Zara is a fashion design and manufacturing corporation in Spain founded by Amancio Ortega Gaona. Zara started as a wear shop and developed to be the most successful and recognized brand in the fashion industry, with over 63,000 stores globally (Murphy, 2021). Zara was included in the public offering in 2001 as Inditex group and gained capital to become the largest manufacturing and retail fashion business globally (Murphy, 2021). Zara is a case of organizational success influenced by an effective business model and management.
Inditex group has utilized the demographics and urbanization data to prospect market trajectory and decide the appropriate business model to embrace. The predicted growth in the women’s apparel market guided Zara to focus on women’s design to enhance sales. Moreover, Zara integrated emerging markets in its supply chain due to their market potential and size. Inditex group has transformational management that rapidly changes according to market projections. For instance, digital adoption by mainstream consumers inspired Zara to adopt online apparel and footwear outlets. The data-guided Zara to identify rapidly changing consumer tastes and market unpredictability to adopt vertical integration, rapid response to market trends, and top-down decision making.
Zara has adopted the vertical integration model to manage a multi-sector business by relying only on outsourcing. Zara has managed an efficient supply chain by engaging in all chain stages. The design, warehousing, logistics, production, and distribution processes of Inditex group are controlled by Zara. Near shored production and use of centralized logistics enable efficient arrival of the products in the retail outlets already labeled and priced. By connecting with all sectors, Zara can anticipate consumers’ needs and respond appropriately rapidly.
Zara leverages rapid response to customer needs and preferences to keep connected to the consumers. Zara has to keep innovating new clothes designs regularly to keep up with the consumer’s swift changing preferences in the hyper-competitive fashion industry. The concept of fast fashion enables Zara to emerge as an avant-garde brand. Zara stocks less merchandise to enable it to make regular updates on its collection. Each season, Zara can produce new sets of collections to outstand as a unique brand in the market. Additionally, brand flexibility by making regular adjustments on products enables Zara to remain viable in different multicultural markets globally. High product turnover and limited production enable Zara to produce high-demand designs and remain flexible.
A top-down decision-making model to encourage employees’ inputs is used by Zara for successful product design, manufacturing, and distribution. Decision-making is an important management role as it determines organizational and managerial activities. Zara has 200 designers who constantly outsource information from consumers and employees to make decisions guided by the latest trends (Murphy, 2021). Sales records are also an important indicator of consumer preference. By considering market factors, consumer feedback, and employee inputs, Zara can make informed decisions to produce competitive products. Zara uses linear decision-making by relying on external intelligence to guide actions.
Zara utilizes its key resources of experienced multi-level management, high-tech software, Radio-Frequency Identification (RFID) technology, and an excellent supply chain. All level managers starting from store managers, have a deep understanding of the organizations’ business model to conduct agile and accurate operations. Zara utilizes modern software such as C-Design and Corel Draw Graphics Suite to efficiently and swiftly model designs. RFID technology to track all its products enables Zara to manage its inventory in its retail outlets. Zara has an agile supply chain model for developing competency by flexible management to enhance responsiveness. Zara uses the motivation theory to adopt new technologies and respond to the shifting market conditions.
Reference
Murphy, C. (2021). The Impact of Influencer Marketing on Fast Fashion Purchase Intentions from an Irish Female Millennial’s Perspective (Doctoral dissertation, Dublin, National College of Ireland). Web.