Zara Case Study - The Tale of a Fashion Dilemma Student...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
The Tale of a Fashion Dilemma Student Name: Julia Covello Student Number: 1000736153
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
1 Zara: Fast Fashion Case Study Issue Statement: As Inditex, the parent company of Zara, continues operations they face a growth challenge between developing their lesser-known retail chains or determining the most effective way to expand Zara into further geographical regions, both within Europe and around the world. Analyzing Inditex’s other retail chains and Zara will provide insight as to whether expanding Zara or developing their lesser-known chains will be a more profitable risk for the company. Situational Analysis: Company: Inditex: Inditex, founded by Amancio Ortega and consists of 6 retail chains: Zara, Massimo Dutti, Bershka, Stradivarius, Oysho and Pull & Bear. Divisional structure is used to organize the chains, in which each chain operates independently from each other, having their own team to execute decisions based on product design, finances, distribution, strategy, and sourcing. This allows each of the chains to understand their targeted consumers and make decisions that properly reflect their goals. However divisional structure is a costly approach because of the size and amount of resources needed to orchestrate the different chains strategies. Zara’s Manufacturing Strategy: Inditex’s most internationalized and largest chain is Zara. Zara operates 507 stores worldwide and contributes 1,506 million in revenue to Inditex. The well-established brand like Zara, helped with the expansion of the new chains. Zara’s business strategy is to provide fast-fashion to their consumers,
Image of page 2
2 which is achieved through their vertical integration manufacturing process. Zara’s vertical integration strategy gives more control over the quality of their apparel, shortens cycle times allowing for quick inventory turnover and reduces the “bull whip effect”. The disadvantage of vertical integration is it reduces economies of scale since it is a centralized approach, meaning Zara cannot produce large quantities of clothing for cheaper prices. As well Zara has high productions cost compared to its competitors since the products that are outsourced are returned to Spain for a final inspection before being distributed. Positioning Strategy: Zara positions its apparel differently depending on the specific countries preferences and income. For example in Mexico, citizens have a much lower income in comparison to Spain. Here, Zara positions their clothing as higher end, rather then the middle-market, as it is perceived in Spain. This positioning strategy allows Zara to attract their desired consumers and understand which fashion trends those particular markets desire. Zara’s other positioning strategy is to create a sense of scarcity for their apparel by turning over inventory every 2 weeks. This strategy forces consumer to purchase Zara’s products right away, creating high demand. It also allows the company to keep up with the ever-changing fashion trends and consumer preferences.
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern