Executive Summary
Operations management is in regard to management about monitoring, designing and managing all process of operations in companies. Every company has its own operation strategies, so it is crucial to get more profit through reducing cost and time in operation process.
Zara, as one of largest apparel retailer over the world, has changed the process of the whole fabric of the industry. Operation strategy of Zara involves having little stock, fast updating collections and communication within process of operation etc. Zara renew its products twice a week to pursue latest fashion, on the other hand other competitors only update once a season,
This report is going to analyze attacking and defending through Zara’s operation, in
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Although competitors have cheaper for the average cost in Asia, Zara has more competitive operation advantages than rivals. Nevertheless, other competitors have less cost on labor; they are lack of flexibility in changing and checking orders within operational process. Zara has lower inventory, so it need less warehouse charge and can invest more money on innovation and shop decoration. On the other hand, competitors have taken more inventory cost as orders are stocked for almost a season in advance until scheduled shipment to stores and distribution facilities. Lower inventory cost is one of key aspects to get Zara to keep its products at cheaper …show more content…
Comparing with other competitors such as H&M which only updates new designs once a season, Zara restocks twice a week to pursue latest fashion. Instead of spending average 3.5% of revenue on advertisement, Zara spends only about 0.3%. Zara spends more in technology operation, store decoration, innovation and keep products cheaper. Zara relies on its stores to build its image and has specialists whose main work is to keep changing the layout of the store every week. As a result, fashionable and changeable stores of Zare encourage shoppers to come back again and also mean that customers need buy their preferable products fast before sold out because of low
However, Zara are usually compared to premium brands for instance Armani, Hugo Boss and others because of this Zara have some stores which are premium and others which are affordable. Zara mostly have a premium pricing strategy the pricing is made by optimising development and training costs (Hitesh Bhasin, Marketing mix of Zara) looking at pricing as portion strategy Zara are looking into high quality and high price. Zara pricing approach in my opinion is value-based for example a detail in a product and the quality of the product will mean the cost will be higher for instance a well designed detailed leather jacket will cost more compared to a basic design leather jacket because the difference of producing the detailed jacket which takes time to designing and material being used compared to the basic quick to make
Zappos is an online shoe and clothing store. The idea of an online shoe store originally came from Nick Swinmurn in the year 1999. He then pitched the idea to Alfred Lin and Zappos’ current CEO Tony Hsieh. Zappos quick rise to success is mostly attributed to their ten core values. These values vary from creating fun and weirdness to being humble. However, the root of this company’s success lies only on one important thing: their regard for customer service. They value the quality time spent with customers over the phone rather than the quantity of customers.
The strongest visual presentation that Zara creates are the mannequins in front of the stores and also standing through the glass windows. Since all of them are wearing the trendies clothing from this season and they all look put together, that draws many people to go in to the store and have a look. Not only they will have one style, there will be many different styles on the mannequins, so it will bring different types of people in.
Zara sources fabric, other inputs, and finished products from external suppliers. It has purchasing offices in Barcelona and Hong Kong. This gives Zara a competitive advantage towards the costs of goods sold, as it can purchase from both Europe and Asia according to prices. Buying more from China in the future might reduce even more the costs of goods sold.
Zara’s own brand and business model is equally competent and valuable because it involves fast turnaround times of quality designer clothing from their own manufacturing factories. It 's also pointed out that this enables them to launch new products every week which attracts customers back even though they do not advertise in order to concentrate their revenue on growing and expanding into more countries like
For example, occasionally M&S has products shipped to Asia to be created, then back to the UK for packaging and labeling, and back once again to Asia to be sold in their retail stores. This increases production costs and time, placing them at a disadvantage to Zara. Zara uses two main centers for their products, a supply center in Beijing and it’s manufacturing center located in Spain. M&S also creates collections in mass numbers compared to Zara, therefore, failed designs cost the company far more money. Zara’s success in inventory turnover lies in the process of creating far less product, keeping its exclusivity, and decreasing its risk of profit
b) Zara can focus on expanding and increasing the number of outlets in Asian countries such as China and India. The scope of development is very high and the demand for fashionable clothes is increasing at a very fast rate. But it will have to focus on other local competitors who provides the latest fashion at a cheaper rate. As Zara is a known brand, so it would be easy to increase awareness among the consumers through advertisement, promotions and celeb endorsements.
The fundamental business strategy of Zara is very simple which is linking customer demand to manufacturing, and liking manufacturing to distribution. Zara has been running their business in fashion industry which is susceptible to seasons and quick changing customer tastes. Zara has been approached to and considered their business as a perishable commodity business just like a fresh baked cake or bread to be consumed quickly.
Operations management focuses on carefully managing the processes to reduce and distribute products and services. Related activities include managing purchases, inventory control, quality control, storages, logistics and evaluations. A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes. Ultimately, the nature of how the operations management is carried out in an organisation depends very much on the nature of products or services in the organisation, for example, retail, manufacturing, wholesale and etcetera.
Operations management strategies play an important role in any organization to achieve organizational goals. An organization uses these operations strategies to maintain and control all its operations...
H&M is the world’s second largest retailer, only behind its main rival Zara of Inditex (Petro, 2012). The company currently has 3006 stores in 53 countries. The company does not own any factories. H&M outsources production to network of 800 independent suppliers; 75% in Asia and 25% in Europe. In order to increase the efficiency and productivity of its supply chain, the company strategically locates its network of 20 to 30 production offices close to its suppliers. According to Stockholm Newsroom, the pretax profit of the company for the month of June to August of 2013 is $907 million, which indicates an 11 rise in turnover (Pollard, 2013). The company continuous development plan facilitates its goal for both brick and mortar, and online stores expansion worldwide. The target segments for H&M, a category specialist store, are trendsetters and fashion/money conscious males and females ranging from 16 to 40 years old with income ranging $15,000 to $60,000 annually.
Carr’s (2003) analysis of the commoditisation of IT represents food for thought for Zara. IT capability is valuable, regardless of whether or not it is a commodity, only if it enables the business’ strategy. Zara uses a vertically integrated supply chain to deliver their competitive strategy of fast fashion. IT is a vital component of its strategy as its employees need access to information across all stages of its value chain. The data contained on its network is vital to support critical business decisions. The fast fashion strategy requires all personnel to be in a position to respond quickly and effectively to changing fashion trends and customer demands. Zara are fast followers of fashion and IT is important for keeping its designers in contact with its suppliers.
This paper describes the various aspects of the Zappos case. The objective is to evaluate the depth analysis of the Zappos strategy. It enables to determine the Zappos strategy, business model & marketing strategy, and smartness of the Zappos acquisition.
o establish whether there were differences in purchase intention for Zara factors between the respondents of different backgrounds, tests of variance were carried out using Student’s T-Test and Analysis of Variance (ANOVA). The results of comparison are presented in tables 4.9 – 4.20.
Zara is part of the Inditex Group along with the other well-known brands such as Pull & Bear, Massimo Dutti and Bershka. As the fastest growing fashion industry, Zara has opened more than 2000 stores in 77 countries and well-known brand image for its high quality fashions with huge range of designs and affordable price. The stores are mostly company owned except in some area that is not possible where its local legislation does not allow foreigner-owned business. While the parent company, Inditex Group has opened more than 6000 stores including Zara in 88 countries.