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Zara Case Study: Strategic Challenges and Opportunities - Coggle Diagram
Zara Case Study: Strategic Challenges and Opportunities
Background
Zara is a major international fashion retailer, part of Inditex Group, founded by Amancio Ortega.
Zara operates a vertically integrated supply chain, with rapid product turnover (introduces ~11,000 new items/year).
The company succeeds by quickly adapting to changing customer preferences in fashion.
Timeline of Key Events
1975
Zara founded by Amancio Ortega
1991
Launch of Pull & Bear
1995
Massimo Dutti acquired by Inditex
1998
Bershka founded
1999
Oysho acquired by Inditex
2001
Stradivarius founded
2002
Inditex achieves net operating revenues of €3,974 million.
2003
Zara expands into new geographical markets, reinforcing its retail presence.
2003-2004
Technological upgrade decisions considered for Point of Sale (POS) systems.
Possible Solutions
Opportunity to add new functionality, such as inventory lookups and store networking.
Port the POS application to a modern operating system (Windows, Unix, or Linux).
Purchase a sufficient number of DOS-compatible POS terminals now to meet future needs.
Change over gradually by creating and testing a new system while still using the current one.
Stakeholders
Customers
Women, men, and children, primarily in the middle-income and upper-middle-income brackets
Primarily young adults for brands like Bershka and Stradivarius
Employees
32,535 employees at Inditex by 2003
Designers, product managers, store managers, and corporate teams
Shareholders
Investors in Inditex, with a focus on the company's financial stability and growth.
Suppliers
Raw material suppliers for the fast turnaround model.
Retail Managers
Product and store managers responsible for maintaining store operations and managing stock.
Competitors
H&M, Gap, Benetton, and other fashion retailers.
Relevant Facts
There are concerns with DOS
Zara wants to bring out new product around when it is trending
Zara puts budget into its stores
Zara does not spend much on ads
Price in-store is determined by a manager
Zara clothes are not made to last
Zara is the most popular within Italy
Zara stores order product twice a week
Zara factories use relatively simple tech
Zara stores all have identical handhelds
POS terminals have remained the same since 2003
PDAS and terminals are not connected to each other and to the company
Key Problems
Zara’s Point-of-Sale (POS) system is old and uses DOS, which Microsoft no longer supports.
Hardware vendors might change machines in ways that make them not work with DOS anymore.
Upgrading might cause problems for a reliable system that now helps with quick store openings and smooth operations.