zara case study solution

zara case study solution

Zara Fast Fashion Case Study Solution

Inditex was the most profitable firm, measured by ROIC. Return on Invested Capital is a key measure of a company’s profitability that focuses on the true operating performance of the company.

Inditex: 21.7% H&M: 13.1%

The operating margin can be used as a measure of each firm’s capital efficiency. It shows that Inditex has a greater power to earn a profit per each Euro of sales than H&M. Inditex has a higher operating income by keeping cost of goods sold and operating expenses low. For example Inditex has a lower staff to store ratio which keeps the amount of money needed to be paid as wages low.

Inditex: 20,81 H&M: 29,76

Additionally the company spends lower advertising expense than H&M.

Inditex: 854834 =1.023 H&M: 1468432 =3.398

Inditex has 1.02 million Euros in current assets. H&M however, has 3.40 million Euros in current assets for every Euro in short term debt. This indicates that Inditex is less liquid which is probably due to the fact that the company has more fixed assets and a quick inventory turnover. But a high liquidity does not consequently mean high efficiency. H&M lacks a good strategy in using its cash. If its cash is not invested it will not generate a return. H&M’s high current ratio may be the result of its excessive inventories because the firm does not own manufacturing facilities and products need to be stored in a warehouse. 4. Total assets turnover

Inditex: 32502605 = 1.248 H&M: 42692183 = 1.956

The total assets turnover indicates H&M is more efficient than Inditex but that may be the result of Inditex’s strategy of owning the stores and plants which tie up capital. In contrast to that H&M depends on outsourcing the production which leads to lower assets. 5. Operating expenses/sales

The ratio of revenues by sales and operating expenses indicates the share in revenues used to cover the costs for running products, business and system. 30% of Zara’s net operating revenues are sufficient to serve operating expenses which means there are 70% left for counterbalancing production costs, taxes and other components. H&M cannot keep up with this because it offers its fashion at a lower price (reduces sales) and applies a more extensive marketing-strategy (rises operating expenses). 6. Success outside Europe

Inditex: 86% H&M: 96%

But H&M is more dependent on the sales from its home continent: Inditex: 77% H&M: 96%

Even though both companies have a strong focus on international expansion, Inditex is more efficient in exploiting the markets it has.

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What Business Is Zara In? Case Study Analysis & Solution

Harvard Business Case Studies Solutions - Assignment Help

What Business Is Zara In? is a Harvard Business (HBR) Case Study on Leadership & Managing People , Fern Fort University provides HBR case study assignment help for just $11. Our case solution is based on Case Study Method expertise & our global insights.

Leadership & Managing People Case Study | Authors :: Daniel Doiron

Zara, a successful fast fashion manufacturer and retailer, noted for its uncommon business process, needs to consider the future of the company and its popular flagship brand. The company produces clothes in the high cost labour market in Europe, spends very little on advertising, ostensibly overspends on positioning high-end stores in chic retail districts, and carries substantially less inventory and charges 15 per cent less than its competitors. Though investors initially viewed this process as a formula for disaster, the company had proven them wrong by establishing itself as a leader in the industry with its hard-to-replicate strategy for success. However, the disruptive business model innovator is now faced with new competitors who are trying to beat the company at its own game by successfully copying key components of its fast fashion approach. The company needs to find a way to continue to differentiate its brand in the evolving industry, while capturing more than its share of the tremendous market growth anticipated in the future. Daniel Doiron is affiliated with University of New Brunswick Saint John.

Growth strategy, Risk management

[10 Steps] Case Study Analysis & Solution

Step 1 - Reading up Harvard Business Review Fundamentals on the Leadership & Managing People

Even before you start reading a business case study just make sure that you have brushed up the Harvard Business Review (HBR) fundamentals on the Leadership & Managing People. Brushing up HBR fundamentals will provide a strong base for investigative reading. Often readers scan through the business case study without having a clear map in mind. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. Reading up the HBR fundamentals helps in sketching out business case study analysis and solution roadmap even before you start reading the case study. It also provides starting ideas as fundamentals often provide insight into some of the aspects that may not be covered in the business case study itself.

Step 2 - Reading the What Business Is Zara In? HBR Case Study

To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. Begin slowly - underline the details and sketch out the business case study description map. In some cases you will able to find the central problem in the beginning itself while in others it may be in the end in form of questions. Business case study paragraph by paragraph mapping will help you in organizing the information correctly and provide a clear guide to go back to the case study if you need further information.

My case study strategy involves -

  • Marking out the protagonist and key players in the case study from the very start.
  • Drawing a motivation chart of the key players and their priorities from the case study description.
  • Refine the central problem the protagonist is facing in the case and how it relates to the HBR fundamentals on the topic.
  • Evaluate each detail in the case study in light of the HBR case study analysis core ideas.

Step 3 - What Business Is Zara In? Case Study Analysis

Once you are comfortable with the details and objective of the business case study proceed forward to put some details into the analysis template. You can do business case study analysis by following Fern Fort University step by step instructions -

  • Company history is provided in the first half of the case. You can use this history to draw a growth path and illustrate vision, mission and strategic objectives of the organization. Often history is provided in the case not only to provide a background to the problem but also provide the scope of the solution that you can write for the case study.
  • HBR case studies provide anecdotal instances from managers and employees in the organization to give a feel of real situation on the ground. Use these instances and opinions to mark out the organization's culture, its people priorities & inhibitions.
  • Make a time line of the events and issues in the case study. Time line can provide the clue for the next step in organization's journey. Time line also provides an insight into the progressive challenges the company is facing in the case study.

Step 4 - SWOT Analysis of What Business Is Zara In?

Once you finished the case analysis, time line of the events and other critical details. Focus on the following -

  • Zero down on the central problem and two to five related problems in the case study.
  • Do the SWOT analysis of the What Business Is Zara In? . SWOT analysis is a strategic tool to map out the strengths, weakness, opportunities and threats that a firm is facing.
  • SWOT analysis and SWOT Matrix will help you to clearly mark out - Strengths Weakness Opportunities & Threats that the organization or manager is facing in the What Business Is Zara In?
  • SWOT analysis will also provide a priority list of problem to be solved.
  • You can also do a weighted SWOT analysis of What Business Is Zara In? HBR case study.

Step 5 - Porter 5 Forces / Strategic Analysis of Industry Analysis What Business Is Zara In?

In our live classes we often come across business managers who pinpoint one problem in the case and build a case study analysis and solution around that singular point. Business environments are often complex and require holistic solutions. You should try to understand not only the organization but also the industry which the business operates in. Porter Five Forces is a strategic analysis tool that will help you in understanding the relative powers of the key players in the business case study and what sort of pragmatic and actionable case study solution is viable in the light of given facts.

Step 6 - PESTEL, PEST / STEP Analysis of What Business Is Zara In?

Another way of understanding the external environment of the firm in What Business Is Zara In? is to do a PESTEL - Political, Economic, Social, Technological, Environmental & Legal analysis of the environment the firm operates in. You should make a list of factors that have significant impact on the organization and factors that drive growth in the industry. You can even identify the source of firm's competitive advantage based on PESTEL analysis and Organization's Core Competencies.

Step 7 - Organizing & Prioritizing the Analysis into What Business Is Zara In? Case Study Solution

Once you have developed multipronged approach and work out various suggestions based on the strategic tools. The next step is organizing the solution based on the requirement of the case. You can use the following strategy to organize the findings and suggestions.

  • Build a corporate level strategy - organizing your findings and recommendations in a way to answer the larger strategic objective of the firm. It include using the analysis to answer the company's vision, mission and key objectives , and how your suggestions will take the company to next level in achieving those goals.
  • Business Unit Level Solution - The case study may put you in a position of a marketing manager of a small brand. So instead of providing recommendations for overall company you need to specify the marketing objectives of that particular brand. You have to recommend business unit level recommendations. The scope of the recommendations will be limited to the particular unit but you have to take care of the fact that your recommendations are don't directly contradict the company's overall strategy. For example you can recommend a low cost strategy but the company core competency is design differentiation.
  • Case study solutions can also provide recommendation for the business manager or leader described in the business case study.

Step 8 -Implementation Framework

The goal of the business case study is not only to identify problems and recommend solutions but also to provide a framework to implement those case study solutions. Implementation framework differentiates good case study solutions from great case study solutions. If you able to provide a detailed implementation framework then you have successfully achieved the following objectives -

  • Detailed understanding of the case,
  • Clarity of HBR case study fundamentals,
  • Analyzed case details based on those fundamentals and
  • Developed an ability to prioritize recommendations based on probability of their successful implementation.

Implementation framework helps in weeding out non actionable recommendations, resulting in awesome What Business Is Zara In? case study solution.

Once you finished the case study implementation framework. Take a small break, grab a cup of coffee or whatever you like, go for a walk or just shoot some hoops.

Step 10 - Critically Examine What Business Is Zara In? case study solution

After refreshing your mind, read your case study solution critically. When we are writing case study solution we often have details on our screen as well as in our head. This leads to either missing details or poor sentence structures. Once refreshed go through the case solution again - improve sentence structures and grammar, double check the numbers provided in your analysis and question your recommendations. Be very slow with this process as rushing through it leads to missing key details. Once done it is time to hit the attach button.

Zara Fast Fashion Case Study - Solutions

market. Along with the globalization and technology development, consumers are easier to access to fashion. As a result, the customers are changing and the companies are evolving to deliver customers satisfaction. Zara, the most profitable brand of Spain clothing retail group Inditex, has leveraged its unique strategy to achieve success and will be expected to maintain a sustainable growth in the fashion industry. Zara’s core competencies can be divided into four areas: process development, distribution…

in the case is it most interesting to compare Inditex's financial results? Why? What do comparisons indicate about Inditex's relative operating economics? Its relative capital efficiency? Note that while the electronic version of Exhibit 6 automates some of the comparisons, you will probably want to dig further into them. Background: Inditex is an international fashion retailer that designed, manufactured and sold apparel, footwear, and accessories for women, men, and children through Zara and other…

Case Study Zara the Technology Giant of the Fashion World

and 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-tech…

Essay on Zara Fast Fashion Case Study Solution

1. With which of the international competitors listed in the case is it most interesting to compare Inditex’s financial results? What do comparisons indicate about Inditex’s relative operating economics? Its relative capital efficiency? Even though H&M follows a strategy which differs significantly from Inditex’s approach it is the closest competitor from the financial point of view. H&M differs from Zara because it outsources all of the production, it is more price oriented and spends…

Zara It for Fast Fashion Case Notes

Zara IT for Fast Fashion Case Notes Identify decision issue, and your role as a decision maker Salgado and Sanchez need to decide if it is the right time to update Zara’s information technology. The key concern is the outdated operating system they use for their point of sale (POS) terminals. Should they purchase the current POS machines from their vendors so that they can support their needs in case the vendor changes their machines to new technology? Or should they move to using new operating…

I. Executive Summary Zara produces of-the-moment fashion and has developed a very successful vertically integrated company which can design, manufacture, and distribute garments to retail stores in as little as three weeks. Zara's target market is comprised of urban, fashion-conscious consumers who shop frequently for the latest trends. Currently under debate is a proposed upgrade to the POS system throughout the Zara chain. With over 550 stores, this would be a huge undertaking for Inditex, Zara’s…

10 ZARA: IT for Fast Fashion 10 ZARA: IT for Fast Fashion Zara: IT for Fast Fashion Executive Summary This concise summary will introduce and also, briefly, analyze and summarize the case at hand: Zara: IT for Fast Fashion and the issues Mr. Salgado and Mr. Sanchez are facing alongside the rest of Zara and Inditex’s management. The problems introduced are all major concerns that are currently affecting or risking to potentially affect the company in the future. These include issues with…

Zara Fast Fashion Case Study - Solutions

Zara – Solutions: Zara is a world famous Retail Chain based in Spain and is extremely successful in their supply chain. Questions: 1. What is Zara’s Business Model and its unique Supply Chain strategy? Zara’s business model can be broken down into three basic components: concept, capabilities, and value drivers. Concept is to maintain design, production, and distribution processes that will enable Zara to respond quickly to shifts in consumer demands. Capabilities: Zara maintains…

machines leaving them incompatible with DOS. Because Zara’s core business model is vertically integrated, it could specialize in speed and efficiency and the fast fashion trend. By assessing the pros and cons of the new IT infrastructure with Zara’s brand image, they determined that implementing the new POS networking system is beneficial for Zara because 1) it creates a more robust and scalable system that is more responsive to Inditex’s supply chain network, 2) it removes the risk of the system becoming…

Fast Zara, Fast Fashion Introduction Everyone, no matter youngsters or middle-aged mothers, love to buy clothes and keep updated on latest fashion trend. In the past, people could only consume western styles clothing if they are rich enough to go shopping by travelling in European countries or able to afford expensive air mail to send the consumed western clothes back from overseas. However, it took a period of time and the fashionable clothing may become “old” at the time received. As the information…

Zara Case Study Case Solution & Answer

The establishment of the new framework will empower Zara to enhance its proficiency, which will directly affect its income. With the smooth communication among the stores and as well as the home office, Zara can better anticipate the future needs of material, and extra expense. The framework will alsoem power Zara to make garments quickly and to get a fastfeed back from its clients. Along with this, there will be more deals, less cost, more income, and more benefit.

1. Should the POS application be re-written to include any additional functionality? If so, what functionality?

As Zara uses POS terminals that work on the outdated DOS framework, it needs to repair the POS terminals with a more cutting edge and well-functioning framework.

The POS should have the customer based functionalities that will record sales, returns, trades, and so forth. Similarly, “Back-office” PCs of the POS framework should handle functions, for example, stock control, obtaining, and accepting and exchanging of products to and from different areas. Zara should also use CRM programming, for example, SAP that not just addresses the short term goals to decrease cost and enhances the basic leadership, however itcan also achieve separate capacities with a specific end goal to compete successfully over along period of time.

2. What are the most important aspects of Zara’s approach to information technology? Are theseapproaches applicable and appropriate anywhere? If not, where would they not work well?

Zara’s approach for information technology is balanced with its core business model as Zara has organized the niche market and has presence in all continents such as Europe, America, Asia, Middle East, and Africa. Moreover, Zara’s core business model is vertically incorporated, as it has some expertise in speed and productivity and the fast fashion pattern.

Zara was created with the underlying objective to link the demand of customer for manufacturing in order to link manufacturing with distribution. Zara has been productive to stay focused on its core fashion theory, which favors innovativeness, creativity and quality design plan, with a fast reaction to market demands will yield productive results.

Zara’s novel approach to deal with promotion and advertising is an extra element to its success. Zara utilizes just 0.3% of income for its advertising consumption, rather than 3%-4% utilized by its competitors. Subsequently, Zara has maintained cost advantage over its competitors. This cost advantage has helped Zara to focus on its stores. Accordingly, it can invest in prime store areas, and store designs. The company is also ready to change the format of its stores every now and then when faced with competition.

The core business model of ZARA may not be applicable in most of the areas of the world as Zara has centralized distribution system. Along with this, Zara has only one distribution center globally, and it does not spend much time and money on advertisements and marketing.

Areas where the core business model would not work are;

  • European market (due to lucrative and low retail chain concept)
  • Asian markets (rebuild the model and structure due to high competition)
  • North America (low retailing capacity and the customers has less fashion sense and larger size is demanded)

Therefore, Zara has to consider the American market and identify the trends of the market in order to enter internationally.

3. What benefits does Inditex/Zara get from its IT infrastructure? How difficult would it be for a competitor to acquire these same benefits?

Zara’s use of IT is reliable with speed and decentralized basic leadership. Zara makes low investment in IT, thus it does not have a particular IT budget plan and cost/advantage analysis……………..

This is just a sample partial work. Please place the order on the website to get your own originally done case solution

Zara Case Study Harvard Case Solution & Analysis

1. How would you advise Salgado to proceed on the issue of upgrading the POS terminals? Should they upgrade the operating system? If yes, which one would you recommend? Why?

Alternative one: Current operating system and keeping the status quo (no IT involvement in daily operations:

Zara could maintain the original frame work as the POS terminals with DOS and exclusive applications work very well. The advantage with staying with the current system is that it is steady and requires less IT support. The advantages of upgrading the system simply don't exceed the expenses. The expenses incorporate the new terminals and software, as well as the expense of changing to the new framework, retraining the staff, and lastly, enlisting a full time IT staff to maintain the new system.

zara case solution

The most serious issue with maintaining the current IT framework is that Zara will not grow rapidly as most vendors are changing their machines and even though, one seller guaranteed that he will keep furnishing Zara with DOS framework,however the risk connected with the customer is high in light of the fact that Zara could exclude this confirmation in its contract with the terminal vendor.

Alternative 2: Upgrading the POS terminals

Zara could change the working framework gradually step by step, and not to include all functionality at first. Rather Zara can move to the new framework with minimum required capacity giving the organization the ideal opportunity for the move and in the meantime, conveying some dependability to the framework. Once the framework gets to be dependable, the additional functionality can be included later consecutively based on the need.

Therefore, Zara should change the operating system as its main strategy is to provide positive and quick response to the target customers in order to meet their demands, which is used to identify the trends of customer in advance. The company has the capacity to recognize the patterns and to take care of the demand with the assistance of its autonomous organized structure and its powerful value chain frameworks.As Zara uses the P-O-S terminals that work on the outdated DOS programming, the establishment of new OS, for example, Linux, Windows, or UNIX, will empower Zara to enhance its capacities and abilities. Cutting edge POS terminals, which are accessible, work on modern OS, for example, Windows, UNIX as well as they can utilize a variety of physical layer protocols, however Ethernet is as of now the preferred framework; an example of this could be; HP-intuit retail solution work on Windows OS.

The supplementary expenses can be distinguished in redesigning the present OS. By looking at the expense of OS for POS terminals, it has been found that Linux does not have a one-time permit cost, whereas, Windows has a one-time permit cost of €140, and UNIX has a one-time permit expense of €160.

In this manner, Linux offers least expensive usage costs for Zara, as well as, it has higher consecutive costs, for example, service contract cost extending from €10 - €150 as Linux’s service contract depends on IT staff's learning on Linux’s programming and maintenance. As Zara will introduce the new OS on an expansive number of PCs, therefore it needs to consider the expenses of every OS. In order to update the framework, Zara will also need to put in new equipment and displace the old POS terminals. The expense of POS terminals is €5000, which will also require establishment of new links, switches and so forth. The wireless witches and ehternet cost, staff preparing cost, programming establishment and support cost, and the per store availability expense of €240 will also add to the cost for upgrading. This is, by all accounts, a rapid cost, however the expense will depreciate throughout the years.

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