Case Study Zara Essay

Case Study Zara Essay.

Christian Deing Simon Luyken Julika Reusse Sebastian Stratmann Anna Worster 1. What are the sources of Zara’s competitive advantage? What is unique compared to H&M, The Gap and Benetton? competitive advantage Competitive advantage is defined as: • a performance feature, which is silhouetted against other competitors • has to be tenable and economic • is able to reach dimensions like price, time and quality, e. g. cost advantage or differentation advantage INDITEX.

Brand ZARA Bershka Pull and Bear Massimo Dutti Stradivarius Oysho Number of stores 1501 573 567 461 INDITEX 444 363 ZARA Home Uterque Total 237 24 4.

170 Quelle: www. inditex. com ZARA • 1501 stores in 71 countries in 2008 • Employees 25. 000 • Employed €1,050 million of the company? s capital in 2001 72% of the total capital of INDITEX •Revenue of €6,264 million in 2007 67% of the total of INDITEX ZARA • Headquarter in Arteixo, outside La Coruna • Manufacturing most of the fashion-sensitive products internally • ZARA? s designers produce about 11.

000 distinct items during the year competitors: 2000-4000 items • Products are shipped to well-located stores twice a week • Finished goods in stores within four to five weeks (entirely new designs) in two weeks for modifications of existing products Competitors H&M The GAP Benetton stores countries employees designers revenue 1.

700 33 68. 000 100 €9. 6 billion 3. 100 19 152. 000 n. s. $15. 8 billion 5. 500 120 8. 000 300 €2. 085 billion Comparison: ZARA vs. H&M -vertical integration ? Short lead times -all production outsourced ? Long lead times – engages many designers -60 % fewer designers ?

Originate designs in a few weeks – one distribution center ? Better survey over inventory ? low costs – expand very fast (stores in 39 countries) – stores as a „face to the world“ -a distribution center in each country ? High costs -expand very slow (stores in 8 countries) – no focus on store makeups ?Competitive advantage Comparison: ZARA vs. Benetton – three different modes for expansion: 1. Franchise systems 2. Company owned stores 3. Joint Ventures -one main mode for expansion: 1. Licensees ?Competitive advantage Comparison: ZARA vs. GAP – vertical integration ?

Short lead times – fast expansion in 39 countries – outsourced all production ? Long lead times – slow expansion in 5 countries ?Competitive advantage What‘s unique about ZARA? – freshness (fast production and distribution to offer the latest fashion) -Change 75 % of the merchandise on display every 3 or 4 weeks ? The frequency of customer visits rises ? Scarcity -few advertisement ? Customers need to visit stores to get the newest fashion ? Save costs for publicity Case Study 2: ZARA: Fast Fashion Group 7: Matthias Freese, Thorsten Hiedels Kirstin Jansen, Sabine Kurten Aleksandra Ludwa, Jennifer Montag Johanna v.d. Asseburg Case Study 2: ZARA:

Fast Fashion, Group 7 1 Table of contents 1 Introduction 2 Zara’s Business System 3 Pros and cons of Zara’s activity architecture with regard to The Gap, H&M and Benetton and in light of the changing environment Case Study 2: ZARA: Fast Fashion, Group 7 2 1 Introduction Inditex: – umbrella group of Zara and 5 other apparel chains – founded in 1963 in Galicia, Spain Zara: – headquarters in Arteixo, Spain – till 2002: 507 stores in 42 countries – position: “medium quality fashion clothing at affordable prices“ – competitors: The Gap, H&M, Benetton.

– Case Study 2: ZARA: Fast Fashion, Group 7 3 2 Zara‘s business system Activity circle: Case Study 2: ZARA: Fast Fashion, Group 7 4 Design creative teams different sources for information: store managers, consumption information system, TV, internet, industry publications, film, trend spotters, ready-to-wear fashion shows first sketches about nine months before start of a season presentation in certain key stores determined prices – Case Study 2:

ZARA: Fast Fashion, Group 7 5 Sourcing and Manufacturing assistance of purchasing offices in Barcelona and Hong Kong more than 200 external suppliers 60% of the clothes produced externally, 40% internally 450 workshops where garments are sewed Case Study 2:

ZARA: Fast Fashion, Group 7 6 Distribution own distribution center in Arteixo satellite center in Argentina, Brazil and Mexico center works on a dual-shift basis equipped with mobile tracking system delivery upon Europe takes about 24-36 hours, outside Europe 24-48 hours scheduled shipments by time zones establishment of a second distribution center at Zaragoza in 2003.

– Case Study 2: ZARA: Fast Fashion, Group 7 7 Retailing consists of merchandising and store operations stores placed in premier shopping streets and centers set high value on presentation of store window displays: prototypes at headquarters continuous training on their personnel very low advertising expenditures, no fashion shows main retailing-tactic: create a sense of scarcity aim: reduce inventories at marked-down prices Case Study 2: ZARA:

Fast Fashion, Group 7 8 3 Pros and cons of Zara‘s activity architecture most significant advantage: reduced cycle time due to the implementation of the quick response system Case Study 2: ZARA: Fast Fashion, Group 7 9 3 Pros and cons of Zara‘s activity architecture – different product precommitement: Case Study 2: ZARA: Fast Fashion, Group 7 10 3 Pros and cons of Zara‘s activity architecture Design: + store managers gather information directly at point of sale + design department organized in flat structure.

Zara has more staff employed although it is smaller than H&M higher labor costs, but lower risk of fashion miss (as H&M) + continuous tracking of customer preferences numerous variations of items + presentation of items in key stores reduced failure rates Case Study 2: ZARA: Fast Fashion, Group 7 11 3 Pros and cons of Zara‘s activity architecture Sourcing and Manufacturing:

+ in-house production of 40% of the garments better control of most fashionable clothes short lead times + offers always the latest fashion trends + change of MFA: no import quotas and reduced tariffs no more barriers for outsourcing production, but larger benefits for H&M increasing complexity of cross-border intermediaries higher coordination costs.

Case Study 2: ZARA: Fast Fashion, Group 7 12 3 Pros and cons of Zara‘s activity architecture Distribution: + cost savings by centralized distribution center capacity problems with only one center when Zara keeps expanding establishment of second distribution center H&M: closer to the market by decentralized distribution center in each country does not need scheduled shipments by time zones – Case Study 2: ZARA: Fast Fashion, Group 7 13 3 Pros and cons of Zara‘s activity architecture.

Retailing: + flexibility of operating in the best spots by using joint-ventures + standardized offering: 85%-90% basic items satisfaction of many markets with little effort even easier in the future as tastes assimilate + standardization of store window displays consistent image low costs but: ignorance of individual preferences low advertising expenditures missing of the chance to gain more customers no communication of social responsibility as Benetton does Case Study 2: ZARA: Fast Fashion, Group 7 14 Thank you very much for your attention!

Case Study 2: ZARA: Fast Fashion, Group 7 15 Harvard Business Case Study “ZARA: Fast Fashion” Question 3: Evaluate ZARA’s global strategy in light of the McKinsey recommendations in the assigned reading1. How does it compare? 1: Incandela, D. ; McLaughlin, K. L. ; Smith Shi, C. (1999): Retailers to the World, in: The McKinsey Quarterly, Vol. 3, pp. 84-97. Agenda • Introduction to ZARA’s international operations • Recommendations by McKinsey • Evaluative comparison • Summary of conclusions and recommendations Agenda.

• Introduction to ZARA’s international operations • Recommendations by McKinsey • Evaluative comparison • Summary of conclusions and recommendations Introduction to ZARA’s international operations largest and most internationalized chain of Inditex 282 stores in 32 countries outside Spain (in the end of 2001) expansion began in 1988 in Oporto, Portugal rapid internationalization between 1998-1999: 16 countries ZARA is expanding very rapidly in comparison to other retailers like H&M, who added only 8 countries in 20 years Source: McKinsey (1999) HBS Case Study “ZARA”, Gruppe 8 4 Agenda.

• Introduction to ZARA’s international operations • Recommendations by McKinsey • Evaluative comparison • Summary of conclusions and recommendations Five approaches to launch a self-reinforcing cycle of benefits propelled by access, scale and expertise The “virtuous circle”.

1 2 3 Choose your sliver – decisions about which sliver to own, which to control without owning and which to off-load are necessary Get comfortable partnering – access to new distribution systems and brand equity Invest in intangible assets – the new source of competitive advantage • brands and reputation • technology and know how • talent and skills Keep expenses and capital requirements low – by centralization, restructuring and outsourcing Exploit opportunities to arbitrage – by value proposition arbitrage and/or cross-border arbitrage.

3. Expertise 1. Access 4 2. Scale 5 Source: McKinsey (1999) HBS Case Study “ZARA”, Gruppe 8 6 Agenda • Introduction to ZARA’s international operations • Recommendations by McKinsey • Evaluative comparison • Summary of conclusions and recommendations 1 McKinsey recommends retailers to optimize the value chain by focusing on slivers Companies have to decide which slivers of the value chain to own, partly-own or to off-load.

Reason: • It is not always efficient to own all parts of the value chain • Some processes have very high outsourcing potential Outsourcing decision drivers: Cash Flow Capital Requirements Risk Competitive Advantage Source: McKinsey (1999) HBS Case Study “ZARA”, Gruppe 8 8 1 Selected Slivers of ZARA’s Value Chain Slivers and Processes Design: All design related processes are fullfilled In ZARA’s Responsibility inside the company. Manufacturing: Basic-items are manufactured in Asia.

Fashion Partly outsourced items are more risky and therefore produced by ZARA‘s fully owned factories Sourcing: All sourcing activities are done externally. Fully outsourced Logistics: Logistics are completely outsourced. About Fully by truck. The remeining 75% are deliveredoutsourced ones are manily organized by airmal. Sales: ZARA delegated store management espacially Partly outsourced in smaller and riskier countries by using franchising. Joint Ventures are used if prime shopping space is not avaiable for ownership.

Distribution: All distribution processes are supervised and In ZARA’s Responsibility executed from one central and fully-owned distribution center in Spain. ZARA decided carefully on which slivers to concentrate and which to off-load Therefore ZARA succeeded in implementing McKinsey’s advice concerning the value chain HBS Case Study “ZARA”, Gruppe 8 9 2 McKinsey recommends to establish partnerships to be successful internationally Build partnerships • To get leads • To enhance the distribution system • To build brand equity in new markets Remain in control of these alliances ! Source: McKinsey (1999).

HBS Case Study “ZARA”, Gruppe 8 10 2 ZARA has established controlled partnerships in production and downstream activities Manufacturing ZARA has long-term relations with suppliers and subcontractors CONTROL Sales In smaller and riskier countries, ZARA uses Franchise Systems Joint Ventures are used in mature and more established markets like for example Germany CONTROL ZARA has successfully implemented McKinsey’s recommendations regarding partnerships HBS Case Study “ZARA”, Gruppe 8 11 3 McKinsey recommends the investment in intangible assets as the new source of competitive advantage.

Brand and reputation • Distinct value proposition with adjustments to region/country specific differences • Personality of the brand must appeal to target group and be reinforced at every contact point • Total visibility of the brand through all appropriate communication channels IT, technology, skills • Invest in proprietary technology to – improve customer access – raise service levels – increase business efficiency People and talents • Scarcity of qualified managers challenges HR policies • Build up talent pools in several stages Source: McKinsey (1999) HBS Case Study “ZARA”, Gruppe 8 12 3.

Regarding the investment in intangible assets, ZARA focuses on innovative technologies Brand and reputation • adjustment of marketing mix to country individual needs – experience gained in flagship store – price according to WTP – slightly different portfolio • concentration on store image high brand awareness • comparably little investments in advertising, esp. in foreign markets IT, technology, skills • strong investment in technology since 1990 – innovative JIT manufacturing system (codeveloped with Toyota) – advanced telecommunication system – sophisticated consumption information system.

People and talents • incentive-intense payment model for store managers – variable parts based on store performance • low hierarchies – store managers as entrepreneurs • advanced training program • But: scarcity of store managers is main barrier to further expansion – 90% recruited from within ZARA almost meets the McKinsey recommendations w. r. t. intangibles ZARA should invest more in international brand power using various media channels and put stronger emphasis on international recruitment HBS Case Study “ZARA”, Gruppe 8 13 4.

McKinsey recommends retailers to strive to be “expense and capital light” Keep expenses and capital requirements low Realize greater purchasing benefits and margins by reducing capital commitment and costs Manage a low need for capital by franchising or renting rather than owning stores Decide about global sourcing activities and IT investments Centralize overlapping category groups, e. g. finance functions Source: McKinsey (1999) HBS Case Study “ZARA”, Gruppe 8 14 4 ZARA has taken numerous measures to keep expenses and capital requirements low Operation.

• integrated just-in-time manufacturing system, central distribution center with direct shipping to the stores • intense market research incl. interviews with store managers and product development • long-term leases instead of owning • different business types to go global (own stores, joint ventures and franchising) • flat hierarchies, e. g. design department • main organization by divisions (women, men and children) • production of price-sensitive items outsourced • minimum amount of advertising • lean administrative organization.

Impact short lead and cycle times, low storage costs low failure rates, reach planned sales low financial strain flexibility and shorter communication lines low production and selling prices, but with expected hold up margins ZARA strategy efficiency control corresponds to McKinsey’s advices ZARA successfully controls its costs, realizing beneficial impact on operational results HBS Case Study “ZARA”, Gruppe 8 15 5 McKinsey recommends the exploitation of opportunities to arbitrage in order to reduce costs Cross-border arbitrage.

• focus on price level when entering a new market • forecasting of prices on local market prices not on own costs • entering markets with a higher preference for apparel (Italy) high rate of absorption of buying power Value proposition arbitrage • no real differentiation among product portfolio across the different countries • 85%-90% of products are common • no design of products for specific preferences of only one country • standardized reporting systems • same business model in similar types of countries amortization of centralized concepts by rolling them out across many markets.

ZARA is implementing the suggestions of the McKinsey concept HBS Case Study “ZARA”, Gruppe 8 16 Optimal expansion path depends on starting situation McKinsey strategic control map Initial situation… high …determines global strategy 1 Address performance problems first. Then grow by a) investing in intangibles/ load-off unattractive value chain parts and/or b) penetrating home market and global expansion Expand the business into new markets through organic growth or acquisitions; skills transfer and synergies are crucial success factors Invest in intangible assets and take further means to increase performance

(2) Experts Performance (4) Superleaguers 2 (1) Incumbents low Size small (3) Integrators 3 4 large Stabilize the successful business concept Source: McKinsey (1999) HBS Case Study “ZARA”, Gruppe 8 17 ZARA heavily invested in technology to increase profitability before starting major global expansion ZARA’s expansion path high • high investments in intangible assets (esp. IT) in the 1990s, i. e. before major phase of international expansion • having a strong performance, ZARA grows in size on a global scale, opening 16 stores from 1998-1999 (282 stores in 32 countries today).

(2) Experts Performance (4) Superleaguers (1) Incumbents low Size small (3) Integrators large ZARA has gone the recommended global expansion path, starting from an incumbent’s position HBS Case Study “ZARA”, Gruppe 8 18 Agenda • Introduction to ZARA’s international operations • Recommendations by McKinsey • Evaluative comparison • Summary of conclusions and recommendations ZARA almost completely lives up to McKinsey’s requirements; few improvements to be realized Approaches recommended by McKinsey Further improvements to be addressed by ZARA in the future 1 2 3 4 5.

Choose your sliver Get comfortable partnering • increase international investments in advertising • increase international recruitment efforts Invest in intangible assets Keep capital requirements low Exploit opportunities to arbitrage Source: McKinsey (1999) HBS Case Study “ZARA”, Gruppe 8 20 Thank you for your attention. Case Study Zara “What do you think of Zara’s past international growth strategy? Evaluate, in particular, its strategy for market selection, its mode of entry, and its marketing approach. What is the best way to grow Zara now? “ Agenda Introduction – What is ZARA?

International Growth Strategy Market Selection Market Entry Marketing Approach Best way to grow Zara now 21. 11. 2008 Introduction What is ZARA? Foundation of Inditex (Industria de Diseno Textil) by Amancio Ortega in 1975 ZARA is one of the six apparel chains of Inditex (completely independent and organized individually) ZARA is Inditex’s most important chain ZARA has over 500 stores in 30 countries Fashion Collection changes twice a year (autumn/winter & spring/summer) Benetton, H&M and the GAP are their most important global competitors Unique selling proposition is due to short cycle times 21.

11. 2008 Case Study ZARA: Fast Fashion 3 International Growth Strategy Market Selection – Overview Waterfall Strategy Market Selection Process: Countries which are similar to ZARA’s home market Macro Analysis Micro Analysis Preconditions for entering: Minimum level of economic development Low entry barriers Oil-Stain Strategy 21. 11. 2008 Case Study ZARA: Fast Fashion 4 International Growth Strategy Market Selection – Evaluation Enough time to explore markets from the outside Test if their business model can be applied to foreign markets (to reduce risk).

Risk of competitors copying ZARA‘s business model and entering markets before ZARA is able to -> Increasing market barriers No danger of loosing control Possibility to meet the special cultural demands High headquarter costs for only a few shops in the beginning Time-and-money consuming process Lately, ZARA decided to grow faster, enabled through their bigger experience and equity which is a step in the right direction 21. 11. 2008 Case Study ZARA: Fast Fashion 5 International Growth Strategy Market Entry – Overview 21. 11. 2008 Case Study ZARA: Fast Fashion 6 International Growth Strategy Market Entry – Evaluation.

Company-owned stores High level of influence over the behavior of the employees Ability to control the Brand presentation at POS Require many resources such as high capital commitment Franchising Opportunity to generate fast growth without needing a lot of equity Overcoming cultural barriers Lack of control -> Image losses Dependency on their partner Joint Ventures Sharing core competences More control of the actions taken Dependency on a partner -> need of a trust base Different methods enable ZARA to meet the demand of every country 21. 11. 2008 Case Study ZARA: Fast Fashion 7 International Growth Strategy.

Marketing Approach – Overview 21. 11. 2008 Case Study ZARA: Fast Fashion 8 International Growth Strategy Marketing Approach – Evaluation 21. 11. 2008 Case Study ZARA: Fast Fashion 9 International Growth Strategy Best Way to grow ZARA now (1/2) ZARA needs to be more present in more countries worldwide to strengthen the brand name and their significance Growth potential: Russia, East & North Europe, Italy, Australia, South Africa Exploration of new Markets in a short time period -> Danger of competitors growing Increase the amount of shops rapidly & drastically to play a greater role in the people‘s mind 21.

11. 2008 Case Study ZARA: Fast Fashion 10 International Growth Strategy Best Way to grow ZARA now (2/2) Establish a department whose task is to visit the franchise stores Use E-Commerce Bigger focus on marketing (e. g. internet, (TV) commercial, billboards) People who bought online any of the following products or services during the last three months ZARA has big growth potential but they need to find the optimal balance between risk and innovative methods to address their customers 21. 11. 2008 Case Study ZARA: Fast Fashion 11 Thank you for your attention! Questions?.

Case Study Zara Essay

Internship Case Study Essay

Internship Case Study Essay.

Follow the organizational format provided. Clarity of writing and proper usage, grammar and spelling are expected. The case study must be typed and double-spaced, using a standard term-paper format of 1” margins at the top, bottom and right and a 1. 5” margin on the left. Use a 10 or 12 point typeface. Case studies should be placed in a folder or notebook. The student’s name, Communication Internship, semester, and the sponsoring organization are to appear on the front. PART I: INTERNSHIP SETTING (3-5 pages) 1.

Explain the role and purpose of the organization with which you are doing your internship. Give a brief history of the organization. Describe the internship site (a photo is helpful but not mandatory), and provide the current staff size. 2. Outline the organization’s current leadership, including the educational and professional background of those in top positions (or those you work with most directly). 3. Prepare an organizational chart with names and titles of those in the direct chain of command over you, from the owner/president to your immediate supervisor to you.

4. List the organization’s “publics” (its audiences, people it influences or affects). Define these publics, using your organization’s latest data (circulation figures, listing of clients, viewership/listenership ratings, number of employees, etc. )

5. Describe the local/regional competition, and report how your organization ranks. 6. Find out how the organization has changed in the past year (for example, new personnel, labor problems, the addition/loss of major clients, new mass communication thrusts, technological changes, etc. )

7. Learn the history of internships in the organization, and tell whether supervisors view previous internships as successful. PART II: SUMMARY AND EVALUATION (5-8 pages) 1. Describe working conditions and typical working hours. 2. Write a narrative (or, preferably, keep a weekly journal which chronicles events, issues, tasks and results throughout the internship). This should be a lively synopsis of the internship which includes examples that bring the experience to life. 3. Cite what was appealing and what was not appealing about the internship.

Tell whether you would consider this type of work after graduation. How has your internship experience affected your career plans? PART III: INTERNSHIP PORTFOLIO Provide five to ten examples of your internship work (news and feature stories, tapes, campaigns, ads, newsletters, PSAs, etc. ). Show as much diversity in your work as possible. Present the portfolio in an easy-access form for inclusion in a standard 8 1/2 by 11 binder. You may want to use portions of your portfolio in your oral presentation to the class.

Interns who are engaged in electronic media or multi-media production or on-air work may submit work samples on audio tape, video tape, or computer disk (when required hardware and software are available to the instructor). All portfolio items must be accompanied by a written explanation of the intern’s role in producing each of the items submitted. If there is some reason the instructor should not write on a portfolio item (for example, this is your only copy), please include a note to that effect.

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