This week we once again look at the apparel industry, this time the Zara case (see the Course Notes). Please answer the question below. Also, please check out the other posts and comment on one of them. If you’re first, please come back later!
The author describes Zara’s business strategy as “counter-intuitive” (p.2 line 4). Do you agree? Please explain why/why not. (If you use technical terms from the case, please ‘translate’ them into plain language)
The author describes Zara’s business strategy as “counter-intuitive” (p.2 line 4). Do you agree?
ReplyDeleteYes I agree with the author’s statement that Zara has a “counter-intuitive” business strategy. Zara has taken the normal and accepted business practices of the fashion industry and turned them upside down.
The fashion industry seems to be based on cycles that come and go with the fashion ‘seasons’. This means that inventory is the biggest asset and the biggest liability for clothing manufacturers. As soon as stock ‘goes out of fashion’ with the customers, its value significantly drops or is completely eliminated. Zara excels with its business strategy of having a fast stock turnover and focuses its resources on data gathering rather than guessing the up and coming fashions.
Their view is that if you can find out what the customer wants and delivery it to them within 15 days you will hold a far better position than competitors who sometimes take months to deliver the latest collections. The vertical integration of Zara gives them flexibility and security over their costs throughout the whole value chain process, something that many of their competitors don’t have.
Having an ‘in-house production’ also builds on Zara’s reputation as a business that values all manufacturing processes by supporting local communities with its business strategy.