In order to proof this statement we are taking a look at different components where we can see their competitive advantages. This has several benefits and it all keeps customers engaged and bringing them more frequently to the ZARA stores. Lower prices and great styles do not mean that the brand compromises on fabric quality. However, while managing the prices, it has not lost focus on quality. Michael Porter , « The Competitive Advantage of Nations », HBR , mars-avril 1990, p. 75. There are growing concerns that fast fashion companies provide low-quality products due to their desire to sell more and cut their costs (Whitehead). Instead it relied upon a well synchronized supply chain. ZARA has managed prices of its products very well and sells them at affordable costs. This has several benefits and it all keeps customers engaged and bringing them more frequently to the ZARA stores. Fashion cycles change after at ZARA. Consumers do not have anything to complain about either. This is made possible due to fact that Zara has developed its own manufacturing and designing units in addition to the selling units. The three major competitive advantages are differentiation, cost and response. Moreover, they always have excess capacity in case they have extra demand for any of their product; they are able to deliver to that demand in a short period of time. ZARA has managed prices of its products very well and sells them at affordable costs. Such best performs help Zara establish an extraordinary supply chain and bec… ZARA has been known as the most successful retailer of fashionable clothes at moderate prices. Apart from that the brand is also operating e-commerce websites across 48 markets. In this way, ZARA has obtained several sources of competitive advantage. In comparison, H&Ms lead time is more than 20 days. while the number of players in the fashion industry is now high, most of them rely on marketing and customer targeting techniques to push sales. It is also operating e-commerce websites across 48 markets. ZARA’s extensive global presence is also a source of advantage for it. Together its physical and online stores have helped it manage an impressive global presence and reach a very large number of customers globally. Competitive Forces And Strategic Issues Shaping Zara S Industry Business Essay Introduction. Across the world, and closer to home in Europe, competitors are cutting prices and refining their business models to cut the competitive advantage that Zara has. While most brands invest a lot in marketing and retention, in case of ZARA most of its marketing happens through its stores and websites. High level customer loyalty is a distinct advantage which translates into higher sales and revenue. A well managed supply chain helps support the production process and a large group of creative designers keeps bringing new ideas to the ZARA stores. It also helps you market your brand and products easily. Styles are updated frequently and faster inside ZARA stores. The fast fashion model adopted by ZARA is also a strong source of competitive advantage. One of these is the fact that it has always been adaptable to the new trends, which is one of the vital factors in the fashion industry. Zara owns its competitive advantages to carry on its business better than other brands. Because Zara's competitive advantage is the "fast" part of the fashion, this is much more important than the minimal amount that Zara could save by sourcing globally. Apart from trained staff, ZARA has focused upon the use of innovative technologies for higher customer engagement and a distinctive experience that maximises satisfaction. When Zara’s retail stores provide consumer with latest fashion items and gain huge amount of sales, its competitors have still struggled to catch up. Although Zara's advantage over its competitors is not so much a result of IT leverage, the sustainability of its competitive edge might be at risk due to a lack in IT investment.The current assumption for the IT investment states about 18,000 hours. How does Zara add value for the customer through major logistics functions?Warehousing: The only warehousing done in this system is local and brief for the component parts and the finished items. China is already a significant market for ZARA where the number of its stores is quite high. This report examines Zara, a strategic unit in the Inditex group, which is shown to be a pragmatic example of the development of market orientation in a company, as a basis for the company’s performance and competitive advantages. Zara has achieved this despite proudly claiming that they have never spent a penny on advertising. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. The company emphasizes on achieving competitive advantage over their rivals by integrating the manufacturing, production, logistics and customer handling staffs. Zara faces competitive pressure from its competitor H & M, which is known globally for its unique and different fashion lines due to collaborating with different designers, an aspect that is different from Zara. Brand equity is an important strengths in this era. 19 Fascinating Facts You Never Knew About Zara. This will not help you find the right level of exposure. Zara’s second competitive advantage is the fact that it manufactures and designs the majority of the attires that it sells in its stores. Zara can obtain a competitive advantage from one or both sources, depending on the depth and breadth of its Value Chain Analysis. Moreover, ZARA does not overstock its stores and the demand for its products remains high because a style available today will not be there a few weeks later. Some other key strengths that have helped it achieve an edge over its rivals include its pricing strategy, focus on quality and customer service and the excellent in-store experience it has designed for visitors. Zara’s Secret for Fast Fashion. Making customer service a central focus was important for another reason too for ZARA. While it brings attractive products at affordable prices, it has connected with its customers better by focusing on the in-store customer experience and designing it to suit the visitors’ preferences. Traditional retailers use 4-6 months. Thus, Zara’s store carries diverse range of products at all times as compared to other competitors. Supply chain refers to those associated operations and activities for converting inputs to outputs. Zara have a well established brand name worldwide. This study attempts to provide an understanding of how fashion retailer such as Zara can sustain competitive advantage without any advertising. Though there is a cost advantage in their approach in regards to labour, the lack of flexibility in changing orders based on current trends hinders their operational efficiencies. My point here isn't so much about how Zara works, or what it is that gives Zara its competitive advantage. However, not many brands have been able to find a perfect match between quality, style and prices. This works to keep the demand for ZARA products high. It has provided Zara with the best competitive advantage, both at international and local level (Berfield and Baigorri, 2013). The next-gen middle class consumers are a bit price conscious. Zara on the Forbes World’s Most Valuable Brands List. ZARA  generates the highest revenue of all the brands owned by Inditex. It offers good quality products that are as stylish as those offered by the high end fashion brands but still, they are not as costly. Customer loyalty is a string advantage and to achieve customer loyalty, you have to focus on several things. All these factors are the reason why Zara is considered a valuable brand around the world and its growth rate is maintained over the years. Given these challenges threatening sustainability and viability of companies in the long term, it is incumbent upon firms in the fashion industry including Zara to enhance focus on developing and implementing strategies to improve bottom line, enhance profitability and … The fast fashion model adopted by ZARA is also a strong source of competitive advantage. Trends change fast and customers are always looking for the freshest styles in the market. The pie is not growing proportionate to the level of competition. Zara had regarded its target market as a “young educated one that likes fashion and is sensitive of fashion” (Wiggin, 2013). As a brand, their speed and responsiveness to the latest fashion trends are key to Zara’s competitive advantage. It has since grown to be known around the world and loved by everyone. By accept the “fast fashion” strategy the company has been able to decrease its make down sale to 15 to 20%. ZAR has achieved all this without investing any thing in marketing. The SWOT analysis of Zara differentiates all the main strengths, weaknesses, opportunities, and threats that would help the company to increase its growth. Owned by the distribution group Inditex, we had a look at what makes Zara so fast that the New York Times called it "mind-spinningly supersonic ". Trends change fast and customers are always looking for the freshest styles in the market. Retrieved December 28, 2017, from https://www.popsugar.com/fashion/Zara-Facts-37094189 Zara goes after the number of customers as well as its supply chain among those brands which also operate in Malaysia. The fast fashion model enables ZARA to replenish its stores frequently. Notes et références [modifier | modifier le code] ↑ Sous l'influence de la traduction française de Competitive Avantage . Firstly, Zara can introduce new product rapidly. The fast fashion model enables ZARA to replenish its stores frequently. But there are winners and the Zara chain is one of them. Zara has been able to convert latest fashion into products and meet the needs of their customers. Customer service is also an important focus area for ZARA and helps retain customers in larger numbers. The company had built a competitive advantage based on its centralized business model and supply chain and offered a unique value proposition to its target customers. Those stores are not just designed beautifully to provide a superior experience but the company staff are also trained well to provide the best customer service to the customers who flock to ZARA stores. Part of one of the most biggest Spanish retailers in the world. The largest number of customers is from the middle class. Zara, which is ranked at number 51 for the World’s Most Valuable Brands, according to Forbes List 2017, is a Spanish fast fashion retail brand introduced in 1975. All these factors indicate that ZARA has managed a strong edge. (2017, July 29). Zara has a very strong supply chain because they do not outsource any of their operations, and because of that they are able to deliver high quality and various varieties of products. This has several benefits and it all keeps customers engaged and bringing them more frequently to the ZARA stores. They want products that are trendy but come at affordable prices. They have a whole team that deals with meeting the latest fashion … Apart from being agile, its supply chain and production system are efficient and designed to deliver results faster. Apart from that to a small extent it has also used differentiation for advantage over other brands. Cost Advantage of Zara 4.1 Cost advantage through Value Chain Analysis of Zara. The fast fashion model adopted by ZARA is also a strong source of competitive advantage. However, since the fashion trends change faster, they are meant to be worn for no more than a few seasons. In comparison to H & M and other rivals, it is the one that has most sales revenue, earns a lot of profit and was able to flourish even through an economic crisis. It still offers good quality products. Due to this factor they are able to attract customers from all income and age brackets increasing their customer base and satisfy the needs of their customers at a reasonable price. Retrieved December 28, 2017, from https://www.forbes.com/companies/zara/ Design The designers go to fashion shows, they develop sketches and while they select fabrics, the price of each product is already determined. It is the flagship brand of Inditex that also accounts for the largest part of the company’s revenue. Though the cost of production in Spain is 17-20% more expensive than Asia, Zara does have a competitive advantage over its competitors in regards to operations. This works to keep the demand for ZARA products high. Zara’s business philosophy depends on the four main values of beauty, clarity, functionality, and sustainability which also reflect the inner environment of Zara’s stores. This makes them easier to develop and make the latest fashion products available at stores. The brand provides high end fashion at low prices. ZARA is a customer oriented brand which apart from prices and quality places hear focus on customer experience. They are getting better value in return than what they are paying for. Zara have more than 2000 stores all over the world. The good quality is also a reason apart from the lower prices of ZARA products that helps attract and retain customers in larger numbers. Imagine being located at a place where your customers go rarely. Competitive Advantage Of Zara 1214 Words | 5 Pages Initially, the efficient supply chain of the business is a good method to enhance its competitive position. They are getting better value in return than what they are paying for. However, the clothes are of average but good quality. However, this all has been achieved without making any large investment in marketing. Abhijeet has been blogging on educational topics and business research since 2016. Competitive advantage of Zara Apart from Zara, there are many different brands operate in Malaysia, such as H&M, Mango, Uniqlo. This makes it possible for them to always have new designs in their stores, thus offering newer choices to their customers every time they visit Zara’s outlet. It is because customers trust and like to shop only from the brands that have created a string and responsible image. It has provided Zara with a distinct source of competitive advantage. The world is so dynamic, with new products and new competitors rising seemingly overnight, that truly sustainable advantage might seem like an impossibility. STRATEGY AND SUSTAINABLE COMPETITIVE ADVANTAGE- THE CASE OF ZARA FASHION CHAIN Sunhilde CUC, Simona TRIPA University of Oradea, Faculty of Textiles and Leatherworks, e-mail: hectic@rdslink.ro, tripasimona@yahoo.com, Keywords: Company Strategy, Competitive Advantage, Operational Effectiveness, Strategic Positioning Abstract. Price is not an advantage anymore: Offering the latest fashion lines at affordable prices continues to be a strategic advantage for Zara, but cannot continue to be the only one. Zara is ‘fast fashion’. This also helps them reduce waste and always sell of their new designs as they are introduced in the stores. The supply chain of Zara is one of the biggest competitive advantage to the brand because where other retail stores take 21 days to even 2 months to get new designs in the store, Zara gets it … Trends change fast and customers are always looking for the freshest styles in the market. Only skilled people can help you manage competitive pressures and productivity very well. Customer service is also an important focus area for ZARA and helps retain customers in larger numbers. Moreover, apart from good salaries and financial incentives, the brand cares for the work environment and motivation of its employees. This is an advantage over gained over competitors by offering consumers greater value, by means of lower prices and cutting age fashion. It has been examined to be the best way to help organization achieve competitive advantages. Zara is a company that well known for its best and quality products since the year 2007(Paloma, 2013). Most amazing thing about ZARA is that it does not invest heavily in marketing and advertising like many other brands do to create demand. … It does knot invest in marketing and instead all the marketing happens though the physical and online stores as well as publicity. The number of ZARA stores globally has grown to more than 2200. He graduated with a Hons. Tendances vêtements Femme, Homme et Enfants sur la boutique ZARA en ligne. Retrieved December 28, 2017, from https://hbswk.hbs.edu/archive/zara-s-secret-for-fast-fashion One of these is the fact that it has always been adaptable to the new trends, which is one of the vital factors in the fashion industry. Consumers do not have anything to complain about either. Inditex has synchronised its supply chain with its production process very well. Zara’s competitive advantage is their extremely flexible and responsive supply chain. Occupying a prime location brings a special advantage where you attract the right customers. Moreover, ZARA stores are located at prime locations all around the world where they attract higher number of footfalls. Moreover, the designs that appear on fashion weeks are also made available to their customers within two weeks. So, by focusing on customer service it has been able to strengthen the relationship between the brand and the customers. ZARA has gained an advantage over its rivals in the fashion industry. The company employs a large number of designers. It is equally focused at customer service and providing its customers which are mainly the next-gen shoppers both male and female a unique and best in cal shopping experience. The designs and styles it sells is similar to those provided by designer brands. In this way, ZARA and the entire Inditex company have managed their human capital very well. Zara’s Competitive Advantage . Zara Leads In Fast Fashion. Last year, it expanded its e-commerce presence into several new markets of Asia including India and Malaysia. Instead, the value of Zara’s brand comes from its supply chain and its ability to add value to every stage of the supply chain (Porter, 1985). There are few reasons why Zara has been able to maintain its position among the competition. Short lead times is Zara one of the most important competitive advantages over its competitors. By having 50% of manufacturers in Spain, 25% in Europe and 25% in Asia, the company can have changes in merchandise in unparalleled speed. Nouveautés, Mode, Collections et Lookbooks chaque semaine. 2. Its unique strategies of vertically integrated system of supply chain allow to produce cheap but fashionable garment within a short period. its network of physical stores has reached more than 2200. So, ZARA is all good news for the average middle class customer who would like to buy several but cannot because of budget constraints. Another important factor is that Zara deals with providing fashion products, which are in accordance with the latest trends but at a less price compared to their competitors. While most brands invest a lot in marketing and retention, in case of ZARA most of its marketing happens through its stores and websites. However, that is not the end of the line for ZARA. These stores are designed to offer a great in-store shopping experience and create highest satisfaction for customers. Location has a special importance in terms of strategy for the retail businesses whether fashion, food or grocery. Apart from taking special care in terms of hiring the best talent, it has also established a strong culture that keeps its employees motivated and engaged. Zara is a Spanish company that deals with Clothes. Styles are updated frequently and faster inside ZARA stores. Fashion cycles change after at ZARA. Moreover, ZARA does not overstock its stores and the demand for its products remains high because a style available today will not be there a few weeks later. You will read about the several sources of its competitive advantage in detail in this discussion post. It is one of the most important factors that ZARA’s popularity and sales have grown fast in overseas markets. A large customer base and high level customer loyalty are helping it grow faster. Inditex has synchronised its supply chain with its production process very well. The products are made from sufficiently good quality fabric. 4. It is because the companies or bands the have maintained a great brand image are more secure in terms of customer base and net sales. ZARA’s greatest strength lies here. Zara has up and down integrated all its processes. Zara has been able to convert latest fashion into products and meet the needs of their customers. 3. Good quality offers a strong competitive advantage and has made ZARA a potent rival of the top selling higher end fashion brands. Apart from that the brand is investing in  emerging technologies to make shopping at Zara a distinctly great experience. The fashion industry has grown highly competitive. These stores are designed to reflect the modern trends in fashion, fun, music and technology. With the fashion industry being so vulnerable to new competitors and increasing competition, Zara has been able to maintain its growth and position in the industry and serves millions of people around the world. Next parts of the article present in detail how Zara can configure primary and/or secondary value chain activities to achieve the desired cost and differentiation objectives. It is extremely rare to find fashion companies that manufacture as well as design their products. The focus of this case flyer is on Zara’s centralized business model. How does it exploit that competitive advantage?The competitive advantage Zara is pursuing is lower prices than his competitors with better speed and flexibility in getting the product to market. Those stores are not just designed beautifully to provide a superior experience but the company staff are also trained well to provide the best customer service to the customers who flock to ZARA stores. 4. HR can be a source of strong competitive advantage since there is high level competition in the industry. It is commendable that they have been able to maintain their position in the ever growing market of fast fashion industry. This is a distinct advantage and it has led to a larger customer base as well as higher loyalty. Companies can therefore either gain a competitive advantage by offering a unique product differentiation, by offering similar products at a lower cost or by offering products at a time and … The adherence to its strategic vision enables Zara to maintain its competitive advantage. Moreover, having stores in a prime location helps you remain right before the eyes of the customers at places they visit regularly. Moreover, ZARA … Also, they make sure they keep their inventories low. contact: support@notesmatic.com, admin@notesmatic.com. In contrast, the traditional industry’s average is 30 to 40%. Overall, ZARA is in a strong position to achieve faster growth in near future. Another major competitive advantage is in an area with … ZARA’s popularity is based on several factors but mainly for its focus on quality and style along with its competitive pricing strategy. Zara offers classy high quality clothes based on consumer trends. However, while managing the prices, it has not lost focus on quality. In that case, you will not have to distribute pamphlets in the streets to announce new arrivals. Synopsis. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. Lower prices and great styles do not mean that the brand compromises on fabric quality. What Is The Competitive Advantage Of Zara 1778 Words8 Pages An advantage that organizations has over its rivals, allowing it to produce more prominent deals or margins and/or retain a bigger number of clients than its opposition. ZARA has grown into a  world famous fast fashion brand and its international presence has seen an impressive rise in the recent years. If high end fashion is made affordable using the right techniques and while also avoiding brand dilution or being considered cheap then it helps you gain a competitive edge. You do not have to compromise on sale and you can buy more from your existing budget. Lot of advantages with Zara Business model : They quickly spot new fashion trends, they always under predict the forecast of stock requirements which reduces discount wars on leftover stock and artificially drives demands to the sky, quick churning of the stock which keeps ladies coming back … Madden, A. There are few reasons why Zara has been able to maintain its position among the competition. In the field of HR too, Inditex and its flagship brand ZARA are doing very well. 4. The gender ration also looks great where the percentage of female employees is much higher than the male employees. It takes special care of its personnel and has implemented special training program to help them grow their skills and continue their education. ZARA is now a well know  fast fashion brand with an impressive presence in the international markets. It still offers good quality products. Zara SWOT Analysis Zara Strengths Below are the Strengths in the SWOT Analysis of Zara: 1. Retrieved December 28, 2017, from https://www.forbes.com/sites/walterloeb/2015/03/30/zara-leads-in-fast-fashion/#1deb44ec5944, Designed by Elegant Themes | Powered by WordPress, Click to share on Twitter (Opens in new window), Click to share on Facebook (Opens in new window), https://www.popsugar.com/fashion/Zara-Facts-37094189, https://hbswk.hbs.edu/archive/zara-s-secret-for-fast-fashion, https://www.forbes.com/sites/walterloeb/2015/03/30/zara-leads-in-fast-fashion/#1deb44ec5944. Competitive Advantage. In contrast to other retail manufacturers, their logistics system is much more effective because it meets the changing consumer demands. A very large number of brands are trying to grab the largest share of the same pie. It has even been able to overcome the giants such as the H&M and the Gap. In comparison to other retailers, most of Zara’s suppliers are local European establishments. This has helped it manage a good image as well as retain its popularity among its followers. Fashion cycles change after at ZARA. Loeb, W. (2015, March 30). In the recent years while the number of ZARA stores has grown fast, so has its online presence. Styles are updated frequently and faster inside ZARA stores. Another attractive aspect of ZARA’s business model is the in-store experience. This has made it very popular among the middle class consumers. In addition, the company attains much importance to the … By applying a “fast fashion” strategy, Zara have accomplished a unexpected increase in profits and market share. The products are made from sufficiently good quality fabric. The Zara's staff devoted to IT contains about 50 people divided in several departments. They also ensure that by traveling around the world and then picking latest trends, enabling them to adapt different cultural designs and target customers all around the world. Apart from that the brand is investing in, Small Business Marketing: Managing the Balance. ZARA’s grown is also a result of the strategic supply chain management by Inditex. Zara is ranked as one of the top 50 global brands in terms of brand value (Interbrand, 2009). ZARA has nailed the price challenge and given its middle class consumers more to feel excited about than the other brands do. This has made it very popular among the middle class consumers. They have a whole team that deals with meeting the latest fashion trends and thus delivering fast fashion products to their customers. What are the company’s competitive advantages? Instead it invests in creating trust and loyalty  by managing prices, quality and customer service better. However, since the fashion trends change faster, they are meant to be worn for no more than a few seasons. In this case study we want to analyse this phenomenon called Zara… Such brands enjoy higher loyalty as well as higher sales. Moreover, its focus on HR has also helped bring great results. COMPANY PROFILE Firms strive for sustainable competitive advantage, financial performance that consistently outperforms their industry peers. The fast fashion model enables ZARA to replenish its stores frequently. As retain its popularity among its followers and meet the needs of their new designs as they are meant be... Rise in the industry keep their inventories low able to maintain its competitive advantages, Inditex and its international has! Them at affordable costs style and prices where they attract higher number zara competitive advantage customers is from brands! 2017, from https: //www.forbes.com/companies/zara/ Loeb, W. ( 2015, March 30 ) as compared to other,... Overall, ZARA have accomplished a unexpected increase in profits and market share while managing prices. Notesmatic.Com, admin @ notesmatic.com, admin @ notesmatic.com, admin @,... 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