Zara was developed with the initial goal to link customer demand to manufacturing, and link manufacturing to distribution. Zara has been successful to remain focused on its core fashion
philosophy that creativity and quality design together with a rapid response to market demands will yield profitable results. The goals such as short lead times, decreased inventory risk, and great choice of style and clothes have helped formulate a unique value proposition and shape Zara’s current business model.
Zara’s strategy requires the generation of a great deal of product variety throughout the year (Ferdows, Lewis, & Machuca, 2003). Zara introduces 11,000 new items in comparison to 2000-4000 of its competitors. Zara treats the items as starting point instead of treating them as end of its design and procurement efforts (McAfee, 2004). Zara competes in the market with a strategy where a vertically integrated supply chain is dedicated to customer responsiveness. Zara has differentiated itself from its competitors by focused differentiation strategy, where it focuses on young, fashion-conscious city dwellers. Their commitment to this goal and their capabilities that they have developed to achieve it, have provided significant competitive advantage to Zara especially in the areas of product development, strategic partnerships and cost of production, advertising and marketing, and information technology infrastructure.
Speed and Decision-making
Ortega and Castellano believed that Zara needed to respond quickly to the changing fashion trends, which were very hard to predict and hard to influence. It needs to target the young, fashion-conscious city dwellers. Zara wanted to deliver styles when they were in fashion, rather than persuading the customers through marketing. The hallmark of Zara is its pull process. Another added advantage Zara has is of disintegrated decision-making. Instead of relying on the decision of a small group, it has given the autonomy to all the employees to delegate on behalf of the company. For example, the store managers decide what clothes would be on sale, and another small group called as “commercials” decides the design and production of clothes. Unlike other stores where the design teams decide the clothes design first and then introduce it in the market, Zara’s commercials scan the market and then decide on the design. The senior managers hardly challenge the decision made by the commercials.
Zara was developed with the initial goal to link customer demand to manufacturing, and link manufacturing to distribution. Zara has been successful to remain focused on its core fashion
philosophy that creativity and quality design together with a rapid response to market demands will yield profitable results. The goals such as short lead times, decreased inventory risk, and great choice of style and clothes have helped formulate a unique value proposition and shape Zara’s current business model.
Zara’s strategy requires the generation of a great deal of product variety throughout the year (Ferdows, Lewis, & Machuca, 2003). Zara introduces 11,000 new items in comparison to 2000-4000 of its competitors. Zara treats the items as starting point instead of treating them as end of its design and procurement efforts (McAfee, 2004). Zara competes in the market with a strategy where a vertically integrated supply chain is dedicated to customer responsiveness. Zara has differentiated itself from its competitors by focused differentiation strategy, where it focuses on young, fashion-conscious city dwellers. Their commitment to this goal and their capabilities that they have developed to achieve it, have provided significant competitive advantage to Zara especially in the areas of product development, strategic partnerships and cost of production, advertising and marketing, and information technology infrastructure.
Speed and Decision-making
Ortega and Castellano believed that Zara needed to respond quickly to the changing fashion trends, which were very hard to predict and hard to influence. It needs to target the young, fashion-conscious city dwellers. Zara wanted to deliver styles when they were in fashion, rather than persuading the customers through marketing. The hallmark of Zara is its pull process. Another added advantage Zara has is of disintegrated decision-making. Instead of relying on the decision of a small group, it has given the autonomy to all the employees to delegate on behalf of the company. For example, the store managers decide what clothes would be on sale, and another small group called as “commercials” decides the design and production of clothes. Unlike other stores where the design teams decide the clothes design first and then introduce it in the market, Zara’s commercials scan the market and then decide on the design. The senior managers hardly challenge the decision made by the commercials.
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