The company which I chose is Zara Canada, I need to answer these questions: Analysis:(1-2 pages) For
Question:
The company which I chose is Zara Canada, I need to answer these questions:
Analysis:(1-2 pages)
- For each issue identified present a root cause analysis.
- For each opportunity suggested, explain why you identified it as an opportunity. What factors caused or created it?
Objectives and Targets:(0.5-1 pg)
Based on the above analyses define your objectives that would allow the company achieve its goal and to effectively and sustainably resolve the issue and/or improve the supply chain and its overall business performance.
Solutions and Strategies 1-2 Pg
Based on your analysis, describe the following
- Short term solutions or action plan that will enable the company to effectively resolve the issues
- Long term strategies that will enable the company to effectively and sustainably realize the opportunities and achieve the objectives
- While working on your solutions do consider the company's key stakeholders and any social, environmental and economic aspects that would create value or benefit for the stakeholders and so contribute to the company's long term sustainable process
- Demonstrate how your recommended solution will add value to the company's supply chain and over all business performance. Provide a simple cost-benefit analysis to show the quantitative value and qualitative pros and cons.
Final Report - content, and guidance
This assignment includes the final submission of each of Assignment 1 A, 1B, 1C and 1D.
It is recommended that students should carefully review any feedback that was received, make necessary corrections before making their final submission of each Assignment
And these are my previous assignment about this company:
Amancio Ortega and Rosalia Mera founded the clothing and accessory company Zara in 1975 in Arteixo, Spain. The core of Zara's business strategy is its focus on fast fashion, which includes items like men's and women's apparel, children's wear, footwear, jewellery, beauty products, swimsuit, and perfumes.
Zara, which began as a small, modest clothing store, has become one of the most well-known and recognizable fast-fashion brands worldwide. Inditex is reputed to produce more than 840 million every year through 6300 outlets dispersed throughout 85 nations.
The company's value approach integrates several business divisions, such as designing, producing, distributing, and providing sufficient raw materials.
The sale of much more than 450 million products by Zara each year is the foundation of its revenue creation. Additionally, the business does not squander a lot of money, which helps Zara turn a profit on its transactions.
" Zara has 1700 stores in more than 86 countries around the world. Total sales of the company are around the US $13 billion that makes it one of the top 3 largest fast fashion brands in the world." (Bhasin, 2021)
The corporation has been reasonably effective in offering goods at a price range that many find acceptable because of its success in establishing businesses in nations such as the USA and China. It helps to some extent with the topic of society's sustainable growth.
The majority of Zara's income comes from sales in Europe. According to statistics, Europe accounts for roughly 66% of the overall sales, Asia for around 20%, and America for about 14%.
For many years, Zara has been a major player in the fashion business. Zara is nonetheless encountering greater difficulties as the rivalry intensifies. The most notable rivals include Gap, Old Navy, H&M, and Uniqlo. These companies are also well-known internationally. These businesses, with the exception of Zara, emphasise innovation and mass production. To stay up with evolving trends, they frequently release new items and designs. Due to this, they have been able to draw in a younger demographic of clients who are searching for alternatives to Zara's products.
This shape results from an amalgamation of uncommon actions and concepts, including vertical integration, business strategy, effective supply chain management, etc.
People are entitled to inquire about Zara's business plan as it has grown to be one of the most profitable clothing companies in the world.
One of the critical aspects of Zara's global expansion and unstoppable success is its business model. The company's value approach integrates several business divisions, such as designing, producing, distributing, and providing sufficient raw materials. Using top-notch tools and knowledgeable workers significantly impact the quality of garments made.
While all of its items are made in Europe, Zara can quickly and frequently alter its designs to keep up with emerging trends. This replacement cycle is advantageous for the clothes company in two real-world ways. First, in the beginning, it aids the brand in staying current with fashion. Second, this cycle motivates buyers to make sporadic purchases of clothing. A fast-fashion company, Zara is considered one of the biggest clothing stores in the world because of its practical and well-thought-out business strategy.
Zara's business strategy entails trade-offs in logistics and vertical integration. These two tactics greatly influence the success and widespread acclaim that Zara enjoys. Vertical integrations assist the business in maintaining control over all of its divisions, including design, manufacturing, delivery, and distribution.
The first problem has always been that a number of the various managers have exceeded expectations for their supply chain management by a wide margin. There needs to be better management along the chain due to multiple parties' pursuit of self-serving benefits. Therefore, some of the parties that the company depends on are doing so based on the positions they hold, and if they behave that way, many of the younger staff will be very hesitant. Because of this, the less experienced team will only sometimes commit to doing what is required.
"The second issue has been poor communication from the relevant staff, which has ensured that the intended task needs to be adequately attended to. Lack of trust among the individual employees results in a lack of sharing of sensitive information, which fuels internal competition among the workers due to a sense of failure or a desire to outperform one another to advance" (Challenges facing Zara Supply Chain Management, 2021). The company Zara has seen several challenges in trying to run its business to generate earnings that are worthwhile in the long run.
"For three of Zara's store chains in the first half of the 1990s, problems with inconsistency, imbalances, and market saturation, together with the ineffective launch of fashion positions, made it difficult to enter the U.S. clothing market. As a result, it had a substantial financial loss in 2001 and a sharp decline in the share price. In addition, the chairman left his long-term CEO role in May of the following year after failing to shift to atrendierselection because of significant fashion oversight. By reducing inventory and the number of suppliers, the supply chain was reorganized in the 1990s. Then, 50% of the production was moved back to domestic manufacturing facilities to shorten cycle times. Seasonal collections were also reduced to make room for reorders of popular items in the third month of a season" (Zara Supply Chain Advantages and Disadvantages Business Essay, 2022).
The major drawback of Zara's supply chain is that it is challenging to grow to far locations since it is costly to distribute such goods because Zara owns all the supply chain channels.
The European trade agreements are the political element that impacts Zara. Since Zara is a Spanish-based company, it is included in the scope of the European Union.
The cheap cost of labour is one of the economic variables affecting Zara. Spain has a low employment rate. Thus, Zara can manufacture goods at a lower labour cost and increase profits while offering clients fashionable items at reasonable prices.
Social forces also take into account cultural trends. Before producing products that blend in with the local culture, Zara researches the new market and cultures because people typically make purchases that have some connection to their culture. Zara can create fashionable items with this creative marketing to give customers a sense of exclusivity.
Despite its outstanding successes, Zara encountered significant difficulties due to the cultural differences between Europe and Asia. Asian nations' e-commerce markets are expanding, and one of those markets is the one where many global companies are competing. However, Zara has difficulty convincing Asian buyers to purchase their goods because their culture does not embrace North American fashion.
In addition, a lack of advertising will make Zara less well-known in some regions. Zara's principal rivals, including New Look, H&M, and Asos, are concentrating more on online marketing. Zara has chosen a different type of marketing plan to avoid using traditional media for advertising. As a result, Zara's sales and marketing may be under pressure. In the fashion industry, there is fierce competition. However, solid retail networks and supply chains do not necessarily mean that a company has a market monopoly or that there is no room for expansion.
The suggestion for Zara is to establish a management staff from various continents, including Asia, the Middle East, and Europe, to overcome cultural problems. To create the most recent products that satisfy consumers, the management teams in various locations can conduct surveys and research on multiple cultures. The designers will use the data from the demand forecasting exercise to begin scribbling fresh designs that will appeal to the market. The management group can develop strategies to choose the ideal market for the business using their analytical abilities. This might boost Zara's revenue and profits.
The additional cash they have to pay is the other difficulty Zara encountered. Because Zara produces its clothing in a low-cost zone, it is exposed to changes in foreign exchange rates, which will have a detrimental effect on cost control. Due to the market, Zara needs help calculating the gain or loss from foreign exchange rates. Also, it will result in higher transportation expenses.
Additionally, setting up highly efficient production centres and hiring local workers to save costs are suggested as ways to avoid spending excessive money. Establishing regional distribution hubs to avoid paying shipping and customs fees is another option to cut costs.
Finally, Zara can build social networking sites like Facebook and Instagram and start an online marketing campaign to address the issue of a lack of advertising. Zara can inform potential customers about the newest products and events in the store by establishing a website and social media presence.
Interactive websites allow users to stay connected without physically visiting a store, which can help Zara develop its products based on client feedback. Zara can keep their brand image while spending less on advertising.
Being able to respond swiftly to all fashion trends and provide clients with the newest fashion outfits as quick as a few weeks later is one of Zara's supply chain strategy's greatest benefits. Second, because Zara doesn't produce in large quantities, if a style doesn't sell as well as anticipated, Zara won't lose much money because there won't be much stock to mark down. Third, even though Zara's supply chain has a higher cost, it allows the advantage of low inventory.
We know Zara's expertise in the fast fashion supply chain, which is essentially regarded as responding quickly to customer needs and reacting to supplier changes. To summarise the Zara scenario, we can conclude that when a product fulfils the consumer's present wants, the consumer purchases the product, which is how Zara keeps its current customers and draws in new ones. By utilizing the data on actual demand gathered and assessing the needs of real customers, the business prevents losses from possible unsold product losses. The investment payback period is also shortened, which is a precious contribution to Zara's cash flow statement. The possibility of meeting specific consumer needs arises with actual demand and the requirements of existing customers, which boosts customer loyalty.