ZARA Case Study Solution

ZARA Case Study Solution

1. Introduction

Zara, a well known reputed fashion designing and manufacturing company has been declared most efficient and market responding enterprise in UK’s fashion industry. Mr. Amancio Ortega, the creator and initial organizer of Inditex is appreciated for his strategic decisions as well as his market competition winning strategies have been accepted and followed by his competitors now.

Zara, one of the brands of Inditex, founded in 1975, is the most renowned and famous fashion icon. It is not only generating the highest profit margins for organization but also is the most famous and recognized by customers in market (Murphy, 2008). The majority of captured market by Inditex is for Zara. An estimated share of Zara in total revenue of group is 80% (Brand Watch Zara, 2004, p.2). It’s a Spanish based company, and has successfully proven itself as a leading company which is successful in positively providing service to their customers. It is the fashion icon which is serving industry since decades and still its customers are so satisfied that it is going to be even better in future. Management has taken decisions that were entrepreneurial at that time and still most of the companies in industry are not deciding on same fronts. Such decisions that lead to success are possible after a deep thoughtful process that requires environmental analysis (both at macro and micro level), external and internal analysis and a rational logical decision making process provides plans and objectives. Zara has already reached its objectives and is a leading company and now further expansion of company is under consideration (Sull and Turconi, 2008). In this document, we are going to analyze the market environment and making some achievable plans for future. This process would be critical and crucial because it leads to decisions that are basis for future actions and these critical decisions for future flow of activities will decide future of company in industry, i.e. a success or failure. Decisions taken hastily may leads to great losses as we may observe in Sainsbury’s case. They have changed supply chain and gone through a series of problems that takes the company years back. Zara has already used technology in its manufacturing plants, where complex process are required to be simplified but such decisions that to which extent we may incorporate technology in process and tools are to be taken after concise measurements and analyzing. There are existing domains where the company may progress and we are going to explore such opportunities in environment.

2. Present Objectives and Mission

Inditex group has clear and definite concept and plans for future. In their mission statement they have described their priorities and general processes that are selected for organization. The founder has chosen a set of strategies that ensures a long lasting, promising successful career. The group’s mission statement for Zara, under the head of ‘Environmental Policies’ says; “Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interacts”. At every store level, the mission has been defined as, “At the store

• We save energy.

• The eco-friendly shop.

• We produce less waste, and recycle.

• Our commitment extends to all our staff.

• An environmentally aware team.”

For features and formation of products, the mission is as follows, “With the product

We use ecological fabrics.

Organic cotton.

We manufacture PVC-free footwear.”

Distribution channel, i.e. after formation the transportation of finished products from point of production to point of sale has been defined to be environmental friendly as “In transport, we use biodiesel fuel”. (http://www.zara.com/webapp/wcs/stores/servlet/category/uk/en/zara-/OurMissioStatement)

A business vision for specifically Zara, a fashion based products offering company is, “ZARA is committed to satisfying the desires of our customers. As a result we pledge to continuously innovate our business to improve your experience. We promise to provide new designs made from quality materials that are affordable”. (zara.com)

So far, the company has satisfying progress towards completion of defined goals. Inditex as a group has been recognized more co-friendly than competitors and now has gained a repute of being sensitive and rational towards the community and environment welfare issues.

Zara is offering products (clothes, shoes and furniture) in 68 countries. A range launched in a country is followed in all the stores and same culture of rapid sale and removal of older inventory is followed. A general concept followed by Zara so far is to offer variety of clothes in a short quantity and for a shorter time period, customers being aware of this flow of items in stores, choose and buy the items right away rather than waiting for some ‘sale’. Products offered by Zara are not very highly priced and a common acceptance for prices and quality of items has been observed. As Folpe (2000), a market observer said that fashions introduced by Zara are more like “Banana Republic” and prices are like “Old Navy”. Men, Women and children section have duly served for and targeted the potential customers. Its products are capable of satisfying shoppers’ needs. Demand management is done by supplying directly from Zara, Spain. A fast and responsive system for shipments have been developed that is satisfying current needs. Currently Zara is working on its environment friendly program and launching stores with technology that supports its approach. At recent annual general meeting, deputy chairman of group has said that “Environmental issues are a key component of Inditex's global strategy”, moreover he mentioned that this would be the strategic target for 2020, to be implemented in all new stores launches.

3. Situational Analysis

Zara has satisfied the customers and has implemented strategies that made it possible to become dominant in fashion industry. Zara has been in market since two decades and has developed its brand image in shoppers. All the 68 countries are following same concepts that are associated with the original brand. Zara has an efficient and continuous communication system with

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