In the case, Marks & Spencer and Zara, it discusses two business process designs that each company took. You first had Marks & Spencer, who had a more traditional approach. Their chain started of with the buying team, design, developers, merchandisers, technologist, suppliers, logistics, and lastly the store. Zara, however, comes up with a new innovative design. With this new design in effect the delivery of new collections only has a lead-time of 5 days. They were able to cut down this time due to the fact that products where mainly produced on Galicia. The business model that sets Zara apart from other clothing retailers is how rapidly the company changes stocks and releases new product lineups. The company averages 12-16 collections annually which equates to more than one lineup a month. Due to stock being limited and the rapid production Zara brings forth, their items are viewed as exclusive promoting further business. Their customers are happy knowing that their specific article of clothing is more “rare” due to only having an average of a two-week window to purchase the clothing. The company specifically targets current trends and has them in the store within 30 days. This maintains the brand’s uniqueness and relativity in fashion. …show more content…
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
Facts of the Case: In 2008, Samantha Elauf applied for a job at Abercrombie & Fitch, Inc., who as part of their “Look Policy” prohibit the use of caps. Elauf, as part of her religious practice, wore a headscarf to the interview. She was interviewed by assistant manager Heather Cooke, who gave her a score that qualified her to be hired. Cooke, however, was worried that Elauf’s headscarf was against the store’s policy and called her district manager Randall Johnson. She informed Johnson of her belief that Elauf wore her headscarf because of her religion, and Johnson replied that headwear whether it was religious or not violated the “Look Policy” of the store. Elauf with the help of the EEOC sued Abercrombie on the grounds of religious discrimination. The U.S Equal Employment Opportunity Commission (EEOC) is an agency established by the government of the United States that imposes federal laws that make it
After each order is made the product is either picked from the store or ordered from one of the central hubs. If a product is ordered from a hub an employee needs to track down the part, count out the correct amount of pieces, and ship the product. Once the product is shipped to the store employees need to receive in the parts and then deliver them to the customer. Behind every part bought there is an extensive amount of labor time put into getting that product to the customer. Not only do the companies need to have labor to produce and distribute products they need high end technology to develop and distribute their
Business strategy is the means by which firm’s plans to achieve its goals and objectives. It can also be termed as organization long-term planning. The strategy covers periods between 3-5 years and sometimes longer. Businesses use two major types of strategy, general or generic and competitive strategies. The overall strategy involves strategies of growth, globalization and retrenchment. The competitive advantage includes low pricing, product and customer differentiation. We will look at the business strategy used by Marks and Spenser (Cole, 1997). The company is a British multinational located at Westminster London and specializes in clothes and luxurious food products.
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.
Analysis & Recommendation: Zara’s main strategy is the ability to respond very quickly to the demands of target customers which called for identifying trends of the customer in advance. The company has been able to identify the trends and meet the demand with the help of its autonomously organized structure and its effective value chain systems. The present system followed by Zara has been very effective and very easy to maintain, which as a result has persuaded the company to continue without any change in the present system so far. The problem that Zara faces right now is that the system that they use, P-O-S (Point of Sale terminals), runs on DOS which Microsoft does not support anymore and any hardware change in the POS terminal will not be compatible with the current POS software. Although the sense of urgency for the change may not be that high, investing in IT infrastructure is a must as MS Dos is an obsolete technology and there is no contract or guarantee from their POS terminal vendor that they will continue supplying the same terminal with out much changes in the hardware for any specific period of time, therefore change is unavoidable. The other main issue that Zara faces is that the stores don’t share inventory information electronically and hence inventory management becomes highly difficult and manual. The decision making process is based on the judgment of employees throughout the company instead of relying on a small set of decision makers; the majority of the decisions were made by store managers and as a result they placed orders for the items rather than simply accepting and displaying what headquarters decided to send them.
Zara portrays many strengths as a company. With stores located all over the world, they have established a well branded name valued by customers. Consumers typically prefer branded products over generic products, and Zara makes this attainable by keeping prices low, yet offering the latest fashionable designs. This is possible by following a vertically integrated system, keeping their business operations at a relatively low cost. Although Zara seems to be doing well, current weaknesses may be the lack of promotional activities. Advertising is necessary in all businesses to reach and attract more customers. Some opportunities include expanding into new markets where they haven’t yet reached such as China, Japan, and India. Another huge opportunity would be offering their products online. With technological advances, shoppers are swaying from the physical store and entering the cyber world. Some threats observed are expanding to a region where fashionable clothing is unimportant, a downfall of an economy leading to potentially higher costs,...
Company and Control Business: In this quick-fashion industry, the trade control process is critical. Since the lead time needs to be as little as it could be expected under the circumstances, subsequently there is no space for deformities. Zara is leading the pack for this angle, because of their much incorporated data reaction, by utilizing PDA to straightforwardly advise the home office about what is happening at the outlet. The report could be on a daily or hourly
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.
Based on the business strategy and tactics, Zara has been trying to optimize its business operation largely in three cyclical processes ordering, fulfillment, and design and manufacturing. Much of the process are standardized and simplified under the excellent control and employee's intuitive decision making latitude. In short, the principle of Zara's business operation is optimization of all business process and get rids of all redundancies and unnecessary things. More extended or peripherals of the principles can be summarized as follow;
Generally, suppliers to retailer have monumental supply chain with little room for change. Companies account stronger for customer needs, depleting the cost of efficiency.
2.4 Segmentation: Some of the important bases for segmenting consumer markets are Demographic, Geographic, benefits, Psychographic and Usage rate segmentation. Geographic segmentation is the priority of Zara. It is a global brand and its supply chain management is very much perfect. It helps Zara in getting the latest trends into stores in three weeks’ time, based on consumer preferences. It’s a Spanish brand, so it would be a better option for Zara to open more stores in European countries.
283). Zappos has without a doubt developed long-term customer relationships that provide a competitive advantage in the purchase of shoes and other products. The company’s customer focused business model believes that developing long-term customer relationships is what is most important for its business (p. 452). Its customer focused approach has proven to be very successful for the company (p. 451). The way that Zappos serves customers and handles their issues is different from any other company in the industry (p. 453). Zappos’ business model and operating philosophy is described through its ten core values: Deliver WOW through service, embrace and drive change, create fund and a little weirdness, be adventurous, creative, and open-minded, pursue growth and learning, build open and honest relationships with communication, build a positive team and family spirit, do more with less, be passionate and determined, and be humble (Ferrell and Hartline, 2014, p. 452). These values create a framework that guide the company’s actions (p. 452). Zappos’ untraditional core values are demonstrated in the company’s commitment to the well-being and satisfaction of its customers (p. 452). The company puts its efforts into developing relationships with each of
To make the products in-house, or to outsource their production to other companies, in the quest to be more profitable and efficient in the delivery of their products and services has become a question in all management’s agenda to move their firms global.
Fast fashion allows consumers to get the latest styles presented in catwalks at a very cheap price. According to Walter Loeb, a former senior retail analyst for Morgan Stanley and a current contributor to Forbes, explains that companies like Forever 21, H&M, and Zara have made a push to get the latest styles in fashion into these stores as soon as possible, before the clothing becomes last season’s style. It is something that works perfectly for retail stores, as Loeb explains, “Many new ideas from the fashion shows that just finished in New York, Paris and Milan will soon be on Zara’s racks.” This means that stores are always in a rush to get their garments sold, before they are out of style six months later. One of the best benefits for retailers is that, because of the high demand of the latest styles, clothing sells very quickly and once it sales out instead of replenishing, they will just replace the garments with new styles coming fresh off the run floor (Stanley). This strongly encourages consumers to buy a piece of clothing that they like when they see it, otherwise there is a good chance it will not be there when they return. It is a perpetuating cycle whit no end in sight. This trend encourages shoppers to be more impulsive than they otherwise would be if he or she knew that the piece of clothing that they really liked was going to
store managers and frontline personnel, play a critical role in the context of Zara’s business model. Using customised PDAs, store managers constantly communicate customer feedback, either hard data such as orders and sales trends or soft data like customer reactions to a new style or the “buzz” around a new design, to Zara’s HQ where the feedback is used by designers to quickly develop new garments based on customers’ wishes (Ferdows et al., 2004). Frontline employees assist their superiors in collecting the feedback. Zara’s store managers and shop assistants thus close the communication loop between shoppers and Zara’s HQ (Ferdows et al., 2004) and therefore contribute hugely to Zara being able to first understand what customers like and then design and produce it (Buck, 2014). Accounting for their key role, Zara pays store managers an above-average salary and up to 100% of their salary in bonuses if they hit sales targets (Ruddick,