Zara brand Assignment Example | Topics and Well Written Essays - 2750 words

Zara brand - Assignment Example Zara is praised widely as the leader in clothing industry. Inditex group-Zara is the most successful clothing company the profits of which rose substantially. In its Inditex’s all subsidiaries, Zara is the key contributor and the backbone of Inditex strength in profitability.The major motivation to the Zara for going global was Cost Reduction. The diminishing transportation costs and low tariffs and duties in many countries facilitated the firms to geographically disperse their operations and take the advantage of inexpensive labor providing countries. Another reason for this internationalized model wasthat it was becoming more difficult for Zara to curb the costs in Europe because most of the firms were labor intensive and labor cost was very high in Europe then. Although these facilitations were also exploited by its competitors, Zara outperformed all. Its distinctive operating strategies regarding Logistics and Value Chain brought impressive results compared to its competit ors.Zara’s Value Chain Strategies to cope with global market:Zara spends substantially on Research and Development which results in the latest fashion items. Special focus on Research and Development is Zara’s most important value creating activity. Zara has a team of more than 500 fashion designers, who visit the world and sense the new trends going on. These designers are provided with handheld computers for reporting and being in touch with the Management. On the other hand, the competitors reduce.... In September 2010, Zara reported $835 million profit- a 68% substantial increase in first half’s net profits- that pushed the aggressive growth rate. The firm considered this success as the outcome of satisfactory customer reception in Asian markets (BBC 2010). Logistic and Value-Chain Analysis: A firm involves in many activities from getting raw material from the suppliers to distributing the final goods to consumers. Logistics is actually a careful organization of these activities which leads them to success and efficiency. If performed efficiently, these activities develop competitive advantage of the firm in terms of cost reduction and/or differentiation and create value for its shareholders. The sequence of all these value-creating activities, which aim at earning a firm an edge in the market, is called Value-Chain. The value-Chain provides competitive advantage to a firm by either reducing the firm’s cost of production, or creating differentiation for its products . The basic value generating activities are almost similar to a wide range of firms. Porter identified few basic value activities referred as Porter’s Value-Chain model. Porter’s value chain is depicted below in the model. Inbound Logistics activities are those which help get raw material from the suppliers and warehouse it. Operations activities transform the raw material into finished goods and services. Outbound Logistics deal with warehousing and distributing the final products. Then, Sales are generated by identifying the customer needs and providing them value by Marketing and Sales. And after-sale Services are provided to customers to engage them in future business