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Zara Case Analysis - Research Paper Example

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Zara’s success in fashion apparel sector is based on rapid response to market demand. The firm has a completely centralized and vertically integrated manufacturing and distribution processes that gives it a competitive advantage over its rivals…
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Zara Case Analysis
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"Zara Case Analysis"

Download file to see previous pages This paper analyzes Zara’s current IT infrastructure with regards to its strategy and makes recommendations on the way to go forward. Description of the case The case details the dilemma that Mr. Xan Salgado Badas, the Head of IT for the clothing giant Inditex, is currently facing with regards to the IT infrastructure of Inditex’s flagship brand Zara. Mr. Salgado needs to decide whether to upgrade Zara’s IT infrastructure or retain the status quo. From the case we can tell that the Inditex’s Head of IT had been deliberating on this issue for quite some time; he and Mr. Bruno Sanchez Ocampo – the technical lead for Zara’s POS - had swopped roles as protagonist and antagonist several times before as they endeavored to evaluate the weight of each side of the argument. To enable us appreciate the dilemma that Salgado was facing the case describes Zara’s business model. The company derived its competitive edge from the speed of its product cycle in combination with decentralized decision making. Zara also employed a different marketing strategy that focused on its stores and the shopping experience rather than advertising like its main competitors. From the case we see that the firm’s IT infrastructure as is was able to make its operations the most effective in the industry. Also, given that it was largely developed in-house Zara’s IT infrastructure was largely proprietary and well-customized to meet its strategic goals. Furthermore, it was easy to install, use and stable. With all these advantages we see why the Head of IT had to take time to deeply consider the company’s next move with regards to IT infrastructure. To give us a balanced picture similar to that which Salgado had, the case also highlights the shortcomings of the current system. Analysis of the company’s goals/strategy Corporate strategy is about what a company wants and how the company should go about to satisfy this want. To achieve its main goal the company employs a grand strategy. Grand Strategies fall into three general categories which reflect what a company’s overall goal would be: growth, stability or retrenchment (Daft, 2000). From the context of the case we are informed that Inditex executives felt that ample room for growth existed within its current markets (Mcafee, Dessain, & Sjoman, 2007, p. 5). This could be construed to imply that Zara’s overall goal was that of growth. The grand strategy is like a framework of the whole business strategy. To achieve its goal Zara would have to focus its attention on business-level strategy. According to Porter (1998) business-level strategy includes numerous strategies, that can be classified into two, either competitive strategy or cooperative strategy. The objective of either strategy is to help the company to achieve competitive advantage against its rival. The difference between these two strategies is in the form of the action taken. There are three ways through which an organization can achieve competitive advantage namely: management, marketing and supply. Zara thrives on speed. It has to respond very quickly to the demands of its target customers who are young, fashion-conscious city dwellers (Mcafee et al., 2007). For Zara to be able to deliver styles while they are still hot, the organization realized that it had to take advantage of the intelligence and judgment of its employees throughout the company. For this reason store managers at Zara were given much more responsibility than those at rival clothing chains. Also Zara employed commercials who worked with designers and store managers to ...Download file to see next pagesRead More
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