Case Note - Zara

1. Introduction

Zara is an international apparel company, based in Spain. It is one of the three

biggest clothes manufacturing firms in the world. It is mainly fashion-based,

carrying out fashionable clothes to the middle class at an affordable level.

2. Main goals

Zara’s management target was to reach a revenue growth of 20% this year. Also,

being a public stock market company, the management has to work towards raising

stock prices. Its stock price was valued high due to investor expectations so we

agreed that the main challenge of Zara is to live up to the expectations and to

reach the targets set by its management.

3. Main problems

Zara’s system is, overall, working well, but it has some flaws that need perfecting.

Due to the fast fashion response system Zara is using, the structure of distribution

differs from its competitors’. Because of that system Zara’s supply chain is long

and hard to understand, whereas they tend to use less money for advertisement

than its competitors (although this does not seem to be a problem in all areas).

Also the company’s international expansion tends to be slower than that of its

competitors’. Some of the price levels do not seem to be sufficient for the region

they are set at.

4. Solutions

On the short term annual goal the group has decided that the firm should expand

to Scandinavian territories (Sweden, Norway, Denmark). Zara has a very limited

store number at those countries where it would not only obtain more markets, it

could weaken its competition (Hennes & Mauritz) as well.

To succesfully expand in those regions, the group felt that certain changes in

marketing behavior were needed. The advertising costs should be kept lower than

the competitors’, but the online presence of the firm should be raised.

Also we need more decision-making power on the lower management levels,

so store managers can also work with their...