Zara: It for fast fashion

Résumé du document

According to porter model, there are five main forces to analyze the structure of competition of a given industry. Despite some limitations, this model is of High relevance to identify the main forces of the competition in a given industry. Market growth: the dynamic of the market is relatively strong and stable, especially at the time of the case. However, the current economic crisis has affected the consumption of fashion clothes. Nevertheless, the market growth slows down, but can be considered as relatively stable, meaning less exposed to economic fluctuation and speculation. Fixed costs - To compete internationally in fast fashion garment industry, the costs of entry are high. The operational costs to develop and run the business are also high. However, the structure of these costs will depend of the type of organisation and the extent of scope integration both up and down stream.

Extraits

[...] Retailers are the major customers to suppliers. They have the option to scan production worldwide, play Dutch auction and squeeze suppliers to drive costs down. They dominate and put pressure on suppliers for low costs and most of all shorten the lead-time of the market. New entrants: The determinant barriers for entry into the fast fashion industry are: Government: Quality control and quota on importation in the EU (gradually offset since the time of the case study) Stores: request for heavy investment to build distribution networks, and intense fights for strategic location on ‘high streets and fashion areas'. [...]

[...] The use of more sophisticated IT applications might also impact the business process for even faster and more cost efficiency production. Externally, ICT could be used for customer relation management. Gathering data about customers will help to sense market trends, customer tastes and consumption habits, and also customise offers to target groups and individuals in order to improve brand loyalty and customer satisfaction Zara's perspective of strategic alignment Zara's approach to IT is clearly business driven, meaning that IT is used to implement business strategy and support business operations. [...]

[...] Zara: For fast fashion 1. Porter's 5 forces: analysis of the competition structure in the fast varying fashion industry According to Porter's model, there are five main forces to analyse the structure of the competition of a given industry. Despite some limitations, this model is of High relevance to identify the main forces of competition in a given industry. Rivalry intensity: According to the following determinants, the intensity of the competition in the fast fashion industry can be considered as relatively high. [...]

[...] Since its first use is to record sales transactions, this data collection can be processed for many operational and strategic uses: Input sales transactions, references and prices, and print bills to customers Store performance and then subsequent allocation of resources Stock management: order/supply match management and theoretical stock level optimisation. SKU performance and subsequent feedback of market trends. Therefore, these data impact the whole operational process of order/supply, manufacturing/delivering, and design, and the business strategy to adopt in order to target customer groups and increase customer satisfaction by supplying better products and services according to their tastes, needs and convenience. [...]

[...] Concerning distribution centres, Zara relies on automation and computerization. Automated conveyors were used, and IT tracks the SKUs' processing. There are poor connections (PDAs via modem) with the HQ and with stores for a cost and time optimisation of product orders, storage, and delivery. In stores, there is no IT support organisation to run stores, which facilitated the high pace of network expansion over the last decade. PDAs, since 1995, were used for product orders and returns, and for communication with DCs and the HQ. [...]