Mgt704 Global Business Management Science Assessment Answers

Introduction

The following report serves the purpose of the identification of the issues in the case of Zara. The retail fashion store applies a rapid-fire fashion strategy that has enabled the company to become successful. The report also discusses the fundamental reasons for the success while comparing with another successful company and an unsuccessful company. The strategy by which the company maintains the competitive advantage has also been discussed. The concept of sustainability has also been explained. The respective business organization is a clothing and accessories retailer that is based in the Glacia port (Zara.com, 2017). It was established in the by Amancio Ortega Goana in the year 1975.  This clothing organization is one of the largest apparel retailers. This particular group of fashion includes brand as the Massimo Dutti, Pull and Bear, Zara Home, Berskha, Oyosho, Uterque and Stradivarius. The clothing retailer uses the various information technologies and different using groups of designers instead of the individuals (Islam, 2016). The Spanish clothing and accessories retailer is ranked along with thirty other Interbrands in the list of the global brands. The stores keep variety of clothing ranging from clothing for men, women and children. The various products are supplied based on the trends of the consumers (Zara.com, 2017). The clothing retailer has a responsive supply chain, which provides for the new products in the stores twice in a week. The stores are located across eighty-eight countries. The brand’s performance is growing every year and there has been an increase in the revenue that is more than the three-fold generated revenue.

Discussion

Business strategy

The clothing retailer has made the possible innovations in their industry. Their business model is said to be super responsive in nature that is driven by the buyer and the supply chain. The consumer of the products plays the most important role (Aribowo and Hadiprawiro 2013). The activity of designing and production begins by the demand of the consumers at the retail stores. The information about the trend and the feedback from the customers are received on a continuous basis. These information and feedbacks are reported back to the headquarters of the company on an instant basis. Zara influences the immediacy of the production and then carries out a great part of the production in the factories that belong to the Group (Zara.com, 2017). The products of Zara are shipped from the central distribution centre to the stores directly. This practice is performed twice a week in small consignments. The inventories of the clothing retailer are kept low while the stores are kept fresh and updated. The business system of Zara enables a rotation time in two weeks.

Application of rapid-fire supply chain

The application of the rapid-fire supply chain requires the support of the top-quality systems of communication. The focus of the clothing retailer is to create a soaring communication channels that is responsive in nature and the operation of the business meets the demand of the customers (Hansen 2012). There is gathering of information is done through the spotting of the trends from the various publications in the industry, television, internet and universities worldwide. The sales information is collected by the regular telephonic conversations that occur between the market specialists and the managers of the store. The Company organizes the information technology instruments that are latest in the market. These instruments help to facilitate the fast exchange of information. The customized PDA connects the headquarters and the retailer stores. The managers at the stores transmit the different types of information on an instant basis. The information ranges from hard data as the information about the sales and the orders to soft data as the reaction of the customers and the buzz that is around the new styles. This communication strategy is maintained by the organizational structure of the Company. This responsiveness nature is primary to the rapid-fire supply chain of Zara. The constant flow of the data that is updated alleviates the bullwhip effect that is an observed occurrence in the distribution channels that are driven by forecast. The small disturbances that may arise could cause major fluctuations in the upstream of the supply chain (Hansen 2012). There are separate teams of management organize the small disturbances in retail orders at the other apparel retailers. There is a rigid schedule maintained for the placement of the orders and receiving the stock. The orders are placed twice weekly by the store managers. The delivery is received by the store twice a week. This accelerated supply chain makes Zara the fastest among its competitors. There is also a centralized distribution centre in La Coruna where the orders are manufactured overnight. There is the use of the logistics system by the company where the respective software is designed by its own teams. There is production of small batches of the products. This is a costly practice but the short leads contribute to an increase in the forecast accuracy for a short term. This allows the lowering of the sale markdown that helps to contribute to an increased profit margin.

Reasons for Success

With the help of the August Inditex, Zara reach a value of around €100 billion in its history of thirty years. The in-house design team of Zara has an item in its store within duration of three weeks. This duration is from the beginning of the process of designing to the time when the product is made available for the customer at the store. The clothing retailer takes in 15 to 25 percentage of the season’s stock (Zara.com, 2017). The clothing retailer has the capacity to follow the appearance of the new trend in the mid season and provide the interpretation at the stores, which the competitors are not able to. The clothing retailer also has the ability to discontinue the supply. Zara values the feedback of its customers. The store manager sends the order twice a week to the headquarters. These orders take into account the data of the sales from the stores and act as subjective evidence from its customers. The respective orders are fulfilled and they reach the stores in two days. The clothing retailer has multiple functions that make the experiences for the customers easy and enjoyable. The new stocks arrive twice a week on Mondays and Thursdays. The clothing retailer also offers the function of in-store availability with fast and free delivery on orders that are more than £50 (Kwon and Choo 2014). The Company also provides alerts on email systems, which informs about the availability of the stocks. They provide services to their customers at their best. Zara provides for a variety of colors, materials, and leg width and waist heights in the apparels. This is one of the main reasons for the success of Zara and the clothing retailer being ahead of its competitors. Zara focuses on the team of designers and the mangers of the products (Hansen 2012). They are responsible for looking at the design, sourcing and the production of the detailed classification of the apparel. The clothing retailer company does not spend much on advertising and this savings helps to support the high cost of production in Spain. This permits the company to manufacture what the customers want.

Comparison with Jac and Jack (successful)

Jacqueline Hunt ‘Jac’ and Lisa Dempsey ‘Jack’ established this clothing retailer organization in the year 2004. This clothing retailer brand sells high quality of modern clothing, which is worn, by men and women every day. The clothes that are manufactured by this retail outfit are of neutral shades that are made up of white, grey and black. The materials that are used to manufacture these clothes are sourced from the ethical suppliers. The purchase is available online and in the in-stores which is based throughout Sydney, Melbourne and London. The customers of this brand are attracted to the unstructured designs that are relaxed and sophisticated in nature. Each piece of the apparel is made with integrity. The manufacturers of the apparel at Jac and Jack use premium and natural yarns that make the apparel soft and comfortable. The company has expanded its stores in Melbourne and Sydney. The label has expanded beyond the original focus on the knitwear. The frequent delivery encourages the consumers to visit the store more often (Jac+ Jack, 2017). The customers can find new products, as there is constant design and creating of variety of styles. Zara is ahead of its competitors as it offers a range of products with a fabric that is less expensive and at a low price. It provides cost efficient quality of apparel that brings high customer appeal. The rapid-fire supply chain provides the company capitalization of the internal and external value chain network. Zara is one of the most recognized brands for an upscale affordable fashion.

Comparison with Marcs and David Lawrence (Unsuccessful)

Marcs and David Lawrence has gone into voluntarily management by citing the deterioration in sales and the general condition of the market. There has been a poor cash flow in the clothing retailer. The clothing retailer was under the pressure of the competitors in the target market. The brands manufactured apparel for men and women (Hansen 2012). There was a stagnation of the sales due to increase in the competition from the online trading and other competitors in the market. This is due to the lack of investment in the differentiation and the innovation of the brand (news.com.au — Australia’s #1 news site, 2017). The reason for failure of Marcs and David Lawrence is due to the seller being interested in a deal for both the brands. The company has collapsed under a debt of around $30 million. While Zara focuses on a range of customers while Marcs and David Lawrence engage with the mid-tier shopping audience and focus on only one type of customer (marcs and davidlawrence.com, 2017). The clothing retailer does not reinvent himself or herself constantly. There was no maintenance of the relevance. The brand was growing but it was not able to maintain its growth.

Competitive advantage and concept of sustainability of Zara

The concept of sustainability is the development in a sustainable manner so that the needs of the present generation are met without compromising the needs of the future generations. Zara adapts to the couture designs, manufactures the items and distributes the products to its stores in almost two weeks. The manager of the stores and the sales team monitor the new trends at a continuous rate and then report the preferences of the customers to the designers at the headquarters. Zara designs and manufactures majority of their apparel that their consumers buy in their stores. This is known as vertical integration that is the factor to quick innovative manufactured goods introduction cycle. The operation of manufacturing is centered on the primary manufacturing facility in Spain. The introduction of the new product from the sketch of the clothing to the store is in four to six weeks. The liveliness of the total design and the supply chain process is fundamental to supporting the core strategy of Zara. The clothing retailer may take advantage of the fleeting interest of the customer in the new designs and the styles because of the introduction cycles of the new product (Gamboa and Gonçalves 2014). The design, production, supply chain capability allows the production in small lots. This supply chain supports the in time capability with the small lots of production and the frequent shipments to the stores. This helps to reduce the waste that is created by the large amount of the designs, which have to be sold for large discounts. Zara does not hold up large amounts of inventories. The responsive manufacturing and the capability of the supply chain helps to maintain the low level of the inventory and replenish them two times a week. The new product development method of Zara and the supply chain operation is an important part of the fast fashion business model. The clothing retailer has the capacity to respond to the demand of the customers as the development and the change takes place. The factories of Zara are situated in Europe. The centre of distribution is close to the retailers that enable the cost of distribution to be lower and the merchandize reaches the stores and the customers at a lesser time. Zara provides value to its customers by providing them with the updated fashion trends (Hansen 2012).

Being suitable for other Companies

The cost of the clothing is cheaper in Europe compared to the other areas. Zara accommodates customers in every country and does not limit itself to a single company. The company cuts the cost in advertising and other areas for the maintenance of the high quality of the products and low cost of the fashion designs. This helps the company to generate a larger amount of revenue that the retailer that produces the products at a higher cost and also sell its product at a high cost. The company has faster rate of production because of the rapid-fire supply chain. The production of this clothing retailer is in-house with flexibility in the designing and the production. Zara has a rich process model that is managed across the inbound logistics, operation and the outbound logistic. The brand image of Zara and the business concept is built in the marketing and the sales activities. The advanced information and communication technology infrastructure and the well-functioned procedure of communication is the reason for the success of the company (Greenhouse 2014). The other companies can attain the competitive advantage in the market through the information system of the organization, the processing model and the brand of Zara. The fashions trends nowadays encourage the customers to buy various items from various sources. The creation of the unique personal style of Zara is the key factor for its success. Zara beats the other high fashion stores by offering diversity of products with the same design manufactured by a less expensive fabric. Then marketing strategy of no advertising and hence providing the customers the products at an affordable price (Matherly and Richards 2013).

Conclusion

Thereby, the report discusses the issues in the case of Zara. The retail fashion store applies a rapid-fire fashion strategy that has enabled the company to become successful. The report also discusses the fundamental reasons for the success while comparing with another successful company and an unsuccessful company. The strategy by which the company maintains the competitive advantage has also been discussed. The concept of sustainability has also been explained.

Recommendations

The clothing retailer may take advantage of the fleeting interest of the customer in the new designs and the styles because of the introduction cycles of the new product. The design, production, supply chain capability allows the production in small lots. This supply chain supports the in time capability with the small lots of production and the frequent shipments to the stores (Hosen 2015). This helps to reduce the waste that is created by the large amount of the designs, which have to be sold for large discounts. Zara does not hold up large amounts of inventories. The cost of the clothing is cheaper in Europe compared to the other areas. Zara accommodates customers in every country and does not limit itself to a single company. The company cuts the cost in advertising and other areas for the maintenance of the high quality of the products and low cost of the fashion designs.

References

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