ZARA

Presented by:
Group 8
 Company Profile
• The company was founded in Spain in 1974. It is the flagship
business unit of a holding company called Inditex Corporation
with headquarters in northwestern Spain.

• In 2018 Zara was ranked as the 46th most valuable brand in the
world by Forbes.

• The company’s core market is women 24 – 35 years old. They

reach this market by locating their stores in town centers and
places with high concentrations of women in this age range.

• Clothing items are priced based on market demand, not on cost

of manufacture.

• Zara sells 85 percent of its items at full price compared to the

industry average of selling only 60 percent of items at full price. 2
3
BUSINESS STRATEGY

4
Corporate Strategic Alignment
Vision
• To attain market leadership through
unmatched quality, a diverse and unique
product mix, empowered employees,
world-class systems, and the highest
ethical and professional standards.

Mission
• ZARA Textile is devoted to achieving
consistent improvement in the system of
providing products & services to the
customers through On Time Delivery &
Enhancing Customers Satisfaction by
means of Quality and Value.

5
 CORPORATE GOVERNANCE
• The corporate governance of Zara is referred to the administrators and managers
responsible for governance who act with diligence, ethics and transparency for the
performance of their roles.

• Inditex corporate governance cares out within the six-different institutional and
operational corporate governance bodies and mechanisms such as:
• The General Shareholders Meeting
• The Audit and Control Committee
• The Board of Directors
• The Regulatory Compliance Committee and Management
• The Ethics Committee
Ethical Standards of ZARA

7
Ethical Standards

• PLANET: Zara has started a repair and reuse program called Closing the Loop. The program
offers customers the opportunity to drop off their used garments in-store or through the
post in order for their clothes to gain a second life.
• PEOPLE: Zara has received an A+ in policies, auditing and supplier relations, an A for
knowing their suppliers, and a B for worker empowerment.
• ANIMALS: Zara’s animal welfare policy includes a strict ban on fur, angora and on stocking
products tested on animals. They also claim to source wool exclusively from non-mulesed
sheep. Unfortunately, Zara does use leather and down without stating their sources.
CODE OF CONDUCT
• No forced labour
• No child labour
• No discrimination
• Respect for freedom of association and collective
bargaining
• No harsh or inhumane treatment
• Safe and hygienic working conditions
• Wages are paid
• Working hours are not excessive
• Regular employment
• Traceability of production
• Health and Safety of products
• Environmental awareness
• Confidentiality of information
9
IMPLEMENTATION OF CODE OF CONDUCT

• Transparency

• Reference to national legislation, Conventions and Agreements

• Verification of compliance

• Ethics Committee and Whistleblowing Channel

STRUCTURE
• Zara organization structure is a
hierarchical flow of subordination of
functional department.
• It is a well- organized structure, by looking
at this, employees know who to report to,
and would find easy to communicate with
their colleagues.
• Thus, it would improve the efficiency of
making work easier as well as productivity
of employees.

11
STRUCTURE
CULTURE
• Aggressive culture: Zara is a company, which has a
high speed production fashion. Thus, an aggressive
culture would do good to get results and their
targets immediately
• Innovative culture: Zara’s employees would
innovative and coming up with new ideas when
adapting this culture. Because Zara is known for
setting trends into global fashion industry, their
designers need to get more different sort of ideas.
• Collaborative culture: when working for Zara
company, teamwork is a basic skill people need to
get to become a good staff. This culture allows
staffs work together and give them chance to
accomplish tasks.

13
Business Model

14
Its model is a factory setup which means the factories push out the newest products to the stores with
ZERO customization option to everyone (take it or leave it) and no products are ever made to order .

ZARA business model is a very supply chain intensive business model . Design cycle – within 7
days(approx) .

Since the lead time is less than a week they don’t have to stock stuff and then sell- they can adapt to the
weather and change their entire collection within a week.

Thus, their model is very adaptive and flexible and they can respond to immediate fashion changes.
15
COMPETITORS OF ZARA
COMPETITIVE ADVANTAGE

• Responsiveness- Due to its effective value system, Zara has managed to reduce the
manufacturing and transportation costs to minimum, taking advantage of the economies of
scale due to its size which ultimately benefited the final consumer by reduced pricing.
• Inventory Management- The company determines the quantity that should be delivered to
every single of its retail stores. The stock delivered is limited. This allows Zara to ship more
often and in smaller batches and there’s not a ton of unsold inventory to get rid of.
• Distribution Network- Enables the company to deliver goods within of 24-40 hours to its
retail stores.
• Just in Time production- Zara can get a product out from concept to store in just 15 days,
while the whole fashion industry average standard is 6 months and it is about 10-12 times
quicker that its competitors.
• Supply Chain- Since Zara has a short supply chain, they can react quickly to new trends and
can actually wait to see what customers are buying and then make that.
CORE COMPETENCIES
Capabilities that are almost impossible to
copy, they are valuable and unique from a
customer’s point of view:
• Customer insight and feedback
• Strong Logistical operations
• Vertical systemization of Design and
Production process
• Recreation of fashion
• IT Systems

18
LEADERSHIP STYLE

• The founder and former CEO of Zara Armancio Ortega, remains a crucial part
the organisation as he sets the leadership and vision for the organisation.
• His leadership style is very introverted, where he has a very low profile and
rarely appears in public. This also translates into the organisation as a whole
and specifically their corporate culture where they do not advertise, but
rather they spend money on their stores and products.
• Zara’s leadership and management style take a very transformational
approach as they encourage their employees to go beyond what is expected
of them and promote an intrapreneurial culture.
VALUES

Over the years, Zara has remained faithful to

its core values, expressed simply in the same
four key words that define all their
activities:
• Beauty
• Clarity
• Functionality
• Sustainability

20
 Strategic Approaches to Operations

Demand Production Central Local Proximity of Procurement

forecasting feedback Distribution supply methodology
center manufacturing
• Ship small • Managers give • Strong IT • Produce • Suppliers • Majority of
batches of feedback to systems that locally close to zara fabrics are
quantities market back the because of factories undyed and
twice a week experts who distribution. faster time to • Produce are purchased
• Predicts exact pass it to • All clothes are market, standard before designs
quantity of production shipped to reduced designs from are finalised.
items needed and design spain, the transportation asia and • Re-use fabrics
for each store. teams central costs and low complex
• Creates a • Feedback location and exposure to designs in
sense of enables quick then to changing spain
scarcity and and agile different tariffs and
few items are response countries policies.
unsold
Brand Building Strategies

• Consumer Orientation – differentiation strategy

• Production and distribution strategy- process
innovation, low cost manufacturing, limited stock
• Related diversification strategy-
perfumes,accessories, shoes
• Affordability –special prize collection
• Innovative marketing strategy – stores in prime
location, high end retailer, word of mouth, market
development strategy
• Sustainability- water management, energy and
green house emissions and biodiversity protection

22
ANALYSIS USING
VARIOUS MODELS

23
 EXTERNAL ENVIRONMENT ANALYSIS
POLITICAL
The most common political factors that impact any business are the financial regulations of a country. Every nation
and its government does not have the same outlook on business. Not all of them are as open to Foreign Direct
Investment.

ECONOMIC
Lower economic activity reduces the purchasing power of the customers who start cutting costs or are forced to do
it. This can take a heavy toll on sales.

SOCIAL
Zara does its research and makes products that rhyme with the local culture. It does not believe in experimentation
and makes and sells fashion that is acceptable for local people.
 EXTERNAL ENVIRONMENT ANALYSIS

TECHNOLOGICAL
Technological efficiency has become a mark of effectiveness in 21st century. Whether it is inventory management or
customer service, technology reduces the pressure on companies and increases their reach and efficiency. ZARA has
also implemented an RFID system for tracking inventory

ENVIRONMENTAL
Sustainability that started as a trend has now become one of the most important concerns for businesses globally.
The green side of business has become more important now than ever. ZARA has also invested in sustainability. Its
parent company Inditex has pledged to make its stores 100% eco efficient by 2020.

LEGAL
Legal compliance is an important requirement and the brand has invested in compliance throughout its system
including the supply chain. It ensures that the brand adheres to local laws in the local markets wherever it operates.
SWOT ANALYSIS

STRENGTHS
• Supply chain – Zara is known to get its designs from conception to the stores in 2 weeks whereas it takes
other competitors minimum 6 weeks or more,
• Design advantage – Zara has the reputation of launching 1000’s of new designs every year across the globe
• Investment in technology and innovation - ZARA is making large investments in information technology, AI
and other modern technologies to bring greater efficiency in its supply chain and retail network
WEAKNESS
• Lack of Advertising – While it may lead to cost advantage but advertising is very important for brand
awareness.
• Low presence in some fast growing markets - In several of the fast growing markets including India and
Malaysia, the number of ZARA stores is low. Number of ZARA stores in India is just 20 (Jan, 2018), Malaysia
10, Thailand 11 and Newzealand has just one store.
SWOT ANALYSIS

OPPORTUNITIES
• Online E-commerce- Zara can definitely take advantage of the onlinr buying trend and make its clothes
available not only in its own stores but also on other E-commerce store as well thereby bringing a hike in
sale.
• Increasing Disposable Income
• Market Potential – The brand is becoming more popular therefore there is a potential of opening new stores.
It is a status symbol.

THREATS
• Competition – Zara has a lot of competitors therefore zara needs to be more innovative in its designs.
• Reach – Zara needs to increase its reach tremendously. The stores in India are very less. Therefore it is very
important for Zara to increase its reach. Otherwise competitors will take that advantage.
 Porters 5 Forces- Industry Analysis

Bargaining Power of Bargaining power

Supplier is Low of Buyers is High.

•High quality of information

•Large number of suppliers
Threats of substitute is •low customer loyalty to the
• They are required to stick to
Moderate. company’s products
particular provisions which
minimize variation or
manipulation of the designs.

•Low switching costs

Competitive Rivalry Threat of new
•High availability of substitutes
is High •Low cost of substitutes Entrant is Moderate

several competitors to choose • Attractive owing to its uniqueness

from like H & M, GAP and and profitability
Armani • Cost of setting up
 Value Chain Analysis

• Vertically integrated retailer

• Supplier
• Producer
• Cube distribution center
• Customers
CONCLUSION

• ZARA has grown into a world famous fast fashion brand and its international presence has seen an
impressive rise in the recent years. its network of physical stores has reached more than 2200.

• More online presence where it is operating e-commerce websites in 48 markets.

• large customer base and high level customer loyalty are helping it grow faster.

• Some other key strengths that have helped it achieve an edge over its rivals include its pricing strategy, focus
on quality and customer service and the excellent in-store experience it has designed for visitors.
 Recommendations

• E-commerce- Zara only have online stores in 27 out of 93 markets in which they are operating , so they should focus ON
Increasing the online presence.
• Advertising: Zara mostly depends on word of mouth advertising, and should focus on more traditional mode of
advertising due to increasing competition.

31
Thankyou

32