How Zara Manages Its Retail Business and Logistics

Document Type:Creative Writing

Subject Area:Management

Document 1

The firm has been successful in penetrating nearly each the ancient rule in the sector of retail. The model of business used by ZARA is focused on a total of four strategic components that in this case are the logistics, stores, production and design and customers (Burghausen and Fan, 2002). The firm has its chain of supply and engages in competition rapidly in the market through the literal use of the idea of the fast fashion with prices that are affordable. Thus, the success of Zara originates from possessing the full control of each component of the business beginning from designing, producing and distributing its commodities. Hence, it justifies the reason, why the managing director of Louis Vuitton Fashion Company, Daniel Piette described the firm as likely the most devastating and also innovative retailer in the globe.

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ZARA is endowed with an efficient system of communication with its respective customers (Sull & Turconi, 2008). Hence, it leads to change in its market flow directly towards the designers. Likewise, the information is utilized in varieties of designs. Every steady system of communication with the market has ensured that ZARA has the knowledge and also responds to its respective customers and eventually satisfying their needs plus the expectation. At last, the company reaps success out of it. Presence of tourists serve as the customers of ZARA and retaining them is done by ZARA through the effective satisfaction of their needs Technological Input Retailing companies in Spain have experienced technological improvements. Majority of the firms that compete with Zara have come up with technological ideas in the market covering the areas such as sales and production process (Murphy, 2008).

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Document 2

A business model is formulated through the business policies and processes adopted and followed by a firm. Zara uses the business model of a retailer. The company sells its products directly to the public after buying the commodities from wholesalers and distributors. The company focuses on buying and selling clothes and related apparel without modifying the fundamental nature of the products. The value of the retailer business model in the marketplace is that the organization specializes in linking consumers and manufacturers. However, Zara ensures that it sources most of its material from the home countries. The company provides that it focuses on a vertically-integrated supply chain which supports its objective of exporting garments within 24 hours (Doiron, 2015). The supply chain also helps the company to process the clothing materials in the distribution center in Spain.

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Document 3

Amancio Ortega and Rosalia Mera are behind the origin of the great retailer company which they founded in the year 1975. Zara is the leading brand of the most massive apparel retailer in the world, known as the Inditex group. The company improved soon after starting and the use of information technologies (Caro, et al. Instead of employing individual designers Zara employed groups of designers. Soon after, the company began international expansion to different countries like Portugal, The United States, and France. Newly designed products usually take less than fifteen days to reach the stores, it’s mostly delivered within the first 48 hours (Caro, et al. Zara does not advertise its products instead prefers to use the money on adverts to develop new stores all over the world.

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The company sets aside a percentage of its revenue which is used in starting new stores. Zara manufactures all its products in their own companies in different countries mainly Spain, Portugal, and Turkey. The company enjoys success mostly from its convenience and consistency. Value chain and creation of value Zara is one of the main players in production, supply and management of retail industry all over the world. Zara manufactures an estimate of around 450 million clothing products yearly. The company majors on diversification and vertically integrated models to design, manufacture and distribute its products to all of its stores all over the world. The distribution is done within two weeks from the day it is first produced. The company prices its product differently according to the locations of the stores (Caro, et al.

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Every Zara store has a manager who communicates customer feedback. The feedback is majorly on customer likes, dislikes and what they specifically want. The data is sent back to the designers who work on it to come up with new customer preferred designs (Taran, et al. Resources and capabilities Zara locates its stores at prime locations of the city where the market is large and reliable. The stores are attractive and employ window display as a way of attracting customers as the company does not do adverts. How distinctive features of Zara affects its operating economics Zara’s business model stands out from the rest, and this is the main reason behind the company’s success. This is because the company gains access to a bigger market because they do their operations differently compared to their competitors.

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Document 4

It is made up of experienced professionals who produces hi-tech differentiated product. Its products are preferred by both middle and high income class due to quality and pricing strategies although it mainly targets the youths who always trends with new fashion. The stores are mostly located in urban areas where most fashion-conscious consumers live (Zhelyazkov 34). Urbanites are always in the market to look out for the latest fashion. The company is on a program to automate its consumer’s deals such that consumers can order at the comfort of their homes. The company has an open management which cultivates trust among employees and the seniors (Tokatli, N 23). The inclusion and trust help the firm in decision making as the employees have the chances of contributing in the final say as they are taken as researchers who knows the customers need.

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The structure of the company has a buyer-driven model; buyers’ opinions are highly valued. The global apparel of the company involves a lot of research to enhance the right branding. Production cost is minimized by employing the natives of where the branch is located which reduces cost of labor. The products are affordable and are designed to only withstand a maximum of 10 wears after which the product is disposed. This strategy ensures constant supply of customers and most of them are always repeat customers. The case study will deal with; Value Chain and Value Creation Value chain is derived through a combination of activities such as logistics, marketing, sales analysis, after sales services, technology development, firm infrastructure, dedicated human resource and consumer’s feedback(Bruce and Daly 332).

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The incorporation of the above ensures that raw materials are produced and conformed to cater the customer’s needs. This ensures that a firm creates a competitive advantage and consumers find reasons to purchase from such. Their information technology is always improving their publications, film contents and marketing. Strategic sourcing for trending fashion is the riskiest, to leverage losses the firm outsources from Asia which is cheaper by 15-20% compared to Europe. This allows the firm to offer fashionable outfits at relatively lower prices perceived to be of high quality. The centrally located distribution center allows accessibility to logistics department after an order is placed for delivery (Cachon 790). Shipments are made twice per week to third party distributors. The management is adequate and in all distribution Centre, this ensure that all the planning, coordinating, directing and controlling activities in regard to Zara’s rules are adhered to.

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This reduces the cases of frauds or manipulations by other vigilant groups or competitors (Choi et al 470). Zara’s information technology is always improving and strategic to ensure that consumers are up to date with their latest designs (Cachon 790). Through publications and fashion exhibitions involvement the fashion industry is aware of prevailing conditions from market, competitors, consumer demand and plans on how to expand to deliver better. Specific features influencing operation economics A Company model is the rationale of how a firm utilizes, conforms and delivers real value to their customers while considering other financial or market and any other relevant environment in a business context to achieve strategic plans and goals (Bruce and Daly 331). They reduce production costs by outsourcing some products which greatly reduces the operating costs and eventually increases their returns.

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A Comparison of Zara with an Average Retailer At a circumstance where two firms offer goods for the same prices one tends to go back and research where they source the materials, if they do not make they will definitely buy. It is therefore critical to ascertain that Zara will perform better than the retail due to its brand name and goodwill (Cachon 776). Due to its outsourcing technique, it has reduced operating costs and its products are perceived to be of high quality. However, its sales are likely to deteriorate because Zara’s customers already have in mind that it offers at relatively lower prices (Corinnaet al 187). Using system dynamics in warehouse management: a fast-fashion case study.  Journal of Manufacturing Technology Management, 22(2), 171-188.

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