it is not far they
swipe from the business. After 2-3 years no one willing to repair, maintain or any other support
to the DOS system as it is old and no more in the world now. Therefore it is high time to
upgrade the system. To upgrade system it cost very high but no other solution than upgrading.
(See Appendix 4)
4.2.2 E-business requirement
The entire world moving to the e-business and e-commerce popularity is increasing day by
day. Almost all other potential competitors are using e-business to tackle young generation
who are willing to buy online. With high stress economy in developed world, people are so
busy with work and daily reducing their free time for shopping hence e world population daily

29
increasing and unlike Zara; all other potential competitors are using this opportunity. Therefore
Zara must have to think for online business.
Advantageous - No store space needed, only need virtual store in web space. But same store
arrangement and same display can arrange.
No store managers, stores keepers and hence very few labour force required. They need people
only for web operating and transporting. In this case Transportation can use skilled transporters
such as DHL etc.
Disadvantages - Return rate may be varying probably higher than normal business. That is
because not having complete demonstration on garments. But with using cat walk technology
the return rate can be minimized.
Return on investment may be higher than normal selling store. It takes some time to remove
people’s doubt on e-business, and so it takes some time to settle. But after that e-business is
more profit than ordinary business.
4.3 International Business Strategies
4.3.1 Market diversification
While analysing it is found that, until 2003, Zara has not moved successfully to the Asian
market, especially India and China as they are giant market share in the world comparing other
countries. Zara has 28 years history, but it is a fail that they have not target Asian or Australian
market as still they survive with European and American region while other all competitors
such as Gap, H&M has moved all continents. (Refer Fig 3.1.6 and 3.1.7 in chapter 03) Hence
market diversification requirement is highly important to keep leading position in global level,
else market share may not easy to grab such as European market.
4.3.2 Common culture
Zara’s business model is a blue ocean strategy as they are the prime mover for this concept;
Zara is not selling just cloths such as all others instead they are selling designs. Within very
short time they are publishing cat walk in their stores, no classic items in their stores. This a
main reason to popular Zara among young generation in Americas and Europe, but in Middle
East, especially Saudi Arabia, highly cultural oriented and still Europe costumes are not much
popular among young generation in those region. The latest design may be not a reason to

30
popular in Middle East even though it is highly popular among Europe. Hence common cultural
concept can be effect in other way round. Even they may be failed if they tried to fight for south
Asian market with European culture concept as still those regions have small touch and it may
need years to show off fully westernise costumes.
4.4 Marketing Management
4.4.1 Zara’s marketing concept
Marketing cost is nothing, comparatively potential competitors. Zara relies more on store
advertising choosing highly visible locations. They are choosing high traffic, well reputed,
prime locations, when choosing locations for their stores around the world. Such advertising
make sense as it delivers high productive out put because it spreads with using word of mouth.
Even channel distributing latest cat walk fashions, the people in far end corner, will never touch
Zara instead they will go for Gap or H&M that they have broaden marketing advertising
campaign which can easily tackle customer.
But, on the other hand, it spreads only among stores around; not island wide. Even though the
people in country side, that Zara stores has not normally located, need latest fashions, they Do
not have idea on Zara and they have better feeling with all other competitors, such as Gap,
H&M, used normal media advertising.
4.4.2 Advertising Campaign
Still Zara’s costumes are highly popular among city people in every country and hence they
may not worry about publicities as they have already covered all high traffic high westernized
modern cities with high fashion lovers.
Zara has not manufacturing or selling classic items, only fashions. Hence all fashions in their
window displays.

31
CHAPTER 05 --- RECOMMENDATIONS
In this chapter contained realistic recommendations and future implementations for research
questions, limitations of the study and Scope for further analysis
5.1 Recommendations
All below recommendations are solutions for research problems, which analysis under
Strategic Management, Information Technology and International Business.
1. Decentralizing of corporate control business
Until display items in their stores, all process is handled by the head office in Spain. However,
when Zara moves into international markets, it loses some of these advantages. It loses some
control over costs – shipping costs, tariff costs, etc. Zara can overcome this problem by re-
configuring its system to a less centralized approach. It should keep some portions of its
systems centralized (such as designing, purchasing, etc.) but should move manufacturing and
distribution to the international market. Therefore decentralising the Spain centric business,
Zara can increase profit as well as can increase customers by reducing finish goods price. When
considering Asian based manufacturing, regional base merchandising, etc can reduce non-
value added services such as unwanted transport, high labour cost, etc.
Decision making authority must be decentralized and it must do within the region; not from
Spain, make more sense to the customers.
2. Time to upgrade information system
Zara and its IT crew have opted to use DOS as their operating system in POS system, which is
their communication system.
-
4100000
4120000
4140000
4160000
4180000
Windows Linux Unix
CostinEuros

32
Fig No. 4.2.1 POS terminals upgrading cost variation with operating system
Graphed by the author,source – Zara Case
3. Web development with e-commerce facilities
It is highly important requirement in current world as daily number of e-commerce lovers are
increasing and within next few decades’ chance for non e-business would be reduced, it is
because this highly stressed economies more people were in risk and they were highly worried
about time.
All people trying different ways to reduce time and e-commerce is one of the best method that
to reduce their time. Without hanging around stores and roads every one can purchase required
items online and hence Zara must think it to implement.
Zara is not willing to do online business as there are higher returns than store selling (Zara
case) but it is because not having a proper system of selling items. To mitigate returns, Zara
has to implement online business with high technical background such as there should be cat
walk facility that customers can dressed up their selections to the models before purchase and
also preferred colour and size selection, quality checking etc.
4. Product Life Cycle Changes – to reduce cost
Short product life cycle increases transportation cost as it has to be delivered low volume
frequently among their stores, hence it adds unwanted cost for their product. It’s because to
maintain its short product life cycle, i.e. maximum life goes 5 - 6 weeks, hence finally it directly
effect to the finish good selling price. Therefore with short product life time increases its selling
price until runs it as Spain centric business. Therefore Zara might think either decentralizing
Spain centric business system for far countries or widen of product life cycle to makes more
profit.
5. International Business Improvement – Market diversification
Another significant strategic suggestion involves the Asian and Middle East market. Zara
should keep eye on this development way, as they never done anything for market
diversification among Asian region till 2003, other than Singapore. The scope of market
diversification is not in easy touching level as the Asian market has confirmed to be a market
of its powerful competition. Not only does such rivalry compress margins but also it requires

33
alert strategy if success is to be achieved. With this strong competition in the Asian clothing
business, recognized brands can still earn a price best over the rivalry in this market. A larger
presence in Europe will only raises Zara’s cache and makes it will be helpful for Zara to
compete in the other markets in future.
6. Regional manufacturing plants for better price
Its business system is Zara’s competitive advantage. For example, in the US market the
company can establish a manufacturing plant in Mexico, another manufacturing plant can
establish in India or China for Middle East and Asian Market and they can be fixed their
satellite distribution centres in same location too. It would be help to expand this distribution
centres to service the America and Asian markets. The raw materials can be purchased
centrally and then shipped directly to manufacturing plant in India; it will be reduced
distribution cost instead of having to go through Spain.
If the existing prices are with respect on market conditions and therefore Zara can leave the
finish goods with same prices and Zara enjoy increased profit margin.
5.2 Limitations
Only limitation for this integrated case study is the time duration. All the data, figures and facts
were before and around 2003 and analysis was done until 2003 because the case was at that
time. Some of the recommendation may already be implemented and some arguments may not
be validated now. But it was an advantage as clearly understood issues during the given time
frame.
5.3 Scope for the further research
In this study only for Zara and that also till 2003. Hence need further analysis for better
understanding problems in this industry with analysing till now.

34
REFFERENCES
1. Bamford C., West G., (2010), Strategic Management – Value Creation, Cengage
Learning CA, 9th edition, pp. 134-136
2. Ghemawat P., Nueno J., (2006), Zara:Fast Fashion, Harvard Business school, 9(703),
p. 32
3. Grant M., (2005) Contemporary Strategy Analysis, Blackwell Publications, 5th
edition, pp. 226 – 240
4. Kotler P., Amstrong G., (2010), Principles of Marketing, Prentice hall, 13th edition, pp.
76-77
5. Laudin K.C., Laudon J.P, (2010), Management information systems, (11th Edition),
Prentice Hall, pp 475-483
6. Mcafee A. Dessain V. Sjomn A. (2007), Zara: IT for fashion - case study, Harvard
business School, 9(604)
7. Pirona C, (2010) Benetton and Zara Information systems, organization de Empresas,
1(1), p.50 [Available from www.scribd.com, Accessed on 12th Nov. 2011]
8. Porter M., (1998) Competitive Advantage, The Free Press NY, 50th edition, pp.36 –
40.
9. Stengg, W., (2001), The Textile and Clothing Industry in the EU, Enterprise Papers,
p.2 [Available from http://europa.eu.int/comm/enterprise/textiles/statistics.htm,
accessed November 27, 2011]
10. The Inditex story [Available from www.scribd.com, Accessed on 15th September 2011]
11. Zara makes profit in last six months [Available from www.retail-news.com, Accessed
on 12th October 2011]
12. Zara retailer [Available from www.en.wikipedia.org/wiki/zara Accessed on 15th
September 2011]
13. Zara-a European fashion brand [Available from www.grin.com/en/e-book/32961
Accessed on 15th September 2011]

35
APPENDIX
Appendix 1
Fig 3.4.1 Zara’s position with their competitors
- Ghemawat P., Nueno J., (2006)
Appendix 2

36
Table No 4.1.1 Labour cost in different regions
Source - Stengg, W., (2001)
Appendix 3
Cost in Euros
Manufactured in Spain Manufactured in
Asia
Fabric purchasing cost 17.2 25.32
Transportation and other input
cost
13.25 1.49
Labour and re-handling cost 11.79 2.28
Total 42.24 29.09
Table No. 4.1.2 Manufacturing cost per one Large Men Shirt in Spain and Asia.
Source - Ghemawat P., Nueno J., (2006)
Appendix 4
Fig. 4.1.2 Sample Price Tags of Zara cloths
Source - Ghemawat P., Nueno J., (2006)

37
Appendix 5
Upgrade cost per one store
(maximum)
Upgrade cost for all 531 stores
Windows Linux Unix Windows Linux Unix
License cost 140 0 160 74340 0 84960
Annual maintenance 30 150 25 15930 79650 13275
Total software cost 170 150 185 90270 79650 98235
POS terminal 5000 2655000
Router 180 95580
Ethernet card 50 26550
Connectivity 240 127440
Installation and training 2000 1062000
Total Cost 7810 7770 7840 4147110 4125870 4163040
Table No. 4.2.1 POS terminals upgrading cost including inventory lookup function
Tabulated by the author, source - case study

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