Zara Case Study

INTEGRATING GLOBAL SUPPLY AND MARKETING

CHAINS
CASE: Zara: Fast Fashion HBS 9-703-497
Executive Summary

The case is based on the retail chain Zara located in Spain, it is regulating under the
global value chain, and it is offering premium quality products for both the middle class
and the higher-class customers. It has the different types of the product ranges and at
the same time, it has certain developmental skills as well as the integration processes
and differentiating strategies. The sections in the report will provide the detailed analysis
on the competitive performance of Zara, business models, growth chain and lastly the
detailed recommendations and the conclusions.

This case study analysis aims to answer the following questions for discussion:

 How well does Zara perform compared to its competitors?

 What are the sources of Zara’s competitive advantage?
 Which of these result from the “Spanish diamond”?
 How well do the various elements of Zara’s business model “travel globally”?
 Why might Zara “fail”?
 What are the best ways to grow the Zara chain?
 What are your top 3 recommendations to Inditex CEO Jose Maria Castellano
regarding the internationalization of Zara?

Introduction
Inditex is one of the renowned owners of Zara and at the same time, it is one of the retail
store located in Spain. Zara operates on the global chain and at the same time also
focusing on the designing, marketing, and the financial issues in a subsequent manner.
It has the particular level of the proper combinations of the sales and the marketing
concepts, which helps in the international competition among the competitors. The
organization is based on the international system as well as n the strategic business
systems so that the vertical structure of the commodity can be adjusted and at the same
time, they can be able to conduct with the other competitors.

Performance of Zara in comparison to its

competitors
The owner of Zara namely Inditex has entered into the competition with many of the
competitors such as Gap, Benetton and H & M. These three companies have the different
narrower nature of decision-making. As per De Brito, Carbone and Blanquart (2008)
most of the competitive stores other than Zara acquired most of the production and the
distribution activities of Zara but at the same time, the competitors outsourced
maximum of the resources to outside. In contrast to other competitors, Benetton mainly
makes an investment in production activities and at the same time, their licenses can be
able to run the stores.

Inditex was one of the renowned global retailers, its store Zara has different techniques
for the production and the manufacturing of the different apparels and footwear, and at
the same time, it has the different chains across the world. Around 80 percent of Zara’s
employees have been engaged in the selling process of the retail products (Sorescu et al.
2011). In 2002, the store called for the different types of the management plans and the
operation systems. Capital expenditures have been divided into different stages like 80
percent of the store openings, 10 percent on refurbishing, and the remaining 10 percent
is engaged in the logistics and so on. Zara engaged itself in offering the lower prices from
the customers and at the same time, it follows some of the franchising model systems
(Danese, 2013). Currently, Zara has opened some of the stores outside Spain to make
some of the investments in the manufacturing as well as the IT industries.

Sources of competitive advantage of Zara

The competitive organizational behavior is one of the important categories for the
success of Zara. Porter has introduced some of the important concepts such as
competitive advantage, competitive strategy as well as the competitive forces. Some of
the significant competitive sources by Zara are:

Low Cost: As per the classical model of Porter, the concept of differentiation and cost
are some of the important sources of competitive advantages. This type of strategy is
completely based on the efficiency and the cost control objectives. The competitive
strategy involves certain manufacturing items, distribution products as well as the
couture designs (Lamberg and Tikkanen, 2006).

Differentiation: This means to provide different brands as well as the customer

service to acquire the proper market share. The company has different technical
strategies as well as the information and the logistics systems with the help of the use of
controlled mechanized system (Rugman and Girod, 2003). Zara's most of the operations
are centered on the primary manufacturing opportunities in Spain. In this case, 50
percent of the items has been designed and manufactured based on different style
patterns and the designs (Massa and Testa, 2009).

Manufacturing of the small lot: The designed supply chain is there to support the
small production capabilities and proper shipments. It helps in the reduction of the
waste, which has been formed by lots of wasted designs (West, Ford and Ibrahim, 2015).

Supply chain operations: The innovations and the process as well as the product
development leads to higher demand for the products. Zara also has some types of extra
capabilities as well as the proper flexibilities to run the manufacturing plants across
India and at the same time having some advantage of adding the temporary laborers in
the case of urgencies.

Results from Spanish diamond

The environmental business of Spain is very asymmetric in nature and as per the
Spanish Diamond; Zara got different benefits from different positive factors such as an
inexpensive force of the laborers, various types of apparel workshops and so on. Spain
has earned different types of the advantages while having a closer look at various
markets and has gained an excellent position in the dynamic market driven by the
different types of fashionable market in the nation. Zara possesses different kinds of
strategies such as proper adaptation, aggregation and the arbitrage process (Wong and
Karia, 2010).

Zara has undertaken different types of the innovation strategies, which includes focusing
on the target local customers as well as the right decision at the right time. The power of
Zara cannot be copied as easily as it has a control on the value chain portion. By this way,
Zara can be able to maintain the good image globally and can be able to focus on
different kinds of responsible activities, which can be able to fetch better product for the
organization. Zara has a certain amount of centralized planning processes, which helps
in driving the better revenue for the organization (Rugman and Girod, 2003).

The management also needs to make a proper search of the successful

internationalization process for the developmental perspectives and tat the same time
the management needs to look at the local laws and the customary aspects. They need
the proper legal permissions to find a different competitive and structural base. The
strategy of Zara is to charge a premium price in the other European zones to provide full
support and in the same way to make an expansion (Voss and Seiders, 2003).

How different elements of business model of Zara "travel

globally"
Relevance:

The value proposition of Zara achieves higher quality designs and the fashions, which
depends on the average wealth capabilities and the necessities of the different countries.
The fashion culture is also there in Zara and for this purpose, the target customers of
Spain is around 80 percent, and the stores are properly designed and at the same time.
All the things in the stores are accurately placed with the higher market availability and
by this manner; all the targets of the local clients can be easily met (Fernie and Perry,
2011).

By this way, the organization can be able to maintain the better image globally and by
this way, each need of the customers are maximized in a high manner. Higher and the
middle Spanish families can be able to afford to buy the products from Zara's and by this
way, it can be able to meet the local requirements of the clients so quickly and in such an
appropriate manner. The significant resources need to be required in such a way so that
all of them can be well placed and at the same time can be able to meet all the
requirements of the organizations as well as the clients. The requirements of the
customer's needs to be strategically based so that they have the good impression about
the products and the demand factors (Macchion et al. 2015).

The above facts need to be made in such a manner so that all kinds of availabilities, as
well as the positiveness, need to be judged properly. In this regard, the more of the
income will be achieved and at the same time, the creativity can be made in the proper
way. The bigger the thought, the more will be the achievement. The real deals need to be
discussed in a certain way so that the ultimate discussion can be made correctly and in a
subsequent manner. The best way to deal with the different types of prospects is to make
the proper management with the best possible resources and the correct form of
practices (Epstein and Buhovac, 2014).
The business strategies need to be made in such a manner so that the proper
identification can be made in a perfect order and at the same time can be regulated in a
proper way of fashion and the greater way of possibilities. The need and the efforts that
need to be made should be same for all the results and the qualifications to make the
mass generation to fulfill all the requirements and the possibilities.

The longer term that needs to be made so that the positive energies and the values can be
made in the proper way and in a greater advantageous way. The main thing is to respond
to different portions of the classes so that every need and the success can be met and at
the same time can also be regulated in a proper manner (Jensen, 1993).The relevancy
and the accuracies are must for each of the levels and the policies and the adjustments.
The needs need to be judged and analyzed properly so that the proper issues and the
needs can be regulated and can be maintained on an equal basis and also in forced
developmental programs. All the regulations and the attitudes need to be made in a high
aspect manner so that the proper strategies can be adequately made and at the same
time can be judged accurately and on a real basis (Alexander, 1990).

Reasons for Possible Failure of Zara

Zara might fail due to different reasons. Those are due to focusing on the different
channels and at the same time, the organization is not able to match the speed with the
other competitors in the international market. The organization might face differences in
the case of proper positioning of the products and at the same time, it lacks the
competitive powers and skills within them (Ganesan,1994).The organization needs to
produce different ranges of products for all the countries to satisfy the needs of all the
customers across the world. The country at the same time also needs to focus on the
distribution as well as the production channels. The organization is not capable enough
to change the form real estate into the new regions.

Best ways for growing Zara chain

There are certain different growing possibilities of Zara like it can be able to test different
kinds of the design techniques and at the same time all the requirements which it will
take into consideration is to focus on various factories and at the same time to obtain
different materials from different sources across the world. It needs to involve the
improved cost mix and at the same time need to bring the limited markdowns to make
the production process much smoother and cheaper (Tokatli, 2008). The test designs
also need to be adapted so that some criteria can be fulfilled like the international
processes, delivery cycle processes and at the same time, the Asian sourcing could also
be prepared for the base items. The faster and the foremost designs need to be made so
that all the fulfillments can be done in a quicker manner (Rigby and Bilodeau, 2015).

There need to be some of the developmental needs so that everyone in the organization
can be able to take some of the important decisions and at the same time can be able to
make certain evaluations of the products. There are certain different needs of the
customers, which need to be fulfilled, and at the same time, the organization needs to
keep in mind the pricing factor. The pricing charges will be different for the different
regions (Markides, 2006). The minimum amount of requirement

There need to be minimum different goals and the objectives of the organization to check
the organizational behavior as well as the resource requirement of the organization.
There need to be proper leadership skills and good connection among the team members
to get the better outputs as well as, the better results in the organization. The needs and
the behavior of the customers need to be analyzed in such a way so that everything can
be stabilized in the proper manner (Jensen, 1993).

There needs to be proper communication in between the team members and so in this
case; the team members need to communicate with each other in a positive manner. The
whole situation is depending on the management policies as well as the business
strategies in between the team members. The proper business strategies include
different types of international processes as well as certain policies, which include the
time management and the proper management skills in between the partners and in
between the team members (Macchion et al. 2015).

The decision-making system needs to be made in a positive manner. The success of the
organization depends on the positivity as well as the self-confidence of the team
members (Markides, 2006).

There needs to be an average availability of the wealth, proper resources as well as the
necessities to fulfill the job so that the real problems can be handled easily. The well
behavior among the team members is necessary so that the proper planning can be made
and the overall revenue is good for all the members of the organization (Ganesan, 1994).
Branded manufacturers as well as the branded marketers, sell the products with their
brand names and at the same time continuously specializing themselves in the
production of the intermediaries as well as the proper management works and the
services (Epstein and Buhovac, 2014). ). The regularity as well as the proper task needs
to be carried to make the proper developmental processes easier and wealthier. This is
done to achieve the different prospects as well as the different forms of integrities
(Ganesan, 1994).

The different forms of the managements, as well as the resource formation, will help in
dealing with various forms of social aspects and dealing with various forms of the
cultural minds and the origins. The essential thing in the real life business is dealing with
the different forms of the aspects and at the same time makes different types of public
figures as well as the different needed images in the most critical as well as the critical
way (Rigby and Bilodeau, 2015).

The goals and the regulations that are needed to make the proper adjustments in a
definite manner and also at the same strategically order. The basic phase is to deal with
the different forms of the strategies and in a different manner. The ways that need to be
generated is formed in such a way so that all forms of the managerial tasks need to be
done n an adequate manner and in the best possible matters (Fernie and Perry, 2011).
The greatness and the achievements need to be made in the proper way so that all the
cases need to be studied in a proper strategically manner. The best way is to deal with all
the different kinds of the problems and to fight back in every aspect. The better way is to
make the self-cases in such a way so that all the possibilities can be generated in an equal
manner. The better management needs to be made in such a way so that every matter
can be judged properly and can be assessed on an average basis. The proper methods
need to be managed and at the same time need to be highly managed and at the same
time need to be properly managed and identified. The basic needs and the urgencies
need to be realized so that all the aspects can be done on an equal basis and can be made
in an equal manner (Rugman and Girod, 2003). The main thing is to face all the troubles
and to make all the things exceptional as per the terms and the conditions of the
adjacent reports and the proper needs of the families. The strategically maintenance
need to be there so that all the things can be met properly and at the same time (Epstein
and Buhovac, 2014).

Recommendations
Zara needs to focus on the different types of the business integration processes and at
the same time need to apply certain useful and the modernized techniques to fulfill
different types of objectives patterns and the fulfillments. It needs to manage different
multiple chain factors without compromising the available chain factors which are there
in the organization. Need to be made so that the ultimate objective can be met seriously.
The margins at the same time need to be kept in the preservation processes to satisfy all
the upcoming demands of the customers as well as all of the clients across the world.

Conclusion
The overall situation highlighted that the organization needs to focus typically on the
integrated business models as well as on the positioning and the pricing matters. They
need to have the clear idea about the tastes and the preferences of the customers in such
a way so that they can be able to gain the higher sales out of it. The preservations of the
margins need to be present equally to convince the customers and to operate in a higher
revenue scales.

Reference List for further study on INTEGRATING GLOBAL SUPPLY AND

MARKETING CHAINS

 Alexander, N., (1990). Retailers and international markets: motives for

expansion. International Marketing Review, 7(4)
 Danese, P., 2013. Supplier integration and company performance: A
configurational view. Omega, 41(6), pp.1029-1041
 De Brito, M.P., Carbone, V. and Blanquart, C.M.,(2008):Towards a sustainable
fashion retail supply chain in Europe: Organisation and
performance. International Journal of Production Economics, 114(2), pp.534-
553
 Epstein, M.J. and Buhovac, A.R., (2014). Making sustainability work: Best
practices in managing and measuring corporate social, environmental, and
economic impacts. Berrett-Koehler Publishers
 Fernie, J. and Perry, P., (2011). The international fashion retail supply chain. In
Fallstudien zum Internationalen Management (pp. 271-290). Gabler Verlag
 Ganesan, S., (1994). Determinants of long-term orientation in buyer-seller
relationships. the Journal of Marketing, pp.1-19
 Jensen, M.C., (1993). The modern industrial revolution, exit, and the failure of
internal control systems. the Journal of Finance, 48(3), pp.831-880
 Lamberg, J.A. and Tikkanen, H., (2006). Changing sources of competitive
advantage: cognition and path dependence in the Finnish retail industry 1945–
1995. Industrial and Corporate Change, 15(5), pp.811-846
 Macchion, L., Moretto, A., Caniato, F., Caridi, M., Danese, P. and Vinelli, A.,
(2015). Production and supply network strategies within the fashion
industry. International Journal of Production Economics, 163, pp.173-188
 Markides, C., (2006). Disruptive innovation: In need of better theory*. Journal of
product innovation management, 23(1), pp.19-25
 Massa, S. and Testa, S.,(2009). A knowledge management approach to
organizational competitive advantage: Evidence from the food sector. European
Management Journal, 27(2), pp.129-141
 Rigby, D. and Bilodeau, B., (2015). Management Tools & Trends 2015. London,
Bain & Company
 Rugman, A. and Girod, S., (2003). Retail multinationals and globalization:: the
evidence is regional. European management journal, 21(1), pp.24-37
 Sorescu, A., Frambach, R.T., Singh, J., Rangaswamy, A. and Bridges, C., (2011).
Innovations in retail business models. Journal of Retailing, 87, pp.S3-S16
 Tokatli, N., (2008). Global sourcing: insights from the global clothing industry—
the case of Zara, a fast fashion retailer. Journal of Economic Geography, 8(1),
pp.21-38
 Voss, G.B. and Seiders, K., (2003). Exploring the effect of retail sector and firm
characteristics on retail price promotion strategy. Journal of Retailing,79(1),
pp.37-52
 West, D., Ford, J. and Ibrahim, E., (2015). Strategic marketing: creating
competitive advantage. Oxford University Press
 Wong, C.Y. and Karia, N., (2010). Explaining the competitive advantage of
logistics service providers: a resource-based view approach. International
Journal of Production Economics, 128(1), pp.51-67

Here you can Download Zara Fast Fashion Case Study