TeachingGuidetoWhatBusinessisZaraIn?

CurriculumWeb February12,2009

WhatBusinessisZaraIn?
ACurriculumWeb createdby ProfessorDanielDoiron Aim TheWhatBusinessisZaraIn?curriculumwebwillbuildconfidenceinfourthyearBBAor MBAstudentstoconstructanunderstandingofhowcompaniescompeteinanindustryvia analyzingtheirbusinessmodels.Throughthisprocessstudentswillbuildskillswhichwillenable themtoconfidentlystudyanindustryanddrawkeyconclusionsofhowcompaniescan effectivelycompetewithinthatindustry.Thisismoreeasilyaccomplishedbystudying companieswhohaveintroduceddisruptivebusinessmodelsintotheirindustries,likeZara, SouthwestAirlines,WalMartorDell. Introduction Zaraisoneofthemostsuccessfulapparelmanufacturingandretailbusinessinthe

worldtoday.Theyarenotthebiggest,buttheirprofitmarginsandgrowthratesareleadingthe industry.Mostinterestingthoughisthattheyhaveaccomplishedthisthroughtheintroduction ofaveryuniquebusinessmodelwithintheirindustry.Letsfindouthowtheydidit... Rationale GraduateswithbusinessdegreesorMBAstoooftenareledtoanalyzeproblemsor

opportunitiesthroughnarrowlyfocusedfunctionalsiloslikeoperationsmanagement, marketing,distribution,financialmanagementorsupplychainmanagement.Theyaretaughtto performSWOTanalysis,whichcanbuildlonglistsofexternalandinternalfactorswhichare rarelyputincontextoftheindustryandthecompanyscompetitors.Theproperapproach startswithanunderstandingofhowthebusinessmodelforanindustryworks.Whenstudents haveapictureintheirmindsofhowanindustryworks,fromabroadperspective,theycanmore easilysolveaproblemoraddressanopportunityanyonestakeholderorcompanyinthat industryisfacing. Page1of9

DanielDoiron(2009)

TeachingGuidetoWhatBusinessisZaraIn?CurriculumWeb February12,2009

Buildingthiskindofperspectiveisdifficultforstudents,whohavelittlebusiness experience.Theuseofbusinesscasesisoneeffectivemethodtohelpstudentsengageinthis kindofhighlevelthinking.Businesscasestypicallydescribeasituationinwhichacompany findsthemselves.Itisthejoboftheinstructorandstudentstodissectthesituationandbuildto asolutionfortheproblemoropportunity.Theinstructorwillusuallybegintheinclass discussionofthecasebyattemptingtobuildanunderstandingoftheindustryandthenbuilda pictureofhowthecompanyfitswithinthatparticularindustry.Thistopdownapproachcanbe verydifficulttoexecutesuccessfully,withtheindustryanalysisusuallytakingupatleasthalfof theclasstimeallottedtothecasediscussion. Acurriculumwebwillnotreplaceaninclasscaseanalysisanddiscussion,butitcan

betterpreparethestudentsforthisdiscussion.Specificallyitcanhelpthestudentsto understandthedynamicsoftheindustryandthebusinessmodelwhichisdrivingthecompanies withinthatparticularindustry.Thiswillbetterpreparethestudentsfortheclassdiscussionand moreimportantly,freeuptheclasstimetofocusonthecompany,discussandultimately analyzevarioussolutionstotheproblemathand. Zaraisaperfectcasetoexemplifyhowthisconceptcanworkastheyhaveintroduceda

verysuccessful,yetsimple,businessmodel,intoacomplexindustryfashionapparel manufacturingandretailing.Theirapproachtosucceedinginthisindustryisradical,yeteasyto understand.StudentscanbeledtoanswerthequestionathandWhatBusinessisZaraIn?In doingsotheywillgainanunderstandingofhowZarasbusinessmodelisradicallydifferentthan thatoftheircompetitors.Thefunpartofthiscaseistheanswertothequestionisatwoword answer,whichwhendiscoveredisalmostalwaysisanahamomentforthelearner.Buildingthis understandingwillhelpthemgaintheconfidencetolookatothercompanies,inother industries,fromabroadperspective. GeneralGoals ThecurriculumwebwasdevelopedbyDanielDoironaspartofBA4101Competitive

Strategy,whichisafourthyearcapstonecourseinanundergraduateBusinessdegreeprogram. Oneoftheprimarygoalsofthecourseistohelpthestudentslearntolookatbusinessfroma broad,overarchingperspective.Thisisaccomplishedinpartthroughthedeliveryofinclass Page2of9

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TeachingGuidetoWhatBusinessisZaraIn?CurriculumWeb February12,2009

strategicbusinesscasestudies.OneofthecasestudiesusedistheHarvardBusinessSchool CaseZara:ITforFastFashion.ZaraisafashionmanufacturerandretailerbasedoutofSpain. Theyarethemostprofitableintheworldwhenyouconsidertheirprofitmargins,althoughthey arefarfromthelargest.Zarahasadoptedaveryuniqueapproachtothemarket,througha disruptivebusinessmodel.Identifyingthismodeliskeytounderstandingtheirsuccessand ultimatelytheiruniqueapproachtofashionretailing.ThegoalsofthisWebQuestaretohave thestudentsbuildanunderstandingofthebusinessmodelfortheindustryandthenunderstand theuniqueapproachorbusinessmodelofZara.ThisWebQuestwillbeusedinpreparationfor aninclasscasediscussion. SubjectMatterDescription Thiswebisaproblemcenteredcurriculum,whichistryingtoanswerwhatatfirstglance seemslikeaverysimplequestionWhatBusinessisZaraIn?Itiscenteredonunderstanding howZaraapproachestheirbusiness,tobetterhelpthestudentbuildskillsinanalyzingand observinganindustriesbusinessmodelandultimatelylearningtolookatbusinessfromabroad, overarchingperspective.Thiswebinvolvestheexplorationandunderstandingof: Acompetitorsapproachandbusinessmodeltotheapparelmanufacturingandretailing businessbylookingatGap. UnderstandingthekeycorecompetenciesofZara. UnderstandingthesupplychainmanagementcapabilitiesandpracticesatZara. Recognizingthestrongbeliefsoroverarchingprinciplesthatguidethebusinessandhow theyareweavedintothecompanysstrategyandbusinessmodel. Recognizingtherolekeyemployeegroupsplayinthecompany. UltimatelyrecognizingthedifferenceinZarasapproachtothebusiness Seeinghowadifferentapproachtobusinesscanleadtosuperiorresults Understandinghowbusinessriskcanbealmostcompletelymitigatedthroughthe properstrategicapproach Page3of9

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TeachingGuidetoWhatBusinessisZaraIn?CurriculumWeb February12,2009

Learner Description

The activities in this curriculum web are designed for fourth year Bachelor of Business students or MBA students taking a Competitive Strategy or Managing Innovation course. They will be familiar with and will have used business or situational analysis techniques, such as performing SWOT analysis. They will also have knowledge of functional business topics, such as marketing, finance, operations management, manufacturing, and human resources management. They typically do not have much real world business experience. This curriculum web is designed to be used in conjunction with the Harvard Business School Case Zara: IT for Fast Fashion. As this case study can be presented from a number of different business contexts, including strategic business growth, managing innovation, human resource management, competing globally and implementing disruptive business models, the audience for this web could potentially vary widely. For example, this case and curriculum web could be part of a seminar series being delivered to management employees at a large enterprise or to a group of technology entrepreneurs trying to understand how to grow their business globally. Prerequisites StudentstakingthiscurriculumwebwilltypicallybeinthefourthyearofaBachelorof BusinessprogramorinanMBAprogram.Theywillhavehadpreviousexperienceincasestudy managementandhaveafoundationofknowledgeincorefunctionalbusinessareas,suchas operationsmanagement,supplychainmanagement,financialmanagementandmarketing. Theywillunderstandthebasicnotionofabusinessmodelandhavesomeconfidencein discussingindustrylevelanalysis.Allofthiseducationalexperiencecanofcoursebereplacedor augmentedwithexperience. LearningObjectives

On completing this curriculum web, students will be able to: 1. Describe the key elements of disruptive business models in the retailing, airline and personal computer businesses. 2. Discuss the general business model for the apparel industry and describe the inherent risks associated with this business model.
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TeachingGuidetoWhatBusinessisZaraIn?CurriculumWeb February12,2009

3. Describe the unique customer characteristics and behaviors of Zaras customers. Related these to the behavior drivers inherent with Zaras approach to the business. 4. Discuss the key core competencies of Zara and the business measures driven by these competencies. 5. Draw a picture and provide a succinct overview of Zaras business model. In doing so discuss how Zara has all but eliminated risk in what is a very hard to predict business; the fashion apparel industry. 6. Answer the question What Business is Zara In?
Materials Allofthematerialsrequiredforthiscurriculumwebareavailablefordownloadwithin thewebsiteitself,withtheexceptionofsomeoftheresearchinformation,whichishostedon variousotherwebsitesanddirectlyaccessiblevialinks.Thebusinesscaseitselfwillnotbe madeavailablethroughthewebastherearelicensingrestrictionswithHarvardBusinessSchool Publishingwhichdonotallowthiscasetobeposted.Itcanbeaccessedandpurchasedat http://www.hbsp.com.Thefollowingdocuments,worksheetsandinteractivematerialsare includedintheweb: 1. Worksheet#1TheQuestion 2. Worksheet#2BusinessModels 3. Worksheet#3Customers&Behaviors 4. Worksheet#4CompetenciesandCompetitiveAdvantages 5. ZaraCrosswordPuzzle 6. ZaraWordScramble 7. TeachingGuideforWhatBusinessisZaraIn? 8. ImbeddedVideoClaytonChristensenatMIT Computer Technology Requirements

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TeachingGuidetoWhatBusinessisZaraIn?CurriculumWeb February12,2009

This curriculum web contains a number of interactive and multi-media features. For these to run smoothly the students computer must have an up-to-date browser, such as Internet Explorer 7.0, the appropriate Java run time application (which is typically embedded in IE 7.0), Flash player to view a streaming video and a copy of Adobe Reader. Parts of this curriculum web will not function properly if the user does not have a broadband connection to the internet. Certain interactive applications have been duplicated onto Adobe pdf files for students unable to run the Java applications, either due to an insufficient browser or security measures on their computer which will not allow them to turn on the Active X capability required for the web. All of this required capability is available on the University computers in the computer labs or libraries. Instructional Plan Students should be able to complete this web prior to the class discussion of the Zara case. This can be done in the computer labs on campus or at home. This web is designed to be executed by students individually. However, there is no reason why they could not do it in groups. It should take 4 - 5 hours to complete the research, all the worksheets and activity sheets, including the interactive crossword, word scramble and watch the online video of Clayton Christensen. These are all accessible and downloadable through the curriculum web. This will prepare the students to present a supported answer to the question What Business is Zara In? PlansforAssessment&Evaluation As part of the assessment students will be required to complete and submit four worksheets, an interactive crossword puzzle and word scramble and prepare and present a power point presentation to class. The following rubric has been designed to assess each of the learning objectives, with appropriate weighting on sections of greater importance, complexity or relevance to the overall learning goals of the curriculum web. Please note item numbers in the rubric should correspond to the associated learning objective, with the exception of the final presentation, which will demonstrate all of the learning objectives.

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TeachingGuidetoWhatBusinessisZaraIn?CurriculumWeb February12,2009

Rubric for Evaluating the Learning Objectives for What Business is Zara In?
Learning Objective 0 points 2 points Assigned Task Incomplete Complete Enthusiastic Learner 4 points Score

1. Disruptive Business Models

Complete Section 1 of Work Sheet 2

No submission or poor research as evident by misunderstanding of disruptive business models. 0 points

Good understanding of at least two key elements all three disruptive business models. 4 points

Apply disruptive litmus test to each of the three business models.

8 points

Complete Section 2 of Work Sheet 2 2. Apparel Industry Business Models

No submission or poor research as evident by misunderstanding of the apparel industry business model.

Good understanding of apparel industry business model as evident by pictorial view and description of three key elements of the model.

Strong understanding of the apparel industry business model through concise pictorial view which demonstrates strong research into Gaps approach to the business.

0 points

1 point

2 points

3. Customer characteristics & behaviors

Complete Work Sheet 3

No submission or a basic regurgitation of facts from case.

Strong discussion supporting facts from the case.

Strong links between customer characteristics and behaviors with an eye to the driving factors.

4. Zara

0 points

3 points

6 points

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TeachingGuidetoWhatBusinessisZaraIn?CurriculumWeb February12,2009

Competencies and Business Measures Complete Work Sheet 4 No submission Students show an understanding of at least three key core competencies of Zara. Students show an understanding of at least three key core competencies of Zara and links these to achieving core business measures and results. 0 points 6 points 12 points

Complete 5. Zara Business Model Section 3 of Work Sheet 2

No submission or complete lack of understanding of the uniqueness of Zaras business model.

Good understanding of Zaras business model.

Strong understanding of Zaras business model, which is well communicated through a pictorial representation.

0 points

4 points

8 points

Complete Zara Interactive Exercise Crossword Puzzle

No submission or incomplete crossword.

Completed crossword.

Completed crossword and unscrambled letter puzzle with correct two word answer to the question.

0 points 6. What Business is Zara In?

5 points

10 points

Answer(s) on Work Sheet 1

No submission or wrong answer.

Right answer.

Right answer showing a strong sense of what it means.

What Business is Zara In?

0 points

10 points

20 points

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TeachingGuidetoWhatBusinessisZaraIn?CurriculumWeb February12,2009

Presentation Class presentation No submission Good succinct presentation showing a strong understanding of the uniqueness in Zaras business model. Good succinct presentation showing strong understanding of the uniqueness in Zaras business model and discussion on why this is a disruptive business model and how Zara has all but eliminated the core risks associated with the industry through this model. Total Score /70

Theanswerstotheworksheetquestionswillleadtocompletionofthecrosswordandto theanswertothequestionathand.ThestudentsabilitytoanswerthequestionANDdescribe itsrelevanceasadisruptivebusinessmodelwillbekeydeterministicfactorsintheirlearning achievement.Also,studentsabilitytosimplyandaccuratelydescribethedifferentriskprofiles ofthetwobusinessmodelsisalsoakeydeterministicfactor.

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