Information Technology (IT) is the study of using computer in order to retrieve, manipulate, store and transmit data and information for enterprise or business. It is subset of Information and Communication Technology (ICT). Each and every organisation need to manage IT system for running operations and activities in effective and efficient manner. The use of IT helps in success and competitive advantage of organisation. The given report is based on Zara which is retail industry founded in 1975 at Arteixo, Spain. It deals in clothing and accessories products which is serving worldwide. In this report, will discuss about current strategy adopted by Zara and its products and services. It also highlights various models such as Porter's five forces, Porter's value chain, SWOT analysis. The deploy of IT in organisation along with use of innovative ideas for improving business process to enhance competitive positioning.
a) Introduction, identifying current business strategy and its products and services
Introduction of Zara
Zara is retail industry which was founded in 1975 at Arteixo, Spain. The founder of Zara are Amancio Ortega and Rosalia Mera. It is the brand of Inditex group which is world's largest apparel. It mainly deals in clothing and accessories serving worldwide. It has stores in 88 countries with 6500 outlets and manages 20 clothing collections in a year. This group owns various brands such as Pull&Bear, Oysho, Uterque, Massimo Dutti, Bershka, Stradivarius and others. It launches 12,000 new design every year for their consumers. Zara has zero advertising and its prefer to invest in opening new stores instead. As per data of 2018, it has earned revenue of $18.9 billion annually.
Identifying Zara current business strategy
The strategy use by Zara is very straight and clear forward. They do innovation in continuous basis such as designing, shipping to stores, production in factories, selling to consumers and others. Current business strategy used by Zara are as follows:
Business Strategy on Production and Supply- It has team of 200 professional designers for designing clothes and 12,000 various models for selling in stores. There are some factories which are owned by company and external vendors to help Zara for fabrication of model and ready to sales it in stores having average term of one week policy and 15 days for door to door. The garments manufacture and purchase from vendors arrive at warehouse of Zara and from there materials is dispatched to worldwide.
Business Strategy on Positioning- Zara Business Model spends Zero on Digital Advertising- Zara do promotion on one of their design for short period of time till it viral among mass people. For this they has following vital strategy such as:
Zara Business Strategy of Fast Fashion- Fast fashion is not copy cat production of mill Chinese. It has global trend spotter feedback system starts from low level of employees in order to alter quickly and improve upon existing lines of clothing. After that fresh design is provided to manufactures in Europe and Asia who support feedback for new clothes lines and ready to sale within a period of one week.
Zara Business Strategy of Supply Chain- It does not outsource anything to manufacturer of China. Due to availability of cheaper labour from Asian and Middle Eastern, Spanish can put new merchandise at store within week. It focus on fast fashion products to produce and outsourcing shelf life goods for cheaper labour market.
Zara Business Strategy of Store Points- Zara does not spend more money on advertisement and promotion rather than it spends on opening of new stores at different places. Also it pay brokerage and higher rents for store adjacent for luxury apparel brands.
Products and Services of Zara
Zara provides various products and services for their consumers in order to fulfils their need and demand. It deals in men, women and children clothing and are supplied on basis of customer trends. This is highly supply chain ships which provide new products twice a week. After designing of products, they take ten to fifteen days to reach outlets and stores. The clothing is prepared through help of distribution centre in Spain. All new products are tagged, inspected, sorted and loaded into trucks. As it produces more than 450 million items every year. It also sell cosmetics, shoes and accessories items to consumer. Zara has control over high quality at each stage of supply chain in order to ensure that products are better for environment and people. It follows all set benchmark for entire production process for all category of goods which they sell and supplier who work with them. In 2017, Zara has analysed 750,000 products and performed inspections of more than 60,000 goods. It has 30 days product exchange policy for their consumer. Zara business model and understanding zara business strategy. 2019. https://unicornomy.com/zara-business-model-business-strategy/
b) Competitive environment of organisation by applying Porter's five forces models
Zara is multinational company operating business in many countries for providing goods and services to consumers. As this organisation has many rivals in each and every sector and country. In order to overcome such challenges, it should adopt new technology and trends and updating themselves from time to time. The organisation can install IT system in their business for betterment running of its activities and operations. This IT system results in providing satisfaction to consumers regarding goods and services.
Competitive environment is external system where operation of business are functioning and competing with each others. If there are more seller selling products and services then it results into more competition. Here, Zara is also facing competition in market because of many new and upcoming brands in market. In order to analyse competitive environment of Zara, Porter's five force model has been used. This analysis helps in identifying rivals of Zara, so that effective decision can be made. Porter's five force model is explained below:
Porter's Five Force Model
It is model which analyses and identifies five competitive forces of any industry and helps in determining its strengths and weaknesses. It is also used for identifying structure of organisation to determine corporate strategy about powerfulness of forces in specified industry. This model was given by Michael Porter in 1979.
Threat of Substitute- Zara is facing low threat of substitute as there does not exist high quality of clothes substitutes in market. It has attracted large number of consumers
Bargaining Power of Suppliers- The bargaining power of suppliers is low as it is weakened by boundaries of China.
Rivalry Among Competitive- There is high level of competitive rivalry among industry. This situation has arise because of fast expansion of apparel industry in market as new entrants comes every day. Zara is also facing high level of competition because of GAP and H&M. The competition is high due to competitors as they look forward for improving same market. As Zara is doing investment in developing unique products over its competitors and trying bes t to fulfils their need and requirement to increase sales and profits.
c) Analysing two primary and support activities in Porter's value chain and evaluating strength and weaknesses
In ZARA, manger analysis and evaluate activities which is conducting at a workplace in order to specified products for that they use Michael Porter's Model. It is essential for every company to produce there products and services in proper chain because by it they can conduct work in smooth and effective manner. If a company want to do innovation and update company need to change chain process accordingly. There are two basic elements of Porter's value chain that are primary element and secondary element. Explanation of Porter's value chain in context of respective company is given below:-
It refers to those activities which is use by ZARA to manufacture final goods and this process include all steps from staring to ends. By this respective company will gain competitive advantage in marketplace. Some major primary activities are explained below:-
Marketing and sales: This activity is related to the advertising and promotion of products and services which help a company in enhancing there sales and profitability. Company can do this by using various channels like digital media, social media, print media and many more. When ZARA adopt or conduct this they able to increase there sales, profitability and competitive advancement. By this they also able to enlarge there reach of customers which directly shown on increase in sales, market shares and profit. For this respective company can use medium like social media- Facebook, twitter, Instagram etc.; print media- advertising in newspaper, manginess, pamphlets and many more.
Service: This is a service which is done by a company after launching of product and services at marketplace. By adopting respective factor company able to retain there customers for a long time in effective manner. Respective company adopt this factor of primary activities to take feedback and suggestions from customers which help them in developing and innovating there products in effective manner. Through which ZARA can also retain there customers for long run that enhance there profit and market shares.
The major objective of this activity is to support in conducting of primary activities in effective and efficient manner. When nay change or update required or conduct in primary activities respective activities factors will provide guidance. Some of the secondary activities are explained below in context of ZARA:-
Human resource management: This department of respective company is very important and essential for accomplishment of task in appropriate manner. This is so because this department hire appropriate candidates according to requirement of particular task. Along with this they also provide training and development to employees according to requirement and need. Which help them in conducting task in proper manner.
Technological department: This department is essential and important for ZARA to apply or adopt new and innovative technology in there producing process. That help respective company in conducting work in effective and appropriate manner. By this they also able to gain competitive advancement at marketplace. Due to which ZARA able to offer more innovative and attractive products to there customers which attract customers and encourage them for purchase.
Gaps and Areas of Improvement
By analysis and evaluating all factors of Porter's value chain ZARA manger identify some gap which they must improve to enhance there customer base. They found that respective company must increase there advertisement channel so that they cover more populations across the world. This will also help in enhancing in sales and profitability ratio. For that they must do advertisement and promotions when ever they introduce new editions or stock of cloths. So that more and more customers base aware about it.
SWOT analysis of ZARA
- Unique Designs:Cloths which are offered by ZARA are elegant, superiors, quality, unique design and proper finishing. They also serve variety of ranges in clothings such as party wear, office wear, for woman, for kids, for men, formal and many others. Along with this respective company also offer accessories and foot wear.
- Strong presence:Stores of ZARA are present in global marketplace, according to research there are approx 2100 stores globally in year 2015. Through which they are earning 15.6 Billions per year and also they are expanding there presence on regular basis.
- Benefits of designs:ZARA change or update there stocks on regular basis which encourage customers to visit there stores twice a weeks. They basically launch 1000 new designs in per annum at global market. Design of ZARA products are simple and attractive which attract customers on huge amount, along with this they offer quality products.
- Generalised collections:It can be consider as main weakness that they are offer everything for everyone, instead of specific on a particular sections. It is a major reason due to which customers are shifting from ZARA to another companies who are focusing on one particular thing.
- Low safety stocks:ZARA have less inventories to reserve there stocks which they can supply when demand will increase in market. Due to which respective company face situation of fulfilling demand of customers of a particular products.
- Online E-commerce:It can be seems as an opportunities for respective company to expand there sales by using E- commerce websites because customers able to purchase products from anywhere and at any time.
- Competition:ZARA is well known brand which have numbers of competitors at global marketplace. Such as H & M, Mango, And, Only, Vero moda, Forever 21 and many mores. These brands are also liked and loved by customers
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