You will prepare and submit a term paper on Zaras Retailer Company. Your paper should be a minimum of 2000 words in length. This paper looks at various operational and expansion strategies that Zara uses in its quest to boost its economic status as well as expand to other parts of the world. These strategies include advertising and marketing, cost of production and strategic partnerships among others. It also looks at the operational management challenges, effects of manufacturing in China on the company’s sustainability and corporate social responsibility and effect of opening a major warehouse outside Spain on its distribution model and local manufacturers.
How should Zara’s operation strategy support its expansion strategy?
Zara make use of a business model that is vertically integrated retailer in apparel industry, linking customer demand to manufacturing, and linking manufacturing to distribution and to retailing business. It aims at responding to market demands in a quick manner since they are always changing. It can be broken down into three components that include concept, value drivers and capabilities. Its fundamental concept is to maintain design, production, and distribution processes that help it to respond to shifts in consumer demands in a quick manner. Similarly, this company has necessary resources or capabilities to exploit any opportunity that arise. It has tight control over its production processes while at the same time keeping manufacturing and design in-house or sometimes with some strategic partnerships that are located near its headquarters. In addition, it as strategic agreements with various local manufactures. this ensures timely service and delivery. Zara maintains the expansion and flexibility required to design and produce more than twelve new items each year, thanks to the strategic partnerships and benefits brought forward by the proximity of operational and manufacturing processes (Slack, 2012, p.12). This capability help Zara achieve its expansion strategies as well as its expedited response to consumer demand. Value drivers ensure huge returns of benefits to all stakeholders. Zara has outstanding financial performance, which is a clear indication of its success. For instance, it tripled its corporate profit between 1996 and 2000. Likewise, the company has high level of brad recognition and customer loyalty. hence, increasing the number of customer that buys its products in an enormous manner (Mihm, 2010, p.15). This has further boosted its expansion strategy in most parts of the world. Operational strategies Speed It quickly responds to the demands of its target customers, who are mostly the young city dwellers who are always conscious of fashion. According to Cunningham & Harney (2012, p.67), this strategy helps Zara to time fashion trends and strike whenever a trend is hot. hence, it is never stuck with inventory when it dies off. Its ability to market in product is far is better than that of its competitors. hence, it is able to expand to other locations at a high rate. Its speed provides additional value to customers, stores, and stakeholders in the process of producing affordable fashions at affordable prices (Cunningham et al., 2012,