A Local Business of Zara Apparel Store - Case Study Example

 “Health of a Family Business” Consultant Report (A Local Business of Zara Apparel Store) Executive Summary Zara Apparel Store is a family business, established a decade before in 2001. This apparel business is famous among the customers because of its up to date offerings and designs at a reasonable price. The business always tries to provide a good quality product at a reasonable price keeping the costs under control. There are many other stakeholders involved in the supply chain of the apparel store. Key product lines of Apparel store includes a variety of product lines including clothing for males, females, children and even baby infants. The Apparel store witness a great up and down in the starting period regarding their revenues and income. It took a time to establish a brand name in the competitive market. Still this a room for improvement in the operational and strategic issues and activities. Organizational structure is not clearly defined among the employees. There are no clear-cut hierarchy levels. When there are no managerial levels then defiantly there is a lack of role clarity among the employees. The customer base is segmented into different segments and then company may design different product lines in order to attract any particular segment. The Apparel store do not have a marketing department rather there is only a marketing manager who himself focus on all the marketing demands and then make strategic plans to fulfill that particular demand. Form marketing point of view the Apparel store is doing well as compare to the competitive businesses. Nevertheless, the Store may face certain challenges regarding their financial matters. Overall Zara apparel store is working in a good condition. There is a five-year plan to extend the branch of the Apparel Store in the next cities also. Zara Apparel store should focus on the distribution strategy because the customers are facing certain delivery problems. Table of Contents Introduction of the Zara Apparel Store …………………………………………………… 4 Business Canvas model Analysis ……………………………………………………………. 4 Financial Performance………………………………………………………………………… 6 Organizational Roles and Structures …………………………………………………………….. 6 Marketing performance…………………………………………………………………………. 7 Conclusion……………………………………………………………………………………… 7 Recommendation ………………………………………………………………………………. 8 Reference List ………………………………………………………………………………….. 8 Introduction of Zara Apparel Store (A Local Family Owned Business): Zara Apparel Store is a local famous clothing family owned business, working successfully for the past decade in the local operational area. The famous person of the locality started this clothing business in 2001. The store was a small one at the time of inauguration but now the operations are so widen that it covers a major portion of the local market. In the next 5-7 years, the owners have a plan to expand the operational serving area into the near geographical boundaries. The owners of the family owned business Zara Apparel Store have also a planning to make an extension in the product lines of the business. Currently the business is serving a major portion of the customer market by offering desired and demanded products for the men, women, children and the baby infant girls and boys. The owners of the Apparel Store focus on the quality provision to the customers. They always try to satisfy the customers with highest or at least the desired quality level at a reasonable price. However, the cost is under control of the production department but still there is a need of cost efficiency and effectiveness. This efficiency and effectiveness will manage the financial terms of the business. Currently the business is not stable regarding the profitability. The business is earning good but there is no extra profitability for the owners. Business Canvas Model Analysis of the Apparel Store: Business Canvas Model is a very common tool to analyze the health or we can say the position of any business in terms of their operations, costs, relationships and many other activities. There are nine key elements of this model, which usually depict a clear picture of the business regarding all the related matters. These nine elements include partners, customers, relationships, channels, cost structure, revenues and the value generation through products or services etc., all of these nine dimensions are enough to make a sound position of the business. The finance managers, who are working at the company, manage cost structure of the Apparel Store Business. Cost structure is linked with the revenues but there are no specific steps, which actually aim for the cost efficiency or effectiveness for the business. An effective cost structure will benefit the business very much (Frick 2012). Therefore, it is recommended for the business owners to review their cost structure by taking the help of some financial analysts. A streamlined and managed cost structure will definitely help to maintain the competitive financial position of the market. Revenue Streams are always associated with the operations of the business (Auger, Barnir & Gallagher 2002). Revenue streams can be enhanced by offering the differentiated products also. The customers will be more attracted when they receive the product of their own choice and then they will prefer to purchase it. This may also come under the umbrella of the relationship management. Apparel store revenues are also linked with the customer satisfaction level. When the customers are more satisfied with the company, products and the services, which a company is providing, then they will definitely come repeatedly. This may also be called as the loyalty of the customers. Customer relationship management is very necessary for the success of the business. Customers will be more satisfied and feel loyal towards the company if the employees of the company serve them properly (Parvatiyar & Sheth 2002). There can be certain ways in order to regulate the system of customer relationship management. Zara Apparel store is working on it accordingly. They have an online inquiry system, which is managed by the IT professionals at the company. Value generation is another important perspective from customer point of view. Customer relationship management is also a way or tip to create value in the customer’s eye (Priem 2007; Vargo 2008). Resources management is also an important consideration from the business point of view. If the resources are used wisely then this will help to lower down the costs of the production in an overall manner. Financial Performance: There are several indicators to predict the financial performance of the company (Main Economic Indicators 2002). At first if we talk about the break even analysis the Zara Apparel Store is gaining its breakeven point in its regular financial position. The only fluctuation in the financial terms may arise when any new and competitive business starts in the market. This is the basic reason that Zara Apparel Store has not gained a stable position in the market although it has been working in this field since 2001 probably. Organizational Structure and Roles: Organizational structure is the basic building block of the company. The structure may help to depict the roles, responsibilities and the duties of different individuals regarding their managerial level (Montana & Charnov 1993). Zara Apparel is working in a good manner but there is an issue with the organizational structure and the division and allocation of the roles among the employees. There is no clear boundary of the organizational hierarchy. There are managers and the labor class in the clothing store. There is not authority delegation and no role clarification to them. They just do their assigned tasks and they have no role in the decision-making. Many authors suggest that these managers should be participative in the decision making because they actually deal with the customers and thus they may have vast knowledge about the customers and their demands (Barnett & Dobrave 2005). Marketing performance: Marketing performance is another important indicator for the true analysis of the business (Marketing Performance Measurement 2008). The Marketing manager of the Zara Apparel store is very active regarding new trends and fashions coming in the market. They always adopt the current trends and the fashion in their product lines but the main issue is that they always imitate other brands; there is no creativity or the innovativeness in the product lines. However, the products are always up to date but there is no newness in the brand. There should be a proper research and development centre or a whole department, which actually work out on the coming fashions and trends in advance. Creativity and innovativeness will be a strong base for the competitive advantage. They will help company managers to make a strong and competitive position in the market (Chieslinska 2007). Conclusion: Zara Apparel stories working good in many perspectives but there is a need of financial review in depth by some financial analyst. Market segmentation of the customers is good because it covers almost all the segments of the market like men, women, children and the baby infants. Now there is a room for the product line extension for the Apparel store and they can even make an extension in the area of serving. Area of serving can be increased by opening of new stores in different localities where a proper marketing or promotional campaign is possible for the marketing managers. Creativity and the uniqueness is always a base for the achievement of the competitive advantage. The business owners should focus on the expertise and the capabilities of their employees and then utilize their work force to attain uniqueness in their products. Recommendations: There are certain recommendations for the Apparel Store Business, They should work on the organizational structure because the operational hierarchy may clarify the roles and duties of the persons. There should be creativity and innovation in the product designs. This creativity will make the products more competitive in the market. There is focus on quality products but the managers should also focus on the cost efficiency and cost effectiveness. If the Zara Apparel Store consider these and some other, operational improvements then it would be better for them and for their coming years also. References: “Main Economic Indicators: Comparative Methodological Analysis, Consumer and Producer Price Indexes”, Volume 2 Supplement 2, “Marketing Performance Measurement, Target Areas where Marketers want to improve How they Measure up”, Buyline Research, United States of America. Auger, P, Barnir, A & Gallaugher, J 2002, “Revenue Streams and Digital Content provider: An Empirical Investigation”, I & M 2520 Barnett, W & Dobrave, S 2005, “Organizational Roles and Transition to Entrepreneurship”, Academy of Management Journal, Volume 48, No, 3. Chieslinska, K 2007, “The Basic Roles of a Manager in an Organization”, The Department of economics. Frick, K 2012, “Cost Benefit and cost Effective Analysis”, Bloomberg School of Public Health, John Hopkins University, Montana, P & Charnov, B 1993, “Organizational Structures: Concepts and Formats”, A Streamlined Course for the People, page 155-169. Parvatiyar, A & Sheth, J 2002, “Customer Relationship Management: Emerging Practice, Process and Discipline” Journal of Economic and Social Research, Preliminary issue. Priem, L 2007, “A Consumer perspective on Value Creation”, Academey of Management Review, Volume 32, Number 1 Vargo, S 2008, “Customer Integration and Value Creation”, Journal of service Research, Volume 11, Number 2 Read More