Zara Case

TEACHING NOTE

ZARA: FAST FASHIONZARA: FAST FASHION

Synopsis

This case focuses on Inditex, an apparel retailer from Spain, which has set up an extremely quick response system for its Zara chain. Instead of predicting months before a season starts what women will want to wear, Zara observes what’s selling and what’s not, and continuously adjusts what it produces and merchandises on that basis. Powered by Zara’s success, Inditex has expanded into 39 countries, making it one of the most global retailers in the world. But in 2002, it faces important questions concerning its future growth.

Teaching Objectives

The Zara case has primarily been designed for use in one or two sessions of an introductory course on strategy or one on international business. It can also be used to bridge between strategy and a number of functional areas, particularly supply chain/operations management, but also marketing and finance.

More specifically, the Zara case has been designed to enable the pursuit of several pedagogical objectives:

1. Simple analysis of competitive economics in terms of both operating economics and capital efficiency.

2. Strategic graphing of the links among Zara’s choices, particularly ones connected to its quick-response capability, and the ways in which they create competitive advantage.

3. Examination of the threats to and likely sustainability of Zara’s competitive advantage over time.

4. Discussion of strategies for globalization.

A two-session structure could also accommodate expanded discussion of a range of issues related to globalization: the impact of Zara’s home base in Galicia, Spain; the global scalability of its advantage; and issues related to market selection, mode of entry, and degree of standardization.

Teaching Aids

The following exhibits are included in this teaching note:

Exhibit A Summary Competitive Financials

Exhibit B Comparative Operating Margin Analysis

Exhibit C Strategic...