Analyzing Global Products through the example of the H & M and Zara industry - Essay Example

? Analyzing Global Products al affiliation Introduction The H & M industry is a Swedish industry that outsources the non core operations. The firm, a clothing industry, does not own any factory. The industry buys its products from a chain of suppliers that supply them with cloths. The Zara Company is the contradictory of H & M Company that also deals with cloths, and it is the first growing industry in Spain. The firm is owned by Spanish Inditex group. Zara has developed a unique business model and it has vertically merged the retailers; controls every step of the value chain, and it mainly outsources garments with a longer shelf/ fashion life. H&M business model focuses on outsourcing and Zara Company uses in-house model to increase its production. This paper aims to conduct an analysis of global products produced by the two organizations. H&M generic business-level strategy Business level strategy is common in organizations that are faced with strong competitors in the market and requires tumbling its built-up costs. The approach allows the firms sell its products at a standard cost around the world. The H & M is in a position to scale down its economic of scale since it produces standard goods (Chris, 2008). The H & M firm conducts a transaction analysis of its products to determine the core problem in the organization, and the analysis fosters the mechanisms used to determine the price of goods by managing the activities within the firms, and lowering the prices as compared to others (Maghok, 2002). The firm conducts a resource based valuation in maintaining its assets values and improves its production. H&M Global strategy H&R coordinates almost 7000 suppliers who are independent. The production officers have a responsibility to make sure that the right price of garment is sold to the customers, and that their invention is conducted in the right condition. The firm expands and discovers new markets through establishment of its one developed subsidiaries. The firm sales and delivers its products in Alshaya, an import of the firms products. Through it, the firm reaches a region that possesses the chances of establishing its own subsidiaries. Currently, the firm imports 60% of its purchases from Kina, 40% from China, and the rest from Europe. This is done to avoid delays and over dependence on a particular country and less production within the system. The firm works with middlemen to offer the best to its consumers. The organization also considers the consumers using the product, and then it considers the middlemen who are the retailers and wholesalers that sell the products to consumers, and get feedback from the consumers. H&M level of product adaptation- packaging, pricing, promotion and ways of distribution Using the middlemen, the firm buys the right items from the suppliers and the right market. H & M has a creative experience in design and markets that considers fashion and textile. The company aims at working with the economical minds of its consumers. Distribution is the process of getting the organizations products to the consumers, and a channel of marketing that distributes the products around the market. The firm has a well distribution channel, and that it depends on the IT system to enable it work efficiently in that it makes use internet strategies to improve on its production and development of garments. Lastly, the firm has a cooperate culture that works in harmony to make sure efficient sales of its products (Saminather, 2007). The firm distributes its products through direct sales that include those made to the beauty therapists, beauty pallor, supermarkets, and shops in town. Direct selling to the consumers allows the organization to be in charge of its prices, get responses from the clients, and take charge in the presentation of the products to the consumers. These direct sales make them sell their products to different consumers from different background. When the organization sells to retailers, they sell product directly to the retailers and the retailers become the middlemen between the organization and the consumers. The disadvantage here is that the retailers will always negotiate what they want to sell and chooses the products. There is need for continuous supply to these stores because they buy in bulk and the demand is high. The organization sells its products to the wholesalers who in turn sell the product to the retailers and other wholesalers. This is helpful because they know several buyers who buy the products faster than the retail shops. Concerning promotion of the product, the organization has to let the market know its products through market promotion. The organization uses promotion strategies to promote its product. Using promotion strategies, the organization uses the several business channels to promote product sales. Zara Generic business-level strategy Zara took over H&M as the well developed clothing firm in the country. The firm belongs to the industrial De Diseno textile. It is known as Inditex and it owns over 3000 shops in more than 70 countries (Strategic direct 2003). The firm developed its own in-house team of designers that made cloths based on current fashion, and at the same time they produced their own fashions. Zara coordinates all its activities from the organization head quarters in Spain, and it offers fresh designs to its customers twice a week (Saminather, 2007). This seems to be very surprising since at that time outsourcing was the classiest trend in the clothing industry. The firm conducts measures to its office layout, and it is designed to make information flow as easy as, possible without influence on detailed procedures. Zara responds to tests in fashion therefore, social challenges are not financial constrains (Saminather, 2007). Zara controls the production process that makes it different from competitors; the use of technology in the firm also gives rise to better production possibilities. The set up of the where house rules, and it stock systems that are set up in all its stores enable it to keep the firm inventories (Strategic direct 2003). Zara Global strategy The firm success has made it possible to expand internationally in several European shops. The firm produces 11000 products as compared to other competitors. The firm developed its concepts to make the consumers feel valued. The firm works by satisfying the consumer’s needs by reducing the cloths’ life cycle, in that designs can stay in the stores for around two to three weeks. This makes the customers visit the shops often because they believe that the cloths will stay in the shop for very few days, and that the following week they will not be in the store. This is beneficial to the firm in contrast to the other competitors. Zara integrates its retailers by controlling the invention process. The firm keeps on assessing its worth chains and attaining control of its production as fast as possible. Zara controls every step of its chain. 50% of its supply is produced in-house, 20% produced in other countries, and 24% produced in Asia. Most of the cloths are made in Spain, and the low cost clothes are outsourced to Asia (Strategic direct 2003). The firm does not have a well developed marketing department and therefore, budgeting does not exist within the firm. The stores draw attention to its customers through media and the firms’ own magic. The firm mainly focuses on production and business models. Its success arises from its own uniqueness described as coordinated activities, and inter-functional activities rooted in the firm’s foundations. Conclusion The business level entails the management directors, panel of directors, and business staff. The management function is to classify the delegation and goals of the business, establish what roles the company must be in charge of apportion of assets to the different enterprise areas of the company, and devise and execute strategies that extend over the businesses. The business level entails the leaders of the particularized business. Company leaders’ responsibility is to explain broad statements of intention at the business level into tangible strategies for particularized businesses. The two companies used the business level to implement their strategies that led to their success. The practical level consists of the business leaders of exact production operations. They build up practical strategies that aid the execution of the company and company -level strategic aims. They offer nearly all the new ideas that make it likely for the company and business -level wide-ranging managers to prepare strategies. They are quicker to the consumer than the characteristic of leaders, and consequently purposeful leaders may produce imperative strategic thoughts. They are in charge of the performance of company balanced decisions made by company leaders. The two companies employed practical level strategies in their organization but Zara took part in the effective implementation of practical level strategy. Market infiltration entails the use of marketing and promotion to generate a delineation advantage to enlarge sale segment. This also produces impediments to access of markets, consequently, growing business productivity and tumbling competition because businesses can be in a position to estimate their competitors’ proceedings. Both companies employed marketing infiltration strategy to accomplish their missions. Market progress involves discovery of a new market portion where companies exploit its products or idiosyncratic competencies. Market expansion and the development of place can cause concentrated competition between companies as new directions of competition are formed. Furthermore, market expansion may offer an income for competitors to go into the marketplace, for it produces a position via which the competitors can cross the threshold. Consequently, market expansion is most likely to be the most aggressive of the product segregation approaches, as it provides the most prospects for increase or failure in marketing. Product expansion is the process of making new and enhanced products to maintain customer order for products. It makes companies be on run and reduces the probability that an innovative competitor will be in a position to approach the business with a better product that can take hold of market strategy. This explains that product growth acts as an impediment to marketing. Similarly, the process leads to standing and product devotion. Product explosion is an attempt to become constant the indecision shaped by market growth. By satisfying all the market strategy, companies are irritating to take action to competitors’ proceedings in order to stabilize the business status. At the same time, manufactured goods production also promotes barriers to entry since it makes it difficult for competitors to enter the market. It consequently, helps organization become stable opposition in the manufacturing industry. Competence management strategies agree to direct competition and encourage industry productivity. Competence management can be used to discourage competition, given that it gives organizations a notion that they will act in response to the menace of access by escalating capability and pouring downward price. This approach leads organizations to synchronize their direct making decisions abilities, and avoid the uneconomical surplus aptitude, which can take place if all companies make the conclusions to construct new place competence. This method stabilizes companies’ effectiveness. Zara employs this strategy that makes it face stiff market competition effectively. Cooperation does take place when associated cooperation of outsourcing outlets is shaped and is associated by a well-organized allocation of its system. Business strategies mean progress due to the formation of outsources that are both business owned and controlled from within, and are also taken care of by an innermost allocation and marketing strategies. A horizontal integration takes place when companies are infused with several companies. The IT gives minor companies, large companies to work fast and without difficulty. The IT system in Zara Company led to its improvement because they made use of current material and fashionable changes introduced in the market. H&R and Zara are known firms that have succeeded in fashion industry. H&M has been the leading company for over several years, but it faces many challenges from Zara, its competitor. Zara has different ways of implementing its strategies that make it succeed in the clothing industry. The firm has developed its own ways of developing new clothes that are fashionable ignoring the old methods of fashion designs. H&M deals with the old ways of creating garments making it face stiff competition; thus, low sales as compared to its competitors. Its management system does not look into employing new dynamic changes taking place in the market. References Chris, W. (2008) The Company Resolution and marketing. Harvard: Harvard Business School Press. Madhok, B. (2002) Transaction Cost Analysis Model. Management Business Journal, 23: 200-400. Strategic Direction (2003) Leading garments designs. Business review, 1:77-98. Suminather, T (2007) International Production Progress. New York: McGraw Hill Publishers.       Read More