Zara Vertical Retailer - 1069 Words

According to Inditex, the Group s business model is characterized by a highly integrated vertical structure. In contrast to the model that has been adopted by competing international corporations, the Group handles all the processes required in the apparel industry—design, production, logistics, distribution to retail outlets—on its own. This model is based on a desire for structural flexibility and a belief that the customer should come first in every aspect of the company s operations. The main elements of this vertical structure can be seen in the retail outlets. The stores are designed with an eye for detail, providing a comfortable venue for the customer to encounter fashion. At the same time, it serves as a site for acquiring the†¦show more content†¦Retailers can shift sourcing according to the costs and exchange rates. Manufacturers can hedge risk by supplying different retailers. Zara has succeeded by creating a vertically integrated system where the disadvantages of vertical integration (higher costs of manufacturing in Europe, lack of flexibility in shifting plant locations, etc.) are offset by the unprecedented speed and design flexibility that its tightly coordinated vertical system permits. Thus, Zara’s highly compressed product development cycle would be impossible for Gap or any other retailer relying on contract manufacturers in Southeast Asia. Zara’s vertical integration works for Zara because it fits with other aspects of its strategy: mid-market pricing, high-fashion orientation, and constantly changing product range. For Gap, vertical integration probably would not work: it’s pricing is relatively low (hence, it needs to produce in low-wage countries), it does not have manufacturing experience, and its products tend to be basic staple (jeans, T-shirts, khaki pants and shorts) such that seasonal product changes are adequate to keep abreast of changing market preferences. Interbrand describing Zara, said, Cutting-edge Spanish apparel retailer epitomizes cheap chic knocking out mass-produced copies of catwalk fashions almost overnight.5 Zara introduced about 12,000 designs every year; the shelf life of each design was about four weeks. In January 2006, Zara had 853 stores,Show MoreRelatedZara Case Study1404 Words   |  6 PagesCompany Case: Zara: The Technology Giant of the Fashion World Identification of the Problem/s or Issue/s Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. By owning its in-house production, Zara is able to be flexible in the variety, amount, and frequency of the new styles they produce. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to maintain that advantage and growth they must confront certainRead MoreZaras Case Study1373 Words   |  6 Pages1. What is Zara’s value Proposition? How does it differ from its Competitors? â€Å"Zara has pioneered leading-edge fashion clothes for budget minded young adults through a tightly integrated vertical structure that cuts delivery time between a garment’s design and retail delivery to under three weeks (against the industry norm of three to six months)† (Grant, 2010, p.212) According to Clayton Christensen in order to process you Value Proposition you must look at the following (Harvard BusinessRead MoreVertical Intergration Zara1446 Words   |  6 PagesHow is Zara organized with respect to its vertical integration and outsourcing decisions? What governance structure does it appear to follow? Support your conclusions with reference to details of the Zara and the Ferdows reading. Zara manufactures and distributes its products in small batches. Zara is vertically integrated as the company manages all design, warehousing, distribution and logistic functions. Zara outsources sewing of garments to an outside supplier. Zara controls the product itRead MoreZara Case Essay examples1568 Words   |  7 PagesCase # 4 – Zara Zara is the flagship company of Inditex, an international clothing retailer. Zara began its business as a small retail store in Spain founded by Amancio Ortega Gaona in 1975. In the following decades Zara has grown to nearly 450 store location in 29 countries by the year 2000. Zara consistently accounts for more than 80% of Inditex’s net sales as indicated by Figure 1; linking the success of Inditex to the success of the strategies of Zara. Figure 1 Inditex Net Sales by Concept Read MoreCase Study Zara the Technology Giant of the Fashion World749 Words   |  3 Pagesand discussion As complete as possible, sketch the supply chain for Zara from raw materials to consumer purchase. Raw material – High tech automated cutting facilities – Small workshops – Ware houses – Stores – customers – Stores – Commercial managers Raw material Zara makes 40 percent of its own fabrics and produces more than half of its own clothes (maximize time efficiency) Cuts fabric in-house As it completes designs, Zara cuts fabric in-house. The cutting is done in Zara’s own high-techRead MoreCase Study : Zaras Success1299 Words   |  6 Pages3.0 Zara s success is due to its approaches to operations management Discuss. 3.1 INTRODUCTION Operations management refers to all operations and activities within the organization responsible for the creation of goods and services that the organization passes to its customers. The main activities of operation management include managing purchases, quality control, inventory control, storage and logistics and a great deal of focus is on efficiency and effectiveness of such a process (slackRead MoreZara Problem Solutions1403 Words   |  6 PagesZara: The Technology Giant of the Fashion World Synopsis Zara is a company that defines what the fashion industry has termed â€Å"fast fashion.† The flagship specialty chain of Spain-based clothing conglomerate, Inditex, Zara has built an information and distribution system that allows it to put the latest runway fashions in its stores in a matter of weeks at a fraction of what the big-name designers charge. In addition to fast, Zara is prolific. In a typical year, Zara launches about 11,000Read MoreEconomics and Zara1397 Words   |  6 PagesCase Analysis of ZARA: Fast Fashion Challenges a. Limitations of Vertical Integration Vertical integration, a distinctive feature of Zara’s business model, has allowed the company to successfully develop a strong merchandising strategy. This strategy has led Zara to create a climate of scarcity and opportunity as well as a fast-fashion system. However, Zara’s strategy creates some weaknesses. Their vertical integration has more advantages than drawbacks but it is important to recognize itsRead MoreThe Retail Giant Of Zara Essay1351 Words   |  6 PagesThe retail giant Zara have proven that utilizing all resources and different management techniques branded the store as a fashion empire. However, Zara has been named one of the most profitable retailers in the world. Zara has expanded and is operating stores all over the world which makes the retailer global. The philosophy behind the retail giant is immersing new fashion fast. Furthermore, Zara focus is producing high-end quality clothes through creativity. The retail giant uses a rapid responseRead Mo reZara s Supply Chain Of Zara1300 Words   |  6 PagesZara’s Supply Chain Zara is characterized by its unique and rapid-fire supply chain that is governed by the vertically integrated system that links their shops, designers, and distribution system. The key players in this system are the wholesalers and retailers, so controlling the activities of those mark the success of the business. Zara’s system is so integrated that makes it hard for other competitors to nail the starting point of a similar product. In the Design Phase, 300 professional designers