Zara

Zara Case Study

BUS 510 Management of Information System

Instructor:

Yehia Mortagy

By:

Qi He (Megan)

University of La Verne

02/20/12

Case Overview

Zara is a Spanish clothing and accessories retailer, which is founded in 1975. It is the first-class chain sore of the Inditex group. Today, Zara has more than 1,700 stores spread over 77 countries and turned over sales of more than $10.9 billion in 2010 (Ooi, 2011).

It has fast response to fashion and changes garments very often. Zara has a great ability to respond quickly to the demands of target customers, which called for identifying trends of the customers. The case begins with the discussion on whether to upgrade POS terminals between Salgado, the boss and Sanchez, a technical leader for point-of-sale system.

The case mainly focuses on its operations and IT infrastructure. There are three cyclical processes in Zara’s operation: ordering, fulfillment, design and manufacturing. Store manager can divide the offer into segments and send each segment by infrared technology to accelerate ordering. Furthermore, employees are given more responsibility in their jobs. And Zara also increases the utilization ratio of inventory. In conclusion, Zara has a good value chain from designing products to sell to consumers.

Zara and Michael Porter’s Model

I use two Porter’s models to analyze Zara’s competitive edges, which are Three Generic Strategies and Five Forces model. Through the analysis, we can investigate Zara’s critical success factor.

Three Generic Strategies Analysis

There are three components in Generic strategies, which are cost leadership, differentiation and focus strategies. Companies must create separate business units for each strategy to get success. And Zara does well in creating its own competitive advantages in generic strategies.

Cost leadership

Zara has low cost...