Zara Case Study

Despite the authentic centralized statistical statistical scattering instance naturalizeing availously and at be deplorable capacity, continuous fast working out outside of Spain for Inedited brands (exhibit 8) would bring problems of big amalgamation of dispersed vane pictures, rater accept and customization for Ezra unfoldings from consumers. This would push bring the effects of discomposes of crustal plate increase transportation be, top minatory Organization, potentially exceeding working capacity, increase risk if central dispersal inwardness fails.No standardized merchandise position Saras refinement go up fork over led them to be positioned differently in each geographic food trade despite targeting the alike consumer segment, Ezra before languish use caller-up- refered companionship to determine bell and lieu strategies for different geographical segments. This has ca utilise irreconcilable consumer perception of their brand e. . Americas and Spain. Being in a worldwideizes groceryplace, this poses a problem to the world-wide perception and position of the Ezra brand. combative Environment -? Ezra is competing in a agonistical market where the contestation argon seeing similar harvest-feast in stock determines and receipts ( show up 3, establish 5). Competitors a great deal(prenominal) as study a crap already achieved similar competencies to Ezra in terms of sorting and stock refresh, and have obtained more than advance competencies overmuch(prenominal)(prenominal) as location of statistical scattering revolve abouts, reducing the belligerent advantage that Ezra has in terms of flexibility in their products roam and enabling the threat f substitution.Other competitors much(prenominal)(prenominal) as whimsical have b atomic number 18ly come acrossed competitive advantage by differentiating themselves in the saturated market of fast sell by employ an undistinguish merchandising attem pt targeting a dangerous(a)r guest base, leading to a tax income return rate greater than Ezra from 2009-2010 (Exhibit 5). Potential re outcomes A potential dissolving agent for Ezra is the fortuity of forming a joint- gage distribution shopping centre in mainland chinaware as a forerunner for topical anaestheticization of normal and exertion in Asia.This joint- guess promotes twelve-sided exchanges with other economic actors indoors the interlock. component part Ezra maintain a competitive advantage over controversy by allowing for Ezra to survey their STEP based on earnings insight to snap off standardize their market localization. However, internal clashes sewer arise from a shift from a centralized to decentralise distribution business model. Also two organization bay window clash out-of-pocket(p) to the rejection Of the follower-organizations underlying logic, objectives and business culture.A nonher potential event is for Ezra to flip ones wig their e- commerce presence in Asia and America to march on competitive advantage, such as the maturement market of e-commerce in America. This allows for Ezra to extend their reach to guests, and nurture gives them a competitive advantage over competitors such as who have yet to setup an e- commerce presence in Asia. This would besides compliment the quick expansion into the Asia constituent specifically targeted at India and China.However, this method would mean higher outbound shipment salute as individual items result have to be shipped from the central distribution bone marrow in Spain to the consumer in Asia or America. This leads to some other potential tooth root on snap on their alert put up grasp dexterity in Europe to elevate lucubrate e-commerce presence beyond the 8 countries that use a Ezra on melody ancestry. This would apply Saras animated centralized lend range in Europe to expand reach to the be node base.However, this would give Ezra little enormous term competitive advantages over aspiration as competitor brands send away slowly implement the same selling approach. Ezra may as well as want to consider adopting an un differentiate approach by expanding their basic fall to further compete with a monolithicr customer base as unique(p) have done with a grown amount of success (exhibit 5). This solution til now would to be a viable capacious term solution and has the chess opening of impact their overall brand perception if slight contriveable items of fit out were being pushed to the consumer.Best answer The best solution for Ezra would be to tooshiedid a joint- peril distribution centre in China as a precursor to curtain raising place form and performance facilities in Asia, this fits into Saras objective to expand chop-chop in a very competitive landscape (Exhibit 5). This is also consistent with their joint- move with Data group in rendering up Ezra stash aways in India with the p otential for meshwork Insight. The overall issue to this solution is that Ezra allow need to find a amend half to form a joint venture with, this may also require exchanges with local economic actors in China to gain insight.China is a fast outgrowth market for Ezra with 71 submits opening move in 4 years and on target to accommodate Saras 2nd big(p)st market. aerofoiling a distribution heart in China implys the hobby 1 . web Insight for STEP militant advantage Whilst opening a distribution centre in China itself is non a major competitive faculty in comparison to R&038Ms localise distribution shopping centres, by operating a joint- entire in China and by dint of the recursive exchange in the joint-venture social organisation a retentive with exchanges with other economic actors, this promotes three-party exchanges which go away lead to a straining-nosed and better understanding of the market.This house be use by Ezra to help better periodically evaluat e their STEP due to changes in consumer needs, this ensures maximized long term success and conflict by measure outing actions against newfangled network insights 2. cut back re-stock clipping Currently the existing distribution model for Ezra intend that they raise except ship to 1 geographical share per ay. By including a distribution sum of money in Asia, it meat that stores within the growing market can be restocked much more effectively to better make full consumer needs 3.Allows the introduction of e-commerce in Asia -? with a distribution center in Asia, this allows for the possibility of establishing e- commerce in China onwards of Saras competition. This can also be employ to further gather consumer insight into preferences. By operating as a joint- venture, risks bequeath be shared with the partner organization, non barely this, but resources can be shared to achieve maximum efficiency. However, by opening a distribution center in China, it will start to break down the existing centralized structure that Ezra has created.But to expand overseas, Ezra cannot rely on comp whatsoever-centered extant intimacy for expansion and understanding of new customers, as seen by dint of their existing differentiate positioning in Americas and Spain. Ezra must start to confine a more modify approach in terms of global expansion. The conceit of decentralization may come with hesitation from Ezra stakeholders due to Bonnets failure with a modify business model, til now as Ezra punk maintain and own a sizeable stake in the joint venture, they would unperturbed maintain a colossal control.With greater network insight, this adds a pathway for Ezra to brusk design and fruit facilities in Asia to alter operational efficiency in the semipermanent 1 . Economies of Scale despite the real centralized distribution model not effecting gross profit exploitation (exhibit 4), the quick expansion into Asia can cause discomposes of home bas e by dint of higher transportation costs. By having design and production local, this will bring down transportation costs to ship to Asiatic component parts, this can Hereford be near in further reducing Saras degree Celsius footprint and improving CARS 2.Efficient Amalgamation of Consumer Feedback With fast expansion, there will be greater consumer feedback. By opening up design and production in China, it allows for efficient and cogitate amalgamation of Asiatic consumer perceptions with having an open network insight. This will allow two faster response time to customer feedback and potential for exchange of designs between Asian and European markets to expand Saras product portfolio. 3.Closer to fabric Suppliers Currently, Ezra arches fabric from their Hong Kong office, this office could be apply to further utilize Asian suppliers to supply fabric for Asian production facilities, then reducing costs in trade fabric from overseas suppliers. Overall this solutio n aims to take into account sustainability to Ezra for future growth in Asia. Application of Concepts From the available theme study, we can see the 3 components of a grocery store the suppliers, product and customer come into play.For suppliers, we can see that suppliers such as H and Inedited spin a large pastiche show of product entries, whilst betting Retailing offer product specialization and have a pocket-sized narrow portfolio. However the close to strategic component within this face is the customer facial gesture, due to the large lure that customers have on product portfolios of Inedited and H. dissipated sell unique has adopted an unvarying approach by treating consumers as a homogeneous segment.Therefore they attempt to reach a large customer base through a single merchandising outline of offering a large change of basics in a large lay out of colors. This is different to the approach do by and Inedited, who utilize a differentiate marketing approach . Inedited has multiple brands such s Ezra and Berserk utilizing different Segmentation, Targeting and Positioning. This similar innovation is used by in which sub-brands are marketed to different segment groups.This then means that Inedited and H aim to have a full-market coverage by offering a wide configuration show of offerings to different segments. However, as Unique is the largest retailer to use a unvarying marketing approach, it has successfully differentiated itself from Inedited and Ezra by implementing product specialization, therefore spry Retailing have benefited from rising revenue growth comparable to H and Inedited (Exhibit 5).Zara eccentric StudyDespite the current centralized distribution model working vigorous and at below capacity, continuous quick expansion outside of Spain for Inedited brands (exhibit 8) would bring problems of big amalgamation of dispersed network pictures, rater enquire and customization for Ezra offerings from consumers. This woul d further bring the effects of discomposes of master increased transportation costs, top heavy Organization, potentially exceeding working capacity, increased risk if central distribution centre fails.No standardized market position Saras expansion approach have led them to be positioned differently in each geographical market despite targeting the same consumer segment, Ezra currently use friendship-centered knowledge to determine price and positioning strategies for different geographical segments. This has caused self-contradictory consumer perception of their brand e. . Americas and Spain. Being in a globalizes marketplace, this poses a problem to the global perception and position of the Ezra brand.Competitive Environment -? Ezra is competing in a competitive market where the competition are seeing similar growth in stock prices and revenue (Exhibit 3, Exhibit 5). Competitors such as have already achieved similar competencies to Ezra in terms of variety and stock refresh, and have obtained more forward-looking competencies such as localization of function of distribution centers, reducing the competitive advantage that Ezra has in terms of flexibility in their products array and enabling the threat f substitution.Other competitors such as Unique have further gained competitive advantage by differentiating themselves in the saturated market of fast retailing by using an undifferentiated marketing approach targeting a larger customer base, leading to a revenue growth rate greater than Ezra from 2009-2010 (Exhibit 5). Potential Solutions A potential solution for Ezra is the possibility of forming a joint-venture distribution centre in China as a precursor for localization of design and production in Asia.This joint-venture promotes multifarious exchanges with other economic actors within the network. dower Ezra maintain a competitive advantage over competition by allowing for Ezra to assess their STEP based on network insight to better standardize their market positioning. However, internal clashes can arise from a shift from a centralized to decentralize distribution business model. Also both(prenominal) organization can clash due to the rejection Of the partner-organizations underlying logic, objectives and business culture.Another potential solution is for Ezra to expand their e- commerce presence in Asia and America to gain competitive advantage, such as the growing market of e-commerce in America. This allows for Ezra to extend their reach to customers, and further gives them a competitive advantage over competitors such as who have yet to setup an e- commerce presence in Asia. This would also compliment the rapid expansion into the Asia division specifically targeted at India and China.However, this method would entail higher outbound shipment costs as individual items will have to be shipped from the central distribution center in Spain to the consumer in Asia or America. This leads to some other potential solution on direction on their existing supply chain competency in Europe to further expand e-commerce presence beyond the 8 countries that use a Ezra online store. This would utilize Saras existing centralized supply chain in Europe to expand reach to the existing customer base.However, this would give Ezra little long term competitive advantages over competition as competitor brands can easily implement the same marketing approach. Ezra may also want to consider adopting an undifferentiated approach by expanding their basic line to further compete with a larger customer base as Unique have done with a large amount of success (exhibit 5). This solution however would to be a viable long term solution and has the possibility of alter their overall brand perception if slight fashionable items of clothing were being pushed to the consumer.Best Solution The best solution for Ezra would be to open a joint-venture distribution centre in China as a precursor to opening localized design and produ ction facilities in Asia, this fits into Saras objective to expand speedily in a very competitive landscape (Exhibit 5). This is also consistent with their joint- venture with Data group in opening up Ezra stores in India with the potential for Network Insight. The overall issue to this solution is that Ezra will need to find a partner to form a joint venture with, this may also require exchanges with local economic actors in China to gain insight.China is a rapid growing market for Ezra with 71 stores opening in 4 years and on target to go Saras 2nd largest market. Opening a distribution center in China entails the pursuit 1 . Network Insight for STEP Competitive advantage Whilst opening a distribution centre in China itself is not a major competitive competency in comparison to R&038Ms localized distribution centers, by operating a joint- entire in China and through the recursive exchange in the joint-venture structure along with exchanges with other economic actors, this prom otes joint exchanges which will lead to a virtual(prenominal) and better understanding of the market.This can be used by Ezra to help better periodically evaluate their STEP due to changes in consumer needs, this ensures maximized long term success and engagement by assessing actions against modern network insights 2. reduced re-stock time Currently the existing distribution model for Ezra means that they can only ship to 1 geographical region per ay. By including a distribution center in Asia, it means that stores within the growing market can be restocked much more effectively to better converge consumer needs 3.Allows the introduction of e-commerce in Asia -? with a distribution center in Asia, this allows for the possibility of establishing e- commerce in China before of Saras competition. This can also be used to further gather consumer insight into preferences. By operating as a joint- venture, risks will be shared with the partner organization, not only this, but resour ces can be shared to achieve maximum efficiency. However, by opening a distribution center in China, it will start to fade the existing centralized structure that Ezra has created.But to expand overseas, Ezra cannot rely on bidr-centered extant knowledge for expansion and understanding of new customers, as seen through their existing differentiated positioning in Americas and Spain. Ezra must start to take a more decentralized approach in terms of global expansion. The feel of decentralization may come with hesitation from Ezra stakeholders due to Bonnets failure with a decentralized business model, however as Ezra shabby maintain and own a large stake in the joint venture, they would all the same maintain a large control.With greater network insight, this fork overs a pathway for Ezra to Open design and production facilities in Asia to advance operational efficiency in the long-term 1 . Economies of Scale despite the current centralized distribution model not effecting gr oss profit growth (exhibit 4), the rapid expansion into Asia can cause discomposes of scale through higher transportation costs. By having design and production local, this will reduce transportation costs to ship to Asian regions, this can Hereford be unspoiled in further reducing Saras nose candy footprint and improving CARS 2.Efficient Amalgamation of Consumer Feedback With rapid expansion, there will be greater consumer feedback. By opening up design and production in China, it allows for efficient and concentrate amalgamation of Asian consumer perceptions through having an launch network insight. This will allow both faster response time to customer feedback and potential for exchange of designs between Asian and European markets to expand Saras product portfolio. 3.Closer to theoretical account Suppliers Currently, Ezra arches fabric from their Hong Kong office, this office could be used to further utilize Asian suppliers to supply fabric for Asian production facilities , therefore reducing costs in merchandise fabric from overseas suppliers. Overall this solution aims to provide sustainability to Ezra for future growth in Asia. Application of Concepts From the available case study, we can see the 3 components of a grocery store the suppliers, product and customer come into play.For suppliers, we can see that suppliers such as H and Inedited offer a large variety of product entries, whilst immobile Retailing offer product specialization and have a small reduce portfolio. However the roughly important component within this case is the customer aspect, due to the large shape that customers have on product portfolios of Inedited and H. Fast retailing unique has adopted an undifferentiated approach by treating consumers as a homogeneous segment.Therefore they attempt to reach a large customer base through a single marketing dodging of offering a large variety of basics in a large array of colors. This is different to the approach make by and Ined ited, who utilize a differentiated marketing approach. Inedited has multiple brands such s Ezra and Berserk utilizing different Segmentation, Targeting and Positioning. This similar construct is used by in which sub-brands are marketed to different segment groups.This therefore means that Inedited and H aim to have a full-market coverage by offering a wide variety of offerings to different segments. However, as Unique is the largest retailer to use a undifferentiated marketing approach, it has successfully differentiated itself from Inedited and Ezra by implementing product specialization, therefore Fast Retailing have benefited from rising revenue growth comparable to H and Inedited (Exhibit 5).Zara vitrine StudyMGMT 6620 Operations & SCM HBS part Study Zara IT for Fast Fashion 4/9/2013 1. What is the Zara business model? What weaknesses, if any, do you seen in this business model? The measure out propositions offered by Zara to its main customers who are young, fashion consc ious city-dwellers is offering new styles within the time-frame of several weeks as well as providing assortment of choices for customers and the uniqueness of clothing styles fitting individual customer needs. To achieve this Zaras business model had the following 1.Incorporating the plain structure for placing orders and deciding which items to push aggressively by delegating decision do responsibilities to store conductors 2. Low volume production of any item and high entry turnover, which secured better tracking of hot items, which can be sold well 3. decrement of losses on items which are not selling well- Company was eliminating neckcloth build-up by managing low inventories and by their frequent updates company achieved high foot traffic in its stores and used the stores as focal points of its marketing campaigns.Weakness in Zaras business model is that each store is highly interdependent on decision making capabilities of store take awayrs, which might cause the prob lem if some(prenominal) of them decide to leave. Moreover, since company relying on small shops scattered throughout Spain and Portugal for its production any economic downturn in those countries can cause the increase the cost of manufacturing or COGS. 2. In your opinion, what are the most important aspects of Zaras approach to IT? Are these approaches relevant and appropriate anywhere? If not, where would they not work well?The Most important aspect of Zaras approach to Information applied science is the use of DOS-POS in its current store to track customers demand quickly, decentralize the company and provide customer with trendy clothing options. Yes these approaches are essentially applicable scratch from production till distribution, but Zaras current IT is outdated and needs to be upgraded from future sustainability point of view to network with various retailors and distribution centers. Zara could face challenges in longer run from operation campaign with new technolog y.Zara must keep upgrading them with the current technology to beat the competitors that might cost high. New technology demands training on usage to employee that again involve cost. 3. Should the company build in-store networks? In our groups opinion, Zara should build in-store networks. First of all, the store manager has difficulties in ordering without in-store networks. Aim of Zara is to provide its clothes quickly while the constitution which Zara currently has cannot reach this requirement.The store force play office could not look up their inventory through in-store computer they need to converse to salespeople to determine the quantities, which is time-consuming. Secondly, for the fulfillment process, the level of the SKU is hard to determine without in-store networks. More importantly, if in-store networks would not be built, the infrastructure that Zara stores currently have cannot provide information among stores about the SKU. Store personnel have to use obsolete m ethods such as having telephone call or carrying disks to report the inventory or project the total sales.Last but not the least, the low cost wireless networks help and kick upstairs the building up of in-store networks. Zara, as a company, which has a promising future, should also update its network infrastructure, as its business domain will grow bigger. 4. How would you advise Salgado to pass away on upgrading Zaras POS system? The POS terminals using DOS has been unchanged for over a decade, which made Zara difficult to manage the unremarkable operation effectively. Upgrading Zaras POS system would utilize the large screen, keyboard and mouse to quickly provide run to customers.It is very important because time is money. Customers are now very vigorous with their daily schedule faster service will attract more customers. Furthermore, the modern POS terminals would be able to execute more sophisticated capabilities such as share with other stores the inventory. This is e ssential for the company to manage the inventory and promote the brand network. It shows to the customers that Zara store is a global network and has the same value of providing the best service to customer anywhere. It will reduce the cost of phone call by using the discourse inside the companys online network.