1) Which of the following are key strengths of Inditex/Zara? (select all that ap
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1) Which of the following are key strengths of Inditex/Zara? (select all that apply) A) The supply chain could respond to new needs very quickly, going from concept to market in as little as two weeks B) Zara entices its customers to return more frequently than competitors by introducing new designs and creating a feeling of scarcity C) Zara is able to manufacture clothes more cheaply than competitors because they make them in large batches D) Store managers and employees have the ability to communicate customer needs and desires to the central design teams, resulting in a lower failure rate for new items 2) Which of the following statements are true of Zara's pricing/cost structure? (select all that apply) A) Zara prices its products about 15% lower than their competitors B) Zara locates its stores away from luxury brands to save on location costs C) Zara outsources the manufacturing of the majority of their products to low-cost countries D) Zara manufactures clothes of lesser quality than their luxury peers 3)Which of these are external factors which influence the fashion manufacturing and retail industry? (select all that apply) A) Trends come and go quickly, leading to short fashion cycles B) Fluctuations in the global economy influence customers' price sensitivity C) Customer tastes are hard to predict D) The middle class in developing nations is growing rapidly; as a result, spending on fashion will continue to grow For the exclusive use of Y. Sherhan, 2018. VEy Publishing W15431 WHAT BUSINESS IS ZARA IN? Daniel J. Doiron wrote this case solely to provide material for class discussion The author does not intend to Austrate either effective or inefective handling of a managerial situation. The auehor may have dsguised certain names andyr information to protect confidentiality. This publication may not be tranamited, photocopied, digiäzed or otherwise reproduced in any form or by any means without the permission af the eopyrignt holder Reproduction of this material is not covered under authortzation by any reproduction rights orpanzaton. To ordler copies or request permission to reproduce materials, contact ivey Publishing, vey Business School, Westem University, London, Onternio, Caneda, NeG ONt (0 519.661.3208 (e) cases@ivey ca: www.lveycases.oom Version 2015-09-24 What would 2016 have in store for Inditex and its flagship brand Zara with its "fast fashion" business modef" it had taken ycars for new compctitors to build business models that could effiectively compote with Zara's approach. Many would recall the carly deference many had towards Zara and its counter-intuitive business model. Why would anyone invest in a fashion manufacturer and retailer who produced their clothes in the high- cost labour market of Spain (versus Asia), spent very little on advertising, ostensibly overspent on positioning high-end stores in chic retail districts across Europe, carried substantially less inventory than competitors, manufactured clothes that were, arguably, of a lesser quality and finally, charged 15 per cent less at the cash register. By all accounts, this approach was vicwed as a formula for disaster in the highly competitive retail fashion industry. At the time, most observers were just not forward thinking cnough to sce the valuc in Zara's approach. And, over time, Inditex took great pride in proving them wrong. By 2014, Zara was, by far, the number one fashion retailer in the world by many mcasures."It really was its unique business model that enabled this astounding success. Inditex, however, could not dwell on past successes, as the future was full of significant challenges associated with the many new upstart and copycat competitors who had infiltrated the market. These new firms would, more than likcly, also enjoy a good degroc of success. Disruptive innovations, such as Zara's business model, inevitably were copied. Examples of how industries evolved around disruptive business models included Southwest Airlines leading the discount airline industry and Wal-Mart dominating the discount department store industry Perhaps it was time for Inditex to reinvent the industry business model, once again. This dooument is authorined tor use only by Yeusel Sherthan in Service Operations Management (MGT 3121) taught by Cory Labanow, CUNY-Baruch College trom January 2018 2018Explanation / Answer
1. Key strengths of Inditex / Zara
From concept to market in as little as two weeks; introduces new designs, production in small batches; inventory managed by store managers, not to create a feeling of scarcity.
Communication with customers is for inventory management; not for the central design teams. Inventory management results in lower failure rate.
A
2. Zara's pricing, and, cost structure
A) Zara priced its products about 15 percent lower
It profits off its supply chain; places stores close to luxury brands
3. Factors that influence the fashion manufacturing, and, retail industry
All apply
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