ALFORQUE, GRACEPUA, PEARL

VERSOZA, SHEILA

History & Background

Current Competitive Situation

• China currency policy

• Focus on global expansion

• Fast fashion & Customization

• Technological advances & E-Commerce

• Global Sourcing

Problem Identification

How is Zara going to expand successfully all over the world with the same level of speed and instant fashion?

External Environment

• Growing apparel retail market in Asia

• Growing online sales opportunity

• Rising Labor cost in European region

Internal Organizational Environment

• Differentiation• Unique Marketing Strategy• Materials Management • Strong distribution network• Zero advertising • Overdependence on the European market• Reliance on local designers

Strategic Factors AnalysisSTRENGTHSDifferentiationMarketing StrategyMaterials Management Information SystemsStrong distribution networkZero advertising

WEAKNESSOverdependence on the European marketReliance on local designers

OPPORTUNITYGrowing apparel retail market in Asia (China, India, Malaysia, Taiwan and Indonesia)Growing online sales opportunity

THREATSRising Labor cost in European regionChina currency policy Focus on global expansion of other retailers

Critical Success Factors

CRITICAL SUCCESS FACTORS:

Behind the success of Zara are four strategic key elements that are always considered by the company. Such elements are:

Speed in Design and Production - 25%Strong Logistics

- 25%Customer Service/Response -

30%Stores’ Visual Merchandising -

20%

Alternatives

Alternative #1:

“Create production and distribution hubs in strategic regions to serve the stores or outlets in neighboring countries. Production and distribution shall be done in each hub.”

Alternatives

Alternative #2:

“Outsource the distribution for fast delivery of stocks to stores in other countries, but retain their production center in Spain, and strengthening the communication facilities.”

Recommendation

Alternative #1: “Create production and distribution hubs in strategic regions to serve the stores or outlets in neighboring countries. Production and distribution shall be done in each hub.”

maximize production by saving costs on shipments, labor and raw materials, thereby decreasing manufacturing costs

ensures fast design and product development

fast turnover and delivery of products to retail outlets

Implementation, Evaluation & Control

1. Determine the expansions or manufacturing hub location.

Implementation, Evaluation & Control1. Headquarter which is in Spain will need to delegate Officers and workforce

teams to be placed in each hubs but some staff and labor needs will be outsourced from the nearby regions where Zara’s manufacturing hubs are placed to minimize cost.

Implementation, Evaluation & Control

1. Each hub will be treated as Business Units

2. Technological trends will be exploited, expansion of online stores