  Textbook Solutions Expert Q&A Practice 

Find solutions for your homework Search

home / study / business / finance / finance questions and answers / zara: the capabilities behind the spanish “fast fashion” retail giant amancio ort…

Question:  
Zara: The Capabilities behind the Spanish “Fast Fashion” Ret… Post a question
Answers from our experts for your tough
homework questions

Zara: The Capabilities behind the Spanish “Fast Fashion” Retail

Giant Amancio Ortega built the world’s Enter question
largest fashion empire
through his Zara branded products and compa- ny-owned stores.
Through his management approach, Ortega became quite wealthy. In
fact, in 2015 he was the fourth
wealthiest person in the world
(with a worth of $64.5 billion). This placed him behind only Bill
Gates (the
wealthiest of all), Carlos “Slim” Helu and family, and
Warren Buffett. Headquartered in La Coruña, in Spain’s
Continue to post
Galicia
region, Ortega founded the Inditex Group with Zara as its flagship
brand. Despite Spain’s 24
percent unemploy- ment rate and crippling
debt, in 2012 Zara increased its revenue 17 percent. Also in 2 questions remaining
2012,
Zara averaged a new store opening every day, including its six
thousandth store launched on
London’s Oxford Street. Although the
influence of the economic environment (an influ- ence from the
external environment that we examined in Chapter 2) affects Zara’s
success, the way Zara uses its
resources and capabilities as the
foundation for core competencies (core competencies are
capabilities that
Snap a photo from your
serve as a potential source of competitive
advantage for a firm over its rivals) demonstrates the value of
understanding a firm’s internal organization. Ortega built this
successful business based on two critical phone to post a question
goals: Give customers
what they want, and get it to them faster than anyone else. To do
“fast fash- ion,” as We'll send you a one-time download
it is called, there are several critical
capabili- ties that must be in place. The first critical capability
is the link
ability to design quickly; the design pace at Zara has been
described as “frantic.” The designers create
about three items of
new clothing a day, and pattern makers cut one sample for each. The
second critical
capability is the commercial sales specialists from
each region where Zara has stores. They provide input
888-888-8888 Text me
on customers’
tastes and buying habits which are reported through store managers.
Each specialist is
trained to keep an eye on what people are
wearing, which Ortega, as well, does personally since founding By providing your phone number, you agree to receive a one-tim
Zara. As such, Zara has a team approach to match quick and creative
design with information coming in automated text message with a link to get the app. Standard
messaging rates may apply.
from the sales staff through
regional specialists and sector specialists to operationalize new
fashion ideas.
Zara’s supply chain is also managed much more
efficiently than those of other companies. The logistics
department
is the essence of the company. Rather than waiting for cloth to
come in after designing, Zara
already has a large supply of basic
cloth and owns its own dyeing operation to maintain control and
speed.
Zara’s objective is to deliver customized orders to every
store in its empire with a 24-hour turnaround for My Textbook Solutions
Europe, the
Mideast, and much of the United States, and a 48 hour turnaround
for Asia and Latin America.
The frequent shipments keep product
inventories fresh but also scarce since they send out very few
items
in each shipment. This approach com- pels customers to visit
stores frequently in search of what they want
and, because of the
scarcity, creates an incen- tive for them to buy on the spot
because it will likely not be
in stock tomorrow. Accordingly,
Zara’s global store average of 17 visits per customer per year is
considerably higher than the average of three visits per year for
its competitors. Until 2010 Zara did not
have an online strategy.
Unlike most retailers it has used very little advertising because
it has focused on a
Numerical... Loose Leaf... Precalculus
rather cheap but fashionable approach. The
fashion draws the interest of customers and, thereby, created 7th Edition
a
huge following on Facebook, with approximately 10 million
followers. This compares favorably to other 6th Edition 4th Edition
competitors such as
Gap. The rarity of the individual pieces of clothing gives
customers a sense of
View all solutions
individuality. This creates a stronger
potential for Zara to pursue an online strategy relative to its
competitors. Most Zara stores are owned by the parent com- pany,
and many of its suppliers, although not
owned by the company, are
considered long-time, relationship- oriented partners. As such,
these partners
identify with the company and, therefore, are loyal.
This approach also sets Zara apart and makes its
strategy difficult
to duplicate because all of the various facets and capabilities of
the company fit together
through a unified culture. As noted above,
Zara also operates its own dyeing plant for cloth, giving it
significant control over its products. Likewise, it sews many of
these garments in its own fac- tories and,
thus, maintains a high
level of quality control and an ability to make quick changes.
Overall, the com- pany
has a unique set of capabilities that fit
together well as it manages activities to produce “fast fashion,”
which creates demand from their customers and loyalty from their
partner suppliers.
1. What influences from the external environment over the next
several years do you think might affect the
way Zara competes?
2. How easy or difficult do you think it would be for
competitors to imitate Zara’s supply chain as a
capability?
3. Is getting products to customers as quickly as possible an
outcome that you believe would create value
in industries in
addition to clothing? If so, which industries and why?
4. What value does Zara create for its customers?
5. As you study how Zara competes and the capabilities it uses
to do so, are there areas of the firm’s
operations you believe
might be candidates for outsourcing? If so, what areas and why
might those be
outsourced in the future?
Please provide with examples thank you

Expert Answer

Pritish answered this

Was this answer helpful? 11 0
90 answers
 1. The major challange is going to come from the revolution in
Analytics. With the help of analytics,
companies in fashion
industry will be able to predict the change in tastes of the
customers in advance and
can leverage it when the opportunity
comes. Secondly this will be easier for competitors to replicate
Zara's
business model, which may lead to reduction in competitive
advantage that Zara has over its competitors.
Hence Zara needs to
constantly evolve and change it's strategy with changing time.
Third, with the rise of
economies like India and China, the market
is going to shift from Europe to Asia. So Zara might need to
change
its production strategy to avail the cost competitiveness these
economies provide.

2. With the emergence of analytics and artificial intelligence,

companies will be able to predict the change
in fashion tastes of
customers in different parts of the world. This may lead to
disruption in supply chian
strategy. To take advantage of cost
competitivenss, companies might need to shift their production
facilities ot India, China or other Asian countries. Hence in
future companies may not need to follow Zara's
supply chain
strategy.

As of now, its difficult to replicate the supply chain

capability of Zara because of such short turn around
time.

3. In almost evry industry, its a key metric to provide

customers what they want, and provide it quickly.
Because there is
always a first mover advantage. The other industries that may
benefit from this strategy
are Automobile industry, Online retail
Industry, food and beverage industry etc.

4. Zara produces designs which are scarce. They don't sell

clothes of same design to multiple customers.
This gives the
customer sence of individuality in owning the apparel. Again Zara
keeps its stock up to data
with latest fashion. This cater the
customers to their needs and make them loyal to the brand.

5. Zara may outsource its production. It's core capabilities is

creating designs rapidly with changing market.
So it can focus in
designing the clothes and outsource its production, especially in
Asian markets.


Comment

Practice with similar questions

Q: Zara:
The Capabilities behind the Spanish “Fast Fashion” Retail Giant
Amancio Ortega built the world’s largest fashion
empire through his
Zara branded products and compa- ny-owned stores.
Through his management approach,
Ortega became quite wealthy. In
fact, in 2015 he was the fourth wealthiest person in the world
(with a worth of $64.5
billion). This placed him behind only Bill...

A: See answer 100% (4 ratings)

Q: Zara: The Capabilities behind the Spanish “Fast Fashion”

Retail Giant
Amancio Ortega built the world’s largest fashion
empire through
his Zara branded products and company-owned stores. Through his
management approach, Ortega
became quite wealthy. In fact, in 2015
he was the fourth wealthiest person in the world (with a worth of
$64.5 billion).
This placed him behind only Bill Gates...

A: See answer

Show more 

Up next for you in Finance

You take out a $10,000

With nominal interest rates,

loans for 7 years at an

the helps protect lenders

annual interest rate of 5%

from having the

and with fixed annual loan

purchasing power rewar…
payments of $1,728.20. The
See more questions for
percent of the first fixed
subjects you study
payment that is applied to

interest would be ____

See answer See answer

Questions viewed by other students

Q: Zara: The Capabilities behind the Spanish “Fast Fashion”

Retail Giant
Amancio Ortega built the world’s largest fashion
empire through
his Zara branded products and company-owned stores. Through his
management approach, Ortega
became quite wealthy. In fact, in 2015
he was the fourth wealthiest person in the world (with a worth of
$64.5 billion).
This placed him behind only Bill Gates...

A: See answer
Q: How easy or difficult do you think it would be for competitors to imitate Zara's supply chain as a capability? Why? As
you study how Zara competes and the capabilities it uses to do so, are there areas of the firm's operations you
believe might be candidates for outsourcing? If so, what areas and why might those be outsourced in the future?

A: See answer 100% (1 rating)

Show more 

COMPANY LEGAL & POLICIES CHEGG PRODUCTS AND SERVICES CHEGG NETWORK CUSTOMER SERVICE

About Chegg Advertising Choices Cheap Textbooks Mobile Apps EasyBib Customer Service
Chegg For Good Cookie Notice Chegg Coupon Sell Textbooks Internships.com Give Us Feedback
College Marketing General Policies Chegg Play Solutions Manual Thinkful Help with eTextbooks
Corporate Development Intellectual Property Rights Chegg Study Help Study 101 Help to use EasyBib Plus
Investor Relations Terms of Use College Textbooks Textbook Rental Manage Chegg Study
Jobs Global Privacy Policy eTextbooks Used Textbooks Subscription

Join Our Affiliate Program DO NOT SELL MY INFO Flashcards Digital Access Codes Return Your Books

Media Center Honor Code Learn Chegg Money Textbook Return Policy

Site Map Honor Shield Chegg Math Solver

© 2003-2021 Chegg Inc. All rights reserved.