Zara Case Study Answers

Teague Homework 9

MBA 672

11/10/15

1a: Zara’s ability to manage some of the manufacturing in-house and distribute only what is absolutely necessary to outside manufacturers gives them a unique amount of flexibility and control over cost and quality. Their competitors are primarily outsourcing the production, so that control over price is lost.

1b: The stores are able to receive inventory quickly and more than once per week, which allows them to keep their inventory “fresher”. The stores also don’t keep any inventory beyond what is on the shelves, in most cases, so they run the risk of running out of some styles that prove to be more popular than others. In the planning phases, store specialists worked in the same space as the designers, receiving information directly from the store managers, which allowed for quick feedback and the ability to rapidly transfer new ideas.

1c: From a cost-control and scaling perspective, the company’s strategy to outsource more and look to lower-wage countries for more production is a sound thought process. The last sentence in the case, however, brings up the point of the company’s fashion-forward, higher-quality clothing image. This is a huge risk to manage, with quality and other “must-control-for” items hanging in someone else’s factory.

The price advantage comes from having many suppliers and having the ability to control cost through volume. Bottleneck items would be something like a chemical compound for a paint or industrial application. The impact on cost is low, but supply risk might be high due to the fact that the chemicals comprising the compound may be difficult to source in war-torn countries or difficult to transport safely. Noncritical items may be something like lubricants or other items in the manufacturing process that are cheap, easily obtained, and can be ordered by anyone that is