Worksheet#2BusinessModels February9,2009

What Business is Zara In?

Worksheet #2

Business Models
Learning Task #3
Discussion Question #1: Briefly discuss the business model and key elements of the disruptive businesses identified. Discussion Question #2: Be sure to identify at least two distinctive competencies of the disruptive companies within the industry groups. Discussion Question #3: Suggest what the key competitive advantage(s) of the disruptive companies are. Resource Links: 1. There is a very good description of disruptive technology in this Wikipedia post http://en.wikipedia.org/wiki/Disruptive_technology. Please dont confuse disruptive technology with disruptive business models. 2. Clayton Christensen of Harvard first adopted this theory. His groundbreaking book, The Innovators Dilemma, defines the notion of disruptive business models quite succinctly. 3. Neusa Hirota wrote this informative article on disruptive innovation . . . http://www.12manage.com/methods_christensen_disruptive_innovation.html. 4. Here is a Wired article on Dell as a disrupter . . . http://www.wired.com/wired/archive/10.07/dell.html. 5. MitWorld has this video of Clayton Christensen describing disruptive innovation in a 36 minute lecture at MIT. http://mitworld.mit.edu/video/108. Well worth a watch.

DanielDoiron(2009)

Page1

Worksheet#2BusinessModels February9,2009

Airline Industry
The disruptive business model for the airline industry was first introduced by SouthWest Airlines in Dallas, Texas and has since been copied by a number of successful airlines, like WestJet in Canada. Of interest, this model has disrupted the incumbent airlines to the point where the vast majority of them have been forced to restructure through bankruptcy proceedings.

DanielDoiron(2009)

Page2

Worksheet#2BusinessModels February9,2009

Retailing
Wal-Mart completely changed the retailing landscape with the introduction and proliferation of its disruptive business model.

DanielDoiron(2009)

Page3

Worksheet#2BusinessModels February9,2009

Personal Computer
Dell disrupted the personal computer manufacturing and retailing with the introduction of its multi-faceted disruptive business model.

DanielDoiron(2009)

Page4

Worksheet#2BusinessModels February9,2009

Learning Task #4 Apparel Industry Business Model

Gap Inc. continues to be a successful global player in the apparel industry. Describe the key elements of its business model by answering the following questions?

1. Why does Gap spend so much on advertising? What is the primary objective of this advertising? 2. How often does Gap introduce new lines of clothing? What times of the year dominated these introductions? 3. Primarily where does Gap manufacture its clothing? 4. What are the primary sources of risk for Gap with this approach to the apparel manufacturing and retailing business? 5. How does Gap make money? In answering this question think about the step-bystep approach they take to their business. 6. What are Gaps core competencies and competitive advantages? Resource Links: 1. This is a good student developed overview of Gap Inc., which among other things highlights some of the key risks associated with their business model . . . http://www.freestudentedu.com/free_essays_id_481_A-Look-at-Gap,-Inc.-.php. 2. This is a great white paper discussing the apparel industry and how Zara is taking it by storm . . . http://www.veritypartnersllc.com/files/phatfile/Verity%20Branded%20Apparel%2 0whitepaper%20final.pdf?&MMN_position=31:31 3. This article discusses some of the pressures on the industry and Gap Inc. to change its business model from a sourcing perspective. Very insightful. http://www.inthesetimes.com/article/823/the_gap_minds_itself/.

Once you have answered all of these questions, draw a pictorial view of Gap Inc.s business model. Make sure to include the key elements from your answers to the above questions.

DanielDoiron(2009)

Page5

Worksheet#2BusinessModels February9,2009

Learning Task #10 Zaras Business Model

Now that you have analyzed the core components of Zaras success and business model, draw a pictorial view of this business model. Be sure to be somewhat consistent with the approach you took with the Apparel Industry Business Model in Learning Task #4. This view should portray the key elements driving Zaras success, including their core competencies, competitive advantages, unique customer behaviors and business process(es).

DanielDoiron(2009)

Page6