ZARA case study
The middle-aged mother buys clothes at the Zara chain because they are cheap, while her daughter aged in the mid-20s buys Zara clothing because it is fashionable. Clearly, Zara is riding two of the winning retail trends - being in fashion and low prices - and making a very effective combination out of it. Much talked about, especially since its parent company's IPO in 2001, often admired, sometimes reviled, but hardly ever ignored, Zara has been an interesting case study for many other retailers and fashion brands around the world.
Zara is the flagship brand of the Spanish retail group, Inditex SA, one of the super-heated performers in recent years. When Inditex offered a 23 per cent stake to the to public in 2001, the issue was over-subscribed 26 times raising Euro2.1 billion for the company. What makes Inditex so tasty? Well, for a start, it seemed to show higher profit margins than comparable retailers, and secondly, the trend seemed sustainable. Good bet for most investors.
Zara, which contributes around 80 per cent of group sales concentrates on three winning formulae to bake its fresh fashions:
• Short Lead Time = More fashionable clothes
• Lower quantities = Scarce supply
• More styles = More choice, and more chances of hitting it right
1.1 What are the organizational objectives of Zara? Explain the importance of an effective supply chain management in achieving the organizational objectives at Zara. (Assessment Criteria 1.1: Explain the importance of effective supply chain management in achieving organizational objectives)
1.2 What are the prime business functions of Zara? Explain the link between supply chain management and business functions in Zara. (Assessment Criteria 1.2: Explain the link between supply chain management and business functions in an organization)
1.3 Discuss the key drivers for achieving an integrated supply chain strategy in Zara? (Assessment Criteria 1.3: Discuss the key drivers for achieving an
Zara is the flagship brand of the Spanish retail group, Inditex SA, one of the super-heated performers in recent years. When Inditex offered a 23 per cent stake to the to public in 2001, the issue was over-subscribed 26 times raising Euro2.1 billion for the company. What makes Inditex so tasty? Well, for a start, it seemed to show higher profit margins than comparable retailers, and secondly, the trend seemed sustainable. Good bet for most investors.
Zara, which contributes around 80 per cent of group sales concentrates on three winning formulae to bake its fresh fashions:
• Short Lead Time = More fashionable clothes
• Lower quantities = Scarce supply
• More styles = More choice, and more chances of hitting it right
1.1 What are the organizational objectives of Zara? Explain the importance of an effective supply chain management in achieving the organizational objectives at Zara. (Assessment Criteria 1.1: Explain the importance of effective supply chain management in achieving organizational objectives)
1.2 What are the prime business functions of Zara? Explain the link between supply chain management and business functions in Zara. (Assessment Criteria 1.2: Explain the link between supply chain management and business functions in an organization)
1.3 Discuss the key drivers for achieving an integrated supply chain strategy in Zara? (Assessment Criteria 1.3: Discuss the key drivers for achieving an