Zara Case

1. Which of Porter’s “generic” competitive strategies is Zara pursuing? Why?

* Cost leadership strategy

Zara has a low price strategy. The quality of the products is lower than its competitors and they can cut costs so offer a lower price. So Zara has a lower cost structure than their competitors. So low cost gives low prices, which make it a Cost leadership strategy.

* Differentiation strategy

They have the concept of fast-fashion (which was pioneered by Inditex), which is unique that they see what the new fashions clothes are and that they are able to produce those clothes and bring them in the shops in a couple of weeks supported by its excellent and integrated supply and value chain. Also, Zara has a creative design team who give differentiation. So we can say that Zara gives design clothes with a normal quality for a very good price.

2. From a Value Chain perspective, how or where does ZARA excel?

* Zara’s value chain is actually what makes Zara able to produce new designs in just 2 weeks by operations and Supply chain.

* Zara excels by targeting technology investment at the points in its value chain where it will have the most significant impact, making sure that every penny spent on technology adds value. For example, Zara operates a highly efficient, low-cost IT infrastructure. They spend little on IT in comparison with their competitors, adhering to the principle ‘less is more’ IT to support business processes whilst going against trend of using IT for decision making and instead relying on the judgment of their people. In fact Zara’s IT expenditure is less than 1/4 the fashion industry average.

3. What do you believe are ZARA’s competitive advantages? How sustainable are these advantages?

* Their products are mix of latest fashion and quality at relatively affordable price.

* They have a fast production and distribution strategy that allows them to offer the latest fashions in less than two weeks.

* Production completed by...