Case Study 1: Zara

Zara's strategy to turnover a large quantity of styles highlights how classical management approaches can blend with new technology for profitable results.  By streamlining the design and production process and assigning each segment of the supply chain a particular task, the store is able to cycle through styles rapidly and continuously offer new products.  It utilizes technology to assess inventory, detail store plans to managers, and get products to most locations within three days.  The company successfully utilizes its vertically integrated companies to create and transport its products worldwide in only a few days.

Its strategy would falter quickly without the ability to adapt operations swiftly.  The company is an expert in inventory levels, a key component of fast fashion.  Its recent financial results indicate that the company is effective both in workflow designs and product management.  This extends into the store design, which encourages shoppers not to wait on making a purchase as employees place new items on the sales floor very quickly after receiving them in original shipping hangars.  The entire process emphasizes speed and style.

Without highly developed systems and ongoing contingency thinking, Zara would be unable to develop such a high quality product cycle process.  It needs to have a highly sophisticated technical and aesthetic systems process to prepare and develop new products quickly.  As this Forbes article points out, the company's ability to streamline manufacturing with design allows it to attract and keep customers who return to the store frequently for unique items.  It also carefully monitors product sales to determine which items shoppers are choosing in each location and either refill popular items or replenish the store with fresh products.  The company can easily maintain proper inventory levels without resorting to sales and clearance specials.  It also minimizes advertising expenses as customers will return frequently to view new products.

The company still performs quite well but there remain substantial risks.  While centralizing operations can save significant money, it is also prone to a single event, such as a fire or political unrest in Spain, that can wipe out a major portion of its production line.  There are also risks in expanding so quickly, as certain markets may not be adequately prepared for fast fashion and over-saturation can remove the novelty of the store, especially in foreign markets.  In addition, new competition and local economic struggles can reduce overall sales and force the company to slash prices in places where redistribution is difficult.  With further development and contingency planning, there is no reason to think that Zara's growth cannot continue.

Articles Cited:
Denning, Steve.  "When Will US Firms Become Agile? Part 2: Internal Agility at Zara."  Forbes.  September 20, 2012. http://www.forbes.com/sites/stevedenning/2012/09/20/when-will-us-firms-become-agile-part-2-internal-agility-at-zara/.

Xiaoxiao, Kang.  "Zara reduces price for the first time in China: 34% down in Beijing." Morningwhistle.com.  September 21, 2012.  http://www.morningwhistle.com/html/2012/Company_Industry_0921/214186.html.