What Business Is Zara - Essay Example

ZARA: IT FOR FAST FASHION College What Business Is Zara In? Zara is a company that is in the business of designing, manufacturing and distributing fashion garments. It manufactures children, women or men garments which are stylish (Niesewand, 1998). What is a business model? A business model is a formal description of what a business entails. It gives the core aspects of a business which include purpose, offerings, strategies, infrastructure, organizational structure, trading practices, and operational processes and policies (Armstrong, 2007). Apparel Industries GAP Business Model GAP analysis is the documenting of determined and approved variance between business requirements and the current business status. It reveals the factors of business that need to be improved. GAP analysis is done at strategic or operational level of business. Serve as a guide to drive the business to its target goals. GAP model give the contributory factors of each GAP of analysis. Why GAP, Inc Spend More On Advertising GAP INC, spend more on advertising since it started as a seller of signature branded jean and white t-shirt for children and now it is selling men, women, children and babies clothes so it need to advertise its new designs but it focused only on physical sales. As it now trying to get to online sales it has to spend more. The primary objective for this advertising is to market its new brands so as to compete for market with other companies on the online selling (Niesewand, 1998). How often does GAP introduce new line of clothing? GAP introduces new line clothing not regularly but approximate once in a year. This is during periods when its sales are high. Sales are high about thirteen weeks a year during the back to school/ work and holiday periods (Niesewand, 1998). GAP, Inc does not manufacture its clothes: it is a retailer company sourcing its clothes from various factories. Sources of risk to GAP, Inc 1. The company has a narrow niche 2. It is limited in sales and growth 3. GAP does not have distinct names for its brands in certain sectors like Nike, Reebok in sport wear industry (Niesewand, 1998). How does GAP make money? GAP makes its money majorly through sales and partly through return on assets and debt. Its financial performance is given by financial ratios which include; return on sales, leverage ratio, solvency ratio and liquidity ratios. GAP’s core competencies and competitive advantages 1. GAP was able to be rated as one of the highest in retention of customers. This advantage is facilitated by the developed sense of customer classlessness by the company. 2. GAP has been in the market for long and so it made a trademark in customers minds. Its wide variety of brands ranging from babies way, casual clothing to sport wear and men’s official has made it widely known. Through the years it has build a reputation from its high quality production. 3. It used a vertical organizational structure so it had not to pay retailers to sell its products since it had a direct contact with customer preference (Armstrong, 2007). Zara Business Model Zara business model is unique and distinct from others because it has taken control of its supply chain independently. It understands the market and its demands. The key features of Zara business model are; Use of technology; technology has enabled Zara to communicate directly with its production centers and designers. It has also facilitated direct placement of ordr4s by store managers basing on the demands of that region. Understanding customers demand. Zara produces new collections every three weeks and this is done after analysis of the design in most demand by customers through the store managers. Use of personal digital assistance. Store managers use PDAs to place orders as requested by customers. This has facilitated time delivery as it has allowed a customer to even get the product within two days. Being customer based. Zara send group of commercials to different countries in which its stores are located to observe the style of cloth wear so that specific style is designed for specified country. This ensures that customer demand in that area is met. Freedom to employees. Zara has an organizational structure that supports attainment of its goals since it allows its employees to place orders of design of choice, set the prices and deciding what to display in their stores (Niesewand, 1998). Innovative linking of its sections. Zara has linked the integrated supply chain, capabilities, and value driver to ensure an effectiveness of meeting customers demand. Fully integrated supply chain. All production stages is done in Zara’s factories. Zara is so independent hence no outsourcing of any stage of production and design. Capability combination. Zara has combined both human capital and technology to ensure effectiveness and speedy work. Customer value driver. Zara values its customers in that customer interest is the first priority and core value. Disruptive Business Disruptive business is a redefinition of innovation. It is a dynamic in response to the change in human behavior which requires shaping of new responses in business and economy. The key element of Zara in disruptive business is its excellent business model (Armstrong, 2007). Distinctive Competencies of Disruptive Zara Flat organizational structure is very unique. Zara has employed a combination of both information technology and human intelligence. Employees are allowed to set designs , place orders and even set prices. These steps are critical and have made Zara distinct from other companies. Integration of supply chain has helped Zara meet customer taste with administration of minimum cost. It has helped Zara have control over production and be able to meet customer’s choice with a help of its short supply chain. Competitive Advantages Of Disruptive Company Low operational cost: Like in the case of Zara, the integrated supply chain, combination of human intelligence and independence has made it achieve it’s the most desired goal of minimum cost of operation. To clearly bring out this advantage we can compare it with GAP which mainly depend on outsourcing and is not able to reach to customer taste in time. Speed of production: new design style observed in the market by commercials is speedily produced in time to satisfy customers demand in time. The independence of Zara has made it win the larger market share since its able to meet customer styles and fashions in time. This is facilitated by its flat organizational structure. Core characteristics of Zara’s target customer 1. High quality wears customers. 2. Zara focus on all genders ( non discriminative) 3. Zara’s customers include high income earners, low earners, men, women and children. Target customer behavior Being a non discriminative model, customers have build confidence in the model. Their taste of clothes is being designed on request of order and delivery of orders is submitted fast in time. Zara has build loyalty in its customers since it is obedient to their demand. The customers are trustworthy since when they order stylish fashion design Zara manufacture them with the trust they are going to sell (Armstrong, 2007). Why do Zara’s customers have the behaviors mentioned? Zara’s use of flat organizational structure has helped its employee in the commercial field interact with customers and do survey of fashions of certain regions. This fashions are the designed and manufactured making them available to customers hence building a trust in the customers (Niesewand, 1998). Zara has good communication system linking its stores and the factories hence this ensures that there is timely delivery of customers order. This also makes customers loyal to their orders and purchases them (Armstrong, 2007). Zara Business Model References Armstrong, D. (2007, June 8). We Both Have in Common the Ability to Think beyond Our Comfort Zones and Aim High ; How We Met ++ Zaha Hadid & Nadja Swarovski. The Independent. Retrieved April 12, 2013, from http://www.questia.com/library/1P2-7501140/we-both-have-in-common-the-ability-to-think-beyond Niesewand, N. (1998, October 2). Architecture: What Zaha Hadid Next When a New Exhibition at the Hayward on the Relationship between Art and Fashion Needed a Designer, an Architect Who Wears Manolo Stilettos and Miyake Pleats Was the Obvious Choice. The Independent. Retrieved April 12, 2013, from http://www.questia.com/library/1P2-4947198/architecture-what-zaha-hadid-next-when-a-new-exhibition#articleDetails Read More