In preparation for our next class, February 16, read textbook Chapter 3 on the firm Zara, and
answer the following questions: (total of 250 words or less)
1. What has been Zara's approach to achieving and sustaining competitive advantage?
The super-efficient fashion model acquired by ZARA is a strong source of competitive
advantage. Styles are updated frequently and faster. At Zara, most of the clothing we see in
stores didn’t exist three weeks earlier, not even as sketches. The fast fashion enables ZARA to
replenish its stores frequently. The average time for a Zara concept to go from idea to
appearance in store is fifteen days. In addition, Zara is also a pioneer in going green, with an
environmental strategy that includes the use of renewable energy systems at logistics.
2. How has Information Technology (IT) enabled Zara's strategy?
Zara excels by targeting technology investment at the points in its value chain where it will have
the most significant impact. Zara’s IT expenditures are low by fashion industry standards. The IT
implementation of the operation research requires establishing dynamic access to compute
several large live databases (store inventory, sales, and warehouse inventory). This helps Zara
to change the merchandise on display every three to four weeks and customer’s average time
between visits to its stores is more than its competitors at 17 times a year. It is technology that
helps identify and manufacture the clothes customers want, get those products to market
quickly, and eliminate costs related to advertising and markdowns.
3. What Zara resources (tangible or intangible) support their corporate strategy?
Zara's intangible resources are: its ingenious and fast design team, especial online strategy,
productively directed supply chain, boosted its e-commerce efforts, limited production runs
allow the firm to reduce to a minimum the risk of making a mistake, faster inventory turnover,
reduced risk, and less advertising.
