zara - 3-1Zara: Game-changing clothes giantParent company:...

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Unformatted text preview: 3-1Zara: Game-changing clothes giantParent company: Inditex Corporation The blend of technology-enabled strategy unlashed by Zara seems to break all of the rules in the fashion industryThe firm shuns advertising and rarely runs salesIn fashion industry nearly every major player outsources manufacturing to low-cost countries, but Zara is highly vertically integrated, keeping huge swaths of its production process in-house3-23-3To understand and appreciate :The counterintuitive and successful strategy of ZaraThe technology, which has made all of this possible3-4Micky Drexler, the iconic CEO, helped turn Gaps button-down shirts and khakis into Americas business casual uniformDrexlers team had spot-on tastes throughout the 1990sWhen sales declined in the early 2000s, Drexler tried to revitalize the brand by filling the stores with teenage apparelsThis shift sent Gaps mainstay customers to retailers that easily copied the styles that Gap had made classic3-5Gaps same-store sales declined for twenty-nine months straight, profits vanishedPaul Pressler, the new CEO shut down hundreds of stores, but it did not help due to bad bets on colors and stylesThe marketing model used by Gap to draw customers in via big-budget television promotion had collapsedIn January 2007, Pressler resigned3-6Conventional wisdom suggests that leveraging cheap contract manufacturing in developing countries can keep the cost of goods lowContract manufacturing: Involves outsourcing production to third-party firmsFirms that use contract manufacturers dont own the plants or directly employ the workers who produce the requested goodsFirms can lower prices and sell more product or maintain higher profit margins3-7...
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This note was uploaded on 03/02/2011 for the course BMGT 301 taught by Professor Wang during the Spring '08 term at Maryland.

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zara - 3-1Zara: Game-changing clothes giantParent company:...

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