Zara’s Business Model, Information and Communication Technologies, and Competitive Analysis :: essays research papers

Question 1 Zaras Business Model and Competitive AnalysisZara, the close profitable brand of Inditex SA, the Spanish clothing retail group, opened its first store in 1975 in La Corua, Spain a city which eventually became the primaeval headquarters for Zaras global trading operations. Since then they have expanded operations into 45 countries with 531 stores located in the most important shopping districts of more than cd cities in Europe, the Americas, Asia and Africa. doneout this expansion Zara has remained focused on its core fashion philosophy that creativity and quality design together with a rapid retort to market demands will yield profitable results. In order to realized these results Zara developed a business model that incorporated the following three goals for operations develop a system the requires short lead times, decrease quantities produced to decrease inventory risk, and increase the number of available styles and/or choice. These goals helped to formulate a funny value proposition to combine moderate prices with the ability to offer new clothing styles faster than its competitors. These three goals helped to shape Zaras current business model. Zaras Business ModelZaras business model can be broken down into three basic components theory, capabilities, and value drivers. Zaras fundamental concept is to maintain design, production, and distribution processes that will enable Zara to respond quickly to shifts in consumer demands. Jos Mara Castellano, CEO of Inditex stated that "the fashion world is in ageless flux and is driven not by supply but by customer demand. We need to give consumers what they want, and if I go to South America or Asia to make clothes, I simply cant move fast enough." This highlights the importance of this quick response time to Zaras operations.Capabilities of Zara, or the required resources needed to exploit the opportunities and hunt this conceptual strategy, are numerous for Zara. Zara maintains tig ht control over their production processes keeping design and manufacturing in-house or with some strategic partnerships located nearby Headquarters. Currently, Zara maintains 80% of its production processes in Europe, 50% in Spain which is very close to La Corua headquarters. They have strategic agreements with local manufacturers that ensure timely delivery and service. Through these strategic partnerships and the benefits brought by this proximity of manufacturing and operational processes, Zara maintains the flexibility necessary to design and produce over 12000 new items annually. This capability allows Zara to achieve their strategy of expedited response to consumer demand.