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Transcript of Zara
We will try to develop Zara´s Business model, step by step. "Be leaders in flexibility and delivery" Flexibility: Flexibility means the capacity of a company to react to the changes in the market. Delivery: Is the time that it takes for a finished good to reach the market. " Adopting a consistent pattern of decissions" Functional Strategies: RESULTS Flexibility: Delivery: Market Segmentation In an international company like Zara, how can you be more flexible than the competitors? Locally oriented businesses
Quick design and tendencies identification
Continued innovation, within the systems and in the product itself.
Limited Stocks Quality
Exclusivity Fast delivery
- Less than 72 h delivery
- Every week new looks
- Short lead time = more fashion clothes More styles
Offer more choices in fashion than other shops Exclusivity
- Unique products with lifetime Lower quantity
- New trends each week
- If they sell it they will produce more Medium Prices
- Affordable prices
- Discounts % Human factor
They choose to produce a type of design and style.
This is the reason why Zara is different from its competitors. Zara competitive advantage meanly focus on. 1. High turn over of its products
2. low level of inventory
3. efficient distribution system
4. commitment of its employees
5. scanning of fashion trens, market trends and consumer demands
6. flexible production system Internal Analysis. What does Zara have to accomplish to meet the Mission? QUALITY CONTROL Standarized quality: Production monopolized in Arteixo
The rest of the factories must have the same quality. Having less costs is not the most important, because they try to meet due dates. They give preference to delivery and flexibility. FLEXIBILITY Zara must be able to sell the trending clothes, while they are still trendi. Detecting them in a record time Producing them in the fewest time possible Zara must deliver its products: 24 hours in the Spanish market
48 hours in the rest of Europe and the USA72 hours to cover the rest of the stores worldwide D Delivery. The have to be able to replenish their stores twice a week.
They deliver to all the stores( 1600).
Maximum delivery time: 72 hours. What does being the lider on delivery imply for Zara? Process, Quality, Capacity, Inventory Zara focus on: Process + Inventory Process - Zara has actually developed its structure in a way that supports the method of mass customization
- The most important methods of mass customization are:
- Information elicitation
- Efficient communication network
- Flexible technology
- Tracking system
- Make-to-order Inventory - In its stores Zara has no stocks, except in the selling room
- Stores places orders twice a week Demand based production Little inventory in Zara`s supply chain Low working capital requirements Process / Product - Matrix Process / Product Matrix In comparison to other fashion retailers Zara combines both: A high level of customization and low prices Corporate communication: Internal communication External communication Main Characteristics: Simple
Bidirectional Philosophy: “The company believes that anyone is able to offer valuable information and opinion is always to be considered” Shareholders, employees, customers, suppliers, distributors, credit entities. Arteixo Comunicates with all shops by TGT (Terminal de Gestión de Tienda) How products are being selled
Incidents inside the shop
Every information General Managers need to know Mensual internal magazine: “IN” Internal news are exposed:
New measures for employees Suppliers: Intranet
Specific web for them Amancio Ortega does not have an own office but interferes with employees daily. Non conventional Advertising Not use any means to advertise! This does not mean you do not use marketing techniques! Zara´s Marketing techniques: Production just in time: Creates dependency on their customers:
New clothes arrive
Actual clothes disappear “Boca-Oído”
Location: Best location in every city.
Never used the image of a famous figure Zara uses anonymous models
Decoration and Design
Other innovative methods: Zara le da otra vuelta a su publicidad: pagará a la gente que mejor lleve su ropa Customer Zara produces in close contact to customers needs (Customer Pull) Furthermore Zara uses the method of "postponement" Exhaustive control of the selled products/exceed stock of every product and shop. Take decision on produce / not produce certain products History History INTRODUCTION Zara provides the latest fashion with the mission to be leader in flexibility and delivery with a great market segmentation.
Zaras main characteristics are : fast delivery , exclusivity , human factor , medium prices and providing new styles.
Zara covers all steps from Arteixo to the shops.
Zara has great competitice advantages such as high returns , low inventories… Conclussion The best price-quality relation
Great distribution ( 72 hours max)
Mass customization with no stock using the MTO
Batch flow with high customization
Non conventional advertising conclussion