ASSESSMENT 2 Authentic Tasks Research Report

ZARA

STUDENT ID 5176979
NAME RAHUL SAMANT

SR NO

TITLE

PAGE NO

1)

EXCEUTIVE SUMMARY

2)

INTRODUCTION

3)

SUPPLY CHAIN FIGURE

Step 1
4)

SUPPLY CHAIN STRUCTURE

5)

6)

1) Physical Flow of the goods

2) Information Management
3) Organisational Structure
SUPPLY CHAIN PERFORMANCE
1)Overall performance of supply
2)Relative performance benchmarking
3) Performance of the Individual Logistics
Business Context

1) Internal Policies Corporate & Market

Strategy
2) External Business Environment
Step 2
7)

Identification of Main issues and Problem

1)Categorize
2)Prioritise

8)

Generation and evalution of Alternative solution

9)

1) Brain storm Idea

2) Two alternative culture
Recommendation Solution and Justification

10)

Reference

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Step 3

Executive Summary

The report talks about the entire supply chain industry. The company, which is
being selected for the report, is Zara. Zara is the part of the Inditex Group. The
company has achieved growth in the retail sector because of the various policies
and structure used by the company to dominate the entire retail sector. The
paper talks about supply chain performance, Identification of main issues and
problem and recommendation

Introduction
The Inditex is the company, which in different sector like the textile design,
manufacturing and distribution. The company has the headquarters in La Courna
Spain and employees about 69240 employees. The Zara is the brand, which
made in the increase in profit margin of the company. Zara is known for the Just
in time production, vertical integration method. The vertical integration method
is like combing the manufacturing, operation ,sourcing and design to adopt to
the changing trends in the fashion and design that suits the customer preference
.The new designs are made which will attract the costumer preference and the
multiple concept approach which has made the consumer attract to the various
brand like Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara
Home and Uterque of different age group and being leader in the competition
with many competitors like Gap , H&M , Mango etc. (Company Overview, 2008)

Supply chain of ZARA -

Zara buys the

fabric of 4
different colours
design and
cutes its fabric
in house

Raw
material

Suppliers are
close to the
factories so
Zara can
order what is
need

Supplier

Clothes are
ironed and
labelled and
packed in
good way

Trucks are
used to
deliver to
store, ships,
and flights
for outside
country

Manufactur
er

Distributi
on

Consumer

Custom
er

End user

Retail store
outlet all over
worldwide
even in Spain

Situational Analysis
Supply Chain Structure
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1) Physical Flow of goods

The concept is all about global production network. The world is about the
globalisation the worldwide information is transmitted in form of finished
product. Inditex is the leading Spanish group in the fashion sector analyses of
how the transport and logistics fit into the production network and will provide
the firm with the most competitive advantage. Zara is known for its eleven
brand. The brand hub of logistics is in Zaragoza in North east of Spain. where the
group it logistics activity take place throughout the world. The main focus of Zara
company is the production model. First is the efficient logistics and sufficient fast
transport which makes the company to have lead times and will be present in
economical and geographical disperse markets. Second the productive structure
which will help in combing nearby. Second the productive structure which helps
in combining the structure which helps in combining nearby and distant
manufacturing. Air Transport which helps to send garments to distant markets
and for receiving the high fashion content garment from Asia cluster and quick
delivery to varies places despite the distance. The concept is all about global
production network. Zara has a good amount of the inventory in house and
makes sure that it has the reserve for the 85 percentage of the goods.
Organisation is bendable in amount, frequency and variety of new product. The
company has dependence on the heavily fabric cutting sourcing and in-house
facilities which are available in Spain. Zara has made commitments for six
months prior which is for 15 to 25 percentage seasons line. The customer
feedback is the important aspect of the entire retail business (Escalance &
Perez ,2014)
Information Management
Information and communication technologies influence the knowledge and
management process within the organisation, which helps the organisation to
influence on innovation and co learning with a economic approach
Zara group shows the existence of its type of ICTS (Information Communication
Technology) as the company has real time information system system. This gives
the organisation to have computer system that connects of all retail outlet
around. Zara has the technologies which permit communication between
different members of the organisation with the means of the email or video
conferencing. ICT allows Zara to transform the knowledge into explicit. ICT has
developed e commerce which permits the sales of its output over the internet.
Inditex group has related a foundation which has the five other Spanish
companies connect with universities and the business world to know about the
global perspective and competitor analysis (Garacia &Alvarez,2015)

Organisational Structure
The Zara is the brand which belong to Inditex group which having success and
achieved a high position. Inditex is an international fashion manufacture and
distribution group which has five store chain Zara, Pull & Bear, Massimo Dutti,
Bershka, and stravidevous . The group owns 1080 stores in 33 countries of these
908 are owned by the company and 172 were franchised stores. Turnover of the
company is 2000 was slightly over 435000 million. The wold fashion market has
change their prefer of wearing the clothes over few decade. Fashion product
which are being used to consumption or product are now for the mass
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production. Todays clothing and accessories is going to be competitive in few

years. Consumer taste has changed past few years. Zara is store which offers
latest fashion clothes. The key of company lies in logistics. The company Zara
has the flexible production more by extent it possible to replenish the product
consumed (Tallas , colours , patterns which tell about the factor modification .
Different logistics communicate with headquarters in Spain . The business model
depends on Inditex depends on the by adapting to the offer market demand by
controlling the supply chain its different design manufacturing and distribution .
(Fernandez,2012)

Supply Chain Performance

Overall performance of the supply chain
Customer Service
Client is the most vital component in the association development rate and Zara
tries to comprehend the client request of the client in stores and tries to convey
the merchandise on time at lighting speed. Inditex has presented vertical joining
strategy for outline, in the nick of time creation conveyance and deals. Texture,
which is cut in house, is sent to several nearby helpful for sewing. Zara
generation cycle is much quicker than contender is. New Zara articles of clothing
are create inside five weeks from plan to conveyance new one of the current
model. Zara does not rely on upon the promoting and deals to pull in the
customer ( DEROSE & TICHY 2013)
The customer service is done in unique way the world is of social marketing.
Facebook is one most of the used media by the customer as large as possible.
Zara has the brand page on Facebook , Zara has done research wok on Facebook
page , on Facebook has 401 valid response , 102 fans and 299 non fans . Zara
had fans like 18- 24 % demographic while 91.2 % were less than 35 year old .
Zara had fans like women (92.2 %) , graduate (49%) and no income (55%)
Zara customer different index were computed as average individual trust ,
perceived value and loyalty (Gamboa & Gonalves 2014)
Cost
Spanish company is leading in retail supply the supply chain of high fashion
retailers provide a good example high relative cost comparing with developing
countries . The internal and external communication has greater productivity,
which will compensate for the companys cost of manufacturing (Escalance &
Perez ,2014)

Relative Performance Benchmarking

Inditex is European largest clothing is the largest retail and owner brand is bullish
about the 17.8 percent in the fourth quarter of 2009 profits. For the full fiscal
year, Spain based Inditex net profit gained 5 percent to 1.31 billion euros. Inditex
rolled out 343 new stores of which 98 were international market. The company,
which operates 4607 stores in 74 countries and which also establishing there
roots in china, Asia, South Korea. Zara chain has generated 46 percentages of
the Inditex sales and Asia and America kicked in 12 to 10 percent. The chain
generated 63.8 percent of the overall company business last year. The net sales

improved 7.1 percent in this period in this fiscal year ,(Zara Helps Lift Inditex 4thQtr. Net' 2010)
Performance of individual logistics The logistics is important part of the company Zara is using computerized
logistics center , connecting the headquarters of the holding with different
stores around the world .Air transport which seems to make possible between
the orders and delivery schedule are exceeding 72 hours . Zara seems to be first
logistics company which based system based internet through transmitting
information between headquarter and group. (AGULL FERNNDEZ, I 2012,)

Business Context
Internal Policies Corporate strategy and Marketing Strategy
Zara has unusual structure has different market strategy as compared to the Gap
Inc., Sweden Heinz and Hautriz AB. Zara produce more than half of its clothes.
Zara owns 40 percentage of its fabric
Zara which operates in the world wide distribution network the whole chain of
production which gives the company more flexibilities. Company Zara is the
mixture of the intelligence gathering, fashion instinct and technology. Zara is
basically known for the for the Just Time production, low cost fashion. Zara
which has unusual structure it produces more clothes 40 percentage as
compared to its rivals. Zara has different style like it takes four to five weeks
which helps to design new collection then a week to make it. (Vitzthum, 2001).
Zara has given more focus on the items which consumer wants different from the
traditional ones. Inditex does not do advertising the company heavily invest on
the beauty products. Zara has the market strategy to locate their store as close
possible were the consumer actually want near the highest end luxury
environment as possible. Zara also believes in the customer satisfaction is
important factor. The company keeps the record of the feedback and provide it to
the staff and headquarters. Zara innovative approach has been disrupting the
industry. Zara has succeeded in way of traditional fashion firms cannot achieve.
Zara which generally ships only limited number of items in each style to the
store. In doing so the company keeps the stock fresh with little left over
Zara collects the data to gain insights into global markets. By making the
consumer focus to new heights .(Levine ,2013)

External Business Environment

The fashion industry is changed to large extent. Zara now opens new mass
production process and sourcing strategies to offer imitations of the designer
product which are low price shortly which are released. Zara is the global brand
of fashion retail industry. If we consider the other competitors brand the net
profit of the company is 80 percent owned by the Spanish Inditex group
Zara if we consider the example of Australia. Zara has suffered 33 percent of loss
inspite of opening new string of the shops in Australia. ASIC earning before the
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tax and interest at group ZARA ( Aus. ) fell to 33.1 percent to 15.5 million in 12
months end of Jan despite 26.8 percent . Zara had a tough competition between
the Swedish rival H& M which lost 2.89 million and tax of one year . The local
chain like Portmans, Dotti , General Pants and department retail store like Myer ,
Zara is facing competition from the local brand So the Zara average sale per
store fell from 5 percent.
( Mitchell, 2015)

Identification of the Issues and Problem Categorize and Prioritise

Zara is the which is having a big name in the retail industry is facing a issues like
Political Issues
Zara is looking for the globalisation. For globalisation the company has to spread
its roots in all the areas around the world. Zara has to good policies but the
original business is in Europe. Europe is facing very sensitive about its liberal
policies of the government in labour law The political factor also leads disorder of
economic system.
Social Issues
Zara trying to expand in Asian country example in India but the cultural change
the difference between the India and Europe
Legal Issues
Zara has to face many legal issues faced by Zara at the start business in Asian
countries. Zara has to take care of the goods which are sold in the market
otherwise first hand copy of the product can be made and sold
High Dependence on European Market
Inditex derives revenue from the European Market and it is exposed to currently
experienced by region. The European economy is growing at slow rate.
( Industria de Diseno Textil, S.A' 2016)
Example Prioritise
In fashion industry, the companies are trying to establish its routes all over the
world. The company like Zara the retail depends on the network design and
inventory location. The impact of purchasing and supply chain management
strategies in retail industry and identify the Azel France retail company of Zara in
clothing in Bosnia. The survey was done Azel France that Zara had a good control
and streamline was focused on the consumer behaviour. The study showed the
limitation that each branch of one specific company which would limit the flow of
the goods and create the problem for just in time production concept (zlen &
Handukic 2013)
Generation of Idea and alternative solution
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Brian Strom idea and Alternative solution Online retail industry is growing at fast rate. As per the USA census bureau and
online retail stores The USA department of commerce online retail store in USA
increased from 168.1 billion to 263 .3 billion in 2013. The ecommerce sale from
second quarter of 2014 totalled 75 billion on increase of 15.7 %. The same is the
market for the Canada and Europe. Inditex has presence in 25 markets which
across the world at end of the year 2014. It has good hold in south American
countries and Asian countries the step should be taken to avoid competition and
ensure supremacy by two ways
1) Positive Outlook of Global Apparel Market
The global market which being growing at steady rate in the recent times.
According to the market view global retail industry grew in 2013 by 3.9 % in
2013 was the largest segment of the global retailers, which was contributing to
50 percent of the retail industry. Inditex gives a wide range of clothing for men
and women with store in different format. The positive outlook for the apparel
market, which will be group revenue growth in short term period

2) Expanding the presence in growing Chinese economy

The growing proportion of the middle class income, rising disposable income and
steady economic growth for the consumable in china Inditex which opened the
first the store in china in 2007 later opened its first bershka , pull and bear store .
The group had been expanding its presence in china over past few years by
opening new stores. The group is focusing on gathering its presence in
emergency markets china will help it offset the deadline of sale in developed
market which arises of the weak economic condition ( Industria de Diseno Textil,
2016)
Recommendation
Expansion of the model
The company is known for its business model. If the company wants to establish
itself properly in the different parts of the world should implement the model in
Asia. By opening design and production and logistics centre for expansion.
Inditex which depends on the sourcing and will have reliance on the Asian
market
Improve the Reach and Optimize design
Zara which has depends on the online business like in Europe. China, Japan. The
company should focus more on the untouched parts of USA and other small
markets of USA and Asia. The world on social media company should try to do
advertisement that increase the fan following on the social networking site and
bring more focus on Zara . The main advantage is that it have competitive
advantage over the competitors
Search Engine Optimization and Marketing
Online shopper should be able to find out the Zara as easy as possible. IF the
online shoppers try to find out spring dress and affordable design the name of
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Zara should come which will increase its market share as compared to the
reltailer . The company spends less money as compared to the competitors
which will hampers its market in some area were the consumer are attracted to
the social media .(DATAMONITOR: Inditex , 2008)

Conclusion
Zara is the fast growing retail outlet in the world of fashion but the company
should also focus the marketing strategy and not only should be whole time
depended on the just time production and vertical integration method to
overcome the competition from the competitor. The company should also Inditex
have the focus on the other brand like Pull & Bear, Massimo Dutti, Bershka,
Stradivarius, Oysho, Zara Home, and Kiddy's Class which will increase overall
profit margin. The company is excellent at the growth rate which cannot be
achieved by the normal retail stores but the world is of globalisation and markets
are changing so company should keep on changing the policy

Reference
Company overview 2008 , Inditex, SWOT analysis , P.4 , Business Source
Complete, EBCO host , viewed 18 October , 2016
Escalance Orace, A & Perez , D, 2014, Global production chain in the fast fusion
sector, transport and logistics, the case of the Spanish retailer Inditex
Investigaciones Geogrficas, Boletn Del Instituto De Geografa, 2014, pp. 113127, ScienceDirect, EBSCOhost, viewed 18 October 2016.
Garacia Alvarez , MT , 2015 , Analysis of the effect of ICTs in the knowledge
management and innovation . The case of the Zara group, Computer in human
behaviour , 51 , Part B , pp .994 1002 , science direct , EBSCO host , viewed 12
October 2016 .
Fernandez I.A , 2012, Producir y consumer: LA logistics , clave del exito de una
cadena de moda I / production and consumption : the logistics , key to success of
the fashion chain , Politica y sociedad ,vol 49 , no 1 , pp 179 -191 , EBCO host
18 October , 2016
DEROSE, C, & TICHY, N 2013, 'Here's how to actually empower customer service
employees', Finweek, pp. 40-41, Business Source Complete, EBSCOhost, viewed
18 October 2016.
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Gamboa, A, & Gonalves, H 2014, 'Customer loyalty through social networks:

Lessons from Zara on Facebook', Business Horizons, 57, 6, pp. 709-717, Health
Business Elite, EBSCOhost, viewed 18 October 2016.
Zara Helps Lift Inditex 4th-Qtr. Net' 2010, WWD: Women's Wear Daily, 199, 59,
pp. 11-1, Business Source Complete, EBSCOhost, viewed 18 October 2016.
AGULL FERNNDEZ, I 2012, 'Producir y consumir: la logstica, clave del xito de
una cadena de moda', Politica Y Sociedad, 49, 1, pp. 179-191, Political Science
Complete, EBSCOhost, viewed 18 October 2016.
Vizthum, C2001, Just in time Fashion , wall street journal eastern
edition , 18 May Academic search complete , EBSO host , Viewed 16 October
2016.
Levine, SR 2013 , How Zara took costumer focus to new heights, credit union
times , 24 , 15 , p.10,Business source complete , viewed 16 October , 2016.
Mitchell , S 2015 , Retail invaders Zara and H& M find Australia a tough Market,
Brw,p.1 , Master file complete ,EBSCO host , viewed 16 October 2016.
zlen, M, & Handukic, I 2013, 'Fashion Industry Supply Chain Issues: Zara (Azel
France)', European Researcher, 47, 4-3, pp. 999-1008, Academic Search
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'Industria de Diseno Textil, S.A' 2016, Industria De Diseno Textil, S.A. SWOT
Analysis, pp. 1-7, Business Source Complete, EBSCOhost, viewed 18 October
2016.
DATAMONITOR: Inditex S.A' 2008, Inditex SWOT Analysis, pp. 1-8, Business
Source Complete, EBSCOhost, viewed 18 October 2016.

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