CASE STUDY - ZARA

1.)

Zaras business model? How is it different?

Zaras business model concentrated on a few points;

Responding according to the customers demand and
quickly adapt to the customers changing tastes and
preferences.
Always tries to open a store in citys prime location
Concentrates on catching the fashion at that point of time
and by producing clothes which are not so durable but are
popular, in fashion and attracts a lot of demand.
Zara is different from its competitors in the folowing
respect;
It allows greater freedom and resonsibilty to its store
managers, as they decided what would the stock and sell
in their stores.
Zara does not advertise much,its marketing expenditures
are way less than its competitors,rather it invests heavily
on its stores.
Decided not to sell clothes over the internet and wants to
avoid the risk of returns.

2.)
Information zara needs to operate. Differntiate zaras
use of IT?
Following are the information zara requires to operate
this model;
Zara needs a purchase order from the stores managers
known as the order in which they list out heir
requirements.

 Aggregated order and total supply soon after the order

deadline, also the level at the SKU so as to make decisions
about the quantity to be supplied to each store.
Previous performance and selling records of stores.

Zaras differntiated use of IT;

Zaras approach was consistent , it had no formal
process or officers in place. There were neither any
justifications nor any cost-benifit analysis conducted.
The softwares and application which were needed were
largely developed imternally by hiring people.
All the stores transmitted sales at the end of the day for
all SKUs using a modem connected to stores POS to
mainting theoretical inventory.
Factories just calculated how to position the cloth to
reduce scrap rather than generating optimal plans for
production.
The main user of IT are the distribution centers as they
manage all the conveyor belts as well as the SKUs.
The stores however still uses DOS as to minimize
complexities and IT support. Stores also has a PDA as
fax machines are more time consuming. But still no POS
or PDA are regularly connected to the head quarters.

3.)

Advice on issue of upgrading zaras POS system.

I would advice zara to upgrade its POS system for the

following reasons;
All the stores would be connected with each other and
information will be integrated hence the HQ will have a
direct acess to all the information which will allow it
predict the demand and sales thereby improving its
supply chain, which is one of the strenghts of Zara

 They will be able to test the performance of the new

designs and collection directly and will not have to depend
upon the opinion and suggestions given by store
managers
There will be better and more effective communication
between the stores and the head quarter resulting in
effective business, and also eliminating dependence on
telephone.
Zara will be able to comnpete with its competitors also on
the IT basis in which it is lagging behind which might
improve their capabilities and will give them an upper
hand against the competitors
Zara now has the fear that the vendor might not supply
them anymore, but once the upgrade to the latest
softwares they will not only eliminate this hurdle but also
will be in a better position to negotiate with the IT
companies now and also in the future as there will be
many vendors available.