zara fast fashion case study answers

zara fast fashion case study answers

What makes the middle aged mother to buy cloths in Zara while the daughter aged in mid 20s buys Zara clothing? Because it is fashion able and up to trend. By collecting data and focusing on shorter response times, the company ensures that its stores are able to carry clothes that the consumers want at that time. Zara can move from identifying a trend to having clothes in its stores within 30 days. That means Zara can quickly and catch a winning fashion trend, while its competitors are struggling to catch up. Catching fashion while its hot is a clear recipe for better margins with more sales happening at full prices and fewer discounts. In comparison, most retailers of comparable size even smaller, work on timelines that stretch into 4-12 months. Thus, most retailers try to forecast what and how much its customers might buy many months in the future, while Zara moves in step with its customers. Unlike other retailers, Zara’s machinery can react to the report immediately and produce a response in terms of a new style or a modification within 2-4 weeks. Many other retailers have such long supply chain lead times that for them it would seem a lost cause those to even try and respond to sales report. In order to collect data, they also visit university campuses, discos and other venues to observe what young fashion leaders are wearing, from daily feedback from the stores and from the sales report. There are 200 designers who are the major players in the Zara creative beehive. They are not allowed to let anything get by them. They receive data from the boutiques on what is selling and adapt their products almost simultaneously with purchasing behavior. They are also kept up to date on what is selling at the different designers from whom they draw their inspiration, in order to determine their pieces' selling potential. Collecting vital information, such as daily sales numbers, allow designers to approximate what types of fashions are selling well. Thus, the designers have real-time information available when deciding which type of fabric, cut, and colors to use when designing new clothes or modifying existing ones. Information and inspiration comes from forecasting agencies, trade shows, and various other places. Over a period of 3-5 months they are develop the ideas into physical samples. Data are collected at any time for forecasting trends. Zara largely concentrates its forecasting effort on the kind and amount of fabric it will buy. Similarly garment styling for Zara actually starts from the email or phone call received from the stores. Thus, from the beginning Zara is responding to an actual need, rather than forecasting for a distant future. Collecting information on consumers’ needs trend information flows daily, and is fled into a data base at office. Designers check for these dispatches as well as daily sales numbers, using the information to create new lines and modify existing ones thus, designers have access to real-time information when deciding with the commercial team on the fabric, cut, and price points of a new garment. On the whole Zara believes in react rather than predict.

Zara’s target market is young, price-conscious, and highly sensitive to the latest fashion trends. They have an advantage over traditional retailers because they do not define their target by segmenting ages and lifestyles giving them a much broader market. They segment their product line by women’s (60%), men’s (25%) and the fast growing children’s (15%) department. Zara started operations in Spain in 1975, and now operates in 74 countries worldwide. Basically, Zara target market is people from teens to adult, men and women. Zara’s target market is a young, educated one that likes fashion and is sensitive to fashion. Today people around the world through various communication devices have more access to information about.

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Zara maintains the flexibility necessary to design and produce over 12000 new items annually. Value drivers for Zara are both tangible and intangible in the benefits that are returned to all stakeholders. The successful implementation of Zara’s business model provides great value to stakeholders and differentiates their business from their peers. Three goals for operations: develop a system that requires short lead times, decrease quantities produced to decrease inventory risk, and increase the number of available styles and/or choice. Others:

Zara has developed a business model based on short deadlines, decrease quantities and a great choice of style and clothes. The infrastructure: Zara only works with stores. They don’t make merchandising in internet. The company succeeds to make moderate prices with a large choice of new clothes every time. The success of ZARA is based on two principals: follow the trend to be able to sell garments at a moment where people want this kind of style, without using any advertisements as the concurrence does. They don’t want to convince people to buy their clothes but give the public what they desire at the moment.

Secondly, the trust that had been given to employees allowed the company to delegate. They decide what clothes should be in stores, the designed the garments by pairs for a specific collection. Their role is to create clothes not to be sold for a long time but only for a short period in appropriateness with the current trend. The goal: of the firm is to convince the consumer to buy their clothes. Their bid: they propose and deliver all fashion style at the moment and they don’t want to make marketing for old or past fashion collections.

The design and the organization of the stores are changed every four years behind the indications and orders of La Coruna in order to be creative and innovative all the time. Unique Supply Chain strategy: They have strategic agreements with local manufacturers that ensure timely delivery and service. Zara is a vertically integrated company that owns different levels of the supply chain. From manufacturing to warehouse to retail outlets, Zara owns all of these different entities. This allows Zara to globally optimize instead of locally.

This type of centralized decision making reduces the bullwhip effect on the overall supply chain. Production costs (machinery and labor) are relatively high for Zara’s supply chain compared to their competitors. Another interesting aspect about Zara’s supply chain is Zara does not forecast the upcoming season’s products before production. Instead , their design team observes the fashion trends at that second and reacts to consumer’s taste. Information is also centralized allowing permeability amongst the different layers in the supply chain.

In order for this model to work, the supply chain has very short lead times and Zara states that it is able to go from design to final product delivery in 14 days. 2. What kind of IT System they are using and what are the major Benefits? Zara’s information and communication protocols are significantly different from its competitors. Zara spends less than 0. 5% of total revenue on IT and IT employees account for only 0. 5% of Zara’s total workforce. This differs from their competitors who spend on average 2% of total revenue on IT expenditures and have 2. % of their total workforce devoted to IT. Zara utilizes human intelligence (from store managers and market research) and information technology (such as their PDA devices) in order to have a hybrid model for information flow from stores to headquarters. For example, managers at Zara stores use handheld devices to send standardized information regarding customer feedback and ordering needs directly to in-house designers. This not only keeps Zara’s designers informed of fast-changing customer trends and demand, but also provides the company with insight on less-desirable merchandise.

Zara’s unique approach of human intelligence assisted IT solutions results in well-managed inventories, linkages between demand and supply, and reduced costs from obsolete merchandise; Hence, the hybrid information and communication system that Zara uses provides cost advantages to Zara’s operations and helps to abide by their fundamental principle to have the ability to rapidly respond to changes in consumer demand. 3. Can you suggest any improvement in their IT System and Networking? There is still room for improvement in their IT processes to realize more effective management of inventory levels.

ZARA: Fast Fashion Case Study Analysis & Solution

Harvard Business Case Studies Solutions - Assignment Help

ZARA: Fast Fashion is a Harvard Business (HBR) Case Study on Strategy & Execution , 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.

Strategy & Execution Case Study | Authors :: Pankaj Ghemawat, Jose Luis Nueno

Focuses on Inditex, an apparel retailer from Spain, which has set up an extremely quick response system for its ZARA chain. Instead of predicting months before a season starts what women will want to wear, ZARA observes what's selling and what's not and continuously adjusts what it produces and merchandises on that basis. Powered by ZARA's success, Inditex has expanded into 39 countries, making it one of the most global retailers in the world. But in 2002, it faces important questions concerning its future growth.

Competition, Globalization, Marketing, Mergers & acquisitions, Supply chain

[10 Steps] Case Study Analysis & Solution

Step 1 - Reading up Harvard Business Review Fundamentals on the Strategy & Execution

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 Strategy & Execution. 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 ZARA: Fast Fashion 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 - ZARA: Fast Fashion 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 ZARA: Fast Fashion

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 ZARA: Fast Fashion . 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 ZARA: Fast Fashion
  • SWOT analysis will also provide a priority list of problem to be solved.
  • You can also do a weighted SWOT analysis of ZARA: Fast Fashion HBR case study.

Step 5 - Porter 5 Forces / Strategic Analysis of Industry Analysis ZARA: Fast Fashion

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 ZARA: Fast Fashion

Another way of understanding the external environment of the firm in ZARA: Fast Fashion 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 ZARA: Fast Fashion 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 ZARA: Fast Fashion 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 ZARA: Fast Fashion 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 is able to sell fashionable clothing to consumers. It can quickly respond to consumer trends and bring garments to market that follow trends in the local market. This concept of “fast fashion” allows trends to move from catwalk/conception to retail location quickly, in some instances in just a few weeks. It also affords these fashionable items at reasonable prices. Consumers therefore look to Zara for affordable, trendy clothing.

Zara is able to deliver on this promise for trendy, affordable goods because of the strategic choices it has made within its supply chains. They allow Zara to quickly adapt the clothes that it sells in its stores. Zara created two basic collections each year, but regularly introduced other items throughout the seasons.

Characteristics of importance:

•ZARA receives textiles from their own suppliers, often undyed ‘gray’ fabric, which allows for customization closer to the sale date.

•Low levels of inventory – they produce a lot of products, thousands of skews and much higher than the average company, but they only produce a few of each item. This helps them keep their inventory levels low, and also drives multiple visits to consumers to the store to see the latest trends.

•Shortened period of garment development from market research → sample creation → shipping final garment to stores. Design/production and majority of suppliers are located close to the action where it will be sold helps shorten this process. (Versus other companies who outsource in third world countries). This shortened cycle time reduced working capital.

•40% of finished garments were manufactured internally; and many of the ‘risky’ fashion items were contracted by local suppliers so they were able to get them to market quickly, get feedback, and order more of the lot based on consumer shopping data •Different than other competitors, Zara’s design teams bridged merchandising and production.

•Investing in prime locations

Under the Newsvendor paradigm, how would you compare the Overage and Underage costs of Zara and Gap?

The newsvendor model is relevant for Zara and Gap because even though the items are not technically ‘perishable’, consumers are less willing to pay high prices for clothing that is out of season or no longer on trend and therefore in the ‘fast fashion’ business we should consider the garments perishable. The Newsvendor paradigm helps us understand optimal inventory levels, considering that unsold garments will not garner as high a price (or no price at all), and that demand will be uncertain.

In order to calculate the underage and overage costs of each chain, we would need to understand the regular market prices for their goods, the cost to manufacture the goods, and the cost to liquidate the goods. See chart below for the data that we would need to calculate these values.

In general, I would guess that Zara has a higher underage cost because it doesn’t stock a lot of inventory and the underage cost reflects the cost of being a unit short in inventory. I would guess that Gap has a higher overage costs because they produce more units and therefore have a higher cost of units of excess inventories.

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…

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