zara clothing case study

Technical Change and Techno-Economic Paradigms


Prof. Carlota PerezStudents:

Aleksei Oleinik – Student X Tinatin Dzirkvadze – Student Y

CASE STUDY

TALLINN 2012

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ZARA is the flagship brand of the Spanish retail group :

INDITEX SA >

Operations into 45 countries with 531 stores located in the most important shopping districts of more than 400 cities

Continuous innovation based on customers desires

Focused on it’s core FASHION philosophy Cutting edge fashion at affordable price Creativity and quality design

SUMMARY


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STUDENT X

PRODUCT process and business model

Zara manufactures its most fashion-sensitive products internally. About 11,000 distinct items are produced during the year. Production takes place in small batches, with vertical integration into the manufacture of the

most time-sensitive items. Both internal and external production flows into Zara’s central distribution center.

Products are shipped directly from the central distribution center twice a week. Zara is able to originate a design and have finished goods in stores within four to five weeks in the

case of entirely new designs.


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STUDENT XChoice of technology and technology sources

Short cycle time - minimum 2 weeks

Big investments in production, automatization

Improving organizational aspects – Each shop has a manager in a role of a “shop owner”

Daily and weekly reports

Managers participating in product development and statics

Low advertising expenditures

Impact of developing management + production system + Logistics

The influence of modern networked organization

Client <-> Supplier <-> Service Units <-> Strategic Management


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STUDENT YStrategy of distribution

Advantages and Disadvantages

Strategy of distribution

Own distribution center in Arteixo, Spain Satellite center in Argentina, Brasil and Mexico

+ Cost savings by centralized distribution center- Capacity problems with only one center where zara keeps expanding>Establishment of a second distribution center at Zaragoza in 2003- Problems with scheduled shipment by time zones+ Taking the advantage of time zones (Dividing working day into shifts)


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STUDENT Y

Activity circle

Good positioning : moving from standardized market to customized marketUsing customer demands as a MAIN ADVANTAGE

Lessons learned

Globalization of CUSTOM ADAPTABLE products

Using the advantage of it

The greater number of users of a particular network - the greater the value of the network and the lower the cost

The growth of markets for intangibles can be completely dispersed and does not require additional plant and equipment

With the same group of central management a leading global corporation

Good monitoring and supervise a giant company

Constantly growing in size

ZARA activity architecture Advantages and Disadvantages Always the latest fashion trends Increasing complexity of cross-border

intermediaries > Higher coordination costs


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Who ? This strategy can be used by companies who would like to respond to customer needs QUICKLY Best for retailing industry (rapidly changing industry) Company with big investment capacity (Vertical integration)

How ? Qualitative centralized management (For fast response and control) Strong management with report and statistic system (To be up to date about customer needs) Investments for researching new markets

Applicability


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The ICT economy, with its global networks, mass customization and intangible trade acrosstransparent borders, requires some form of “globalization”, which was used by ZARA.

This is good example of the use of opportunities in PRESENT PARADIGM SHIFT.And the example of alternative globalization or good globalization

The main lesson we learned is the importance of market positioning.

The flexible nature of the ICT paradigm was best for this case, they used advantage of time

required to share information, researches and statistics.

Good example for the lecture aboutGLOBALIZATION AND DEVELOPMENT: THE PRESENT PARADIGM SHIFT AND THE NATURE OF

OPPORTUNITIES

Aspects of the course related to this case study


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THANK YOU

zara clothing case study

Business