Essays on Zara Sustainable Advantage Case Study

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The paper 'Zara Sustainable Advantage" is a perfect example of a marketing case study.   A competitive advantage is having an advantage over competitors that are accrued by offering consumers greater value, either through lowering prices or offering greater benefits as well as service that justifies higher prices. Competitive advantage gives a company an opportunity to outperforming others. Efficient use of resource and production logistics can lead to a competitive advantage (Clulow, Gerstman & Barry, 2003). Companies with higher competitive advantage are able to realize huge revenues at a much lower cost as compared to competitors.

Zara chain management under Inditex has invested in high-tech equipment as well as the extra capacity that gives room for factories to deal with a sudden surge in production or any other changes hence having an advantage over other companies. There are factors that have contributed to Zara sustainable competitive advantage hence making it outperform her competitors. Minimizing costs while quickly responding to the changing needs of customers is important in keeping Zara at the top of the apparel retail market (Neha, 2011). Zara spends minimum costs on advertising and warehousing hence allowing a large part of the budget to be allocated to other activities like distribution and retailing.

Zara has set high standards in the fashion and apparel market hence making other company lag behind. This essay explores whether and how Zara achieves sustainable competitive advantage. Discussion Inditex showed through its Zara chain that strategic imperatives on the manner that a retailer sought to create as well as sustain a competitive advantage using its cross-border activities (Z4). Cross-border activities such as manufacturing, distribution and retailing enable Zara to diversify risk while taking advantage of cheap labour and available resources in other countries.

Access to resources and keeping production costs low is important in attaining sustainable competitive advantage at Zara. Zara has managed to geographically diversify its production as well as create a market for its products across the world (Porter, 2008). There is production efficiency. Only 8.5% of the employees were involved in design, manufacturing, distribution, and logistics where 80% took part in retail sales. The remainder of the workers engaged in activities at the headquarters.

Zara keeps production costs low while investing activities that help the products to reach the final consumers like distribution. Controlling of inventories helped in reinforcing the upstream policies even where some demand was unsatisfied (Z12). Top managers implied that Indetex was not the most profitable retailer across the world despite the margins but stability was a very distinctive feature. Definitely Zara enjoyed the stability that other companies longed for. Stability is important for the development of the Zara chain and marketing it across the world. Strong leadership that provides direction is important to the success of any organization (Speer, 2012).

Zara management has worked to its expectation of providing guidance and charting the way for the company. Both external and internal production flowed into the central distribution center of Zara. Products were transported directly from the distribution center to attractive and well-located stores twice in a week hence eliminating the need for warehouses and consequently keeping inventories low (Z9). Warehousing can create a burdening cost in the company leading to inflated budgets to accommodate it. Eliminating the cost of warehousing is a huge advantage of Zara since it can use the company on distribution logistics (Kotler et al, 2008).

Other companies spend a lot of money on warehousing and have huge inventories that are not sure of selling off. The policy of keeping inventory low at Zara is very crucial to making sure there no or very little warehousing costs incurred.

References

Chaston, I., 2012, Strategy for Sustainable Competitive Advantage: Surviving Declining Demand and China's Global Development, Routledge, New York.

Clulow, V., Gerstman, J. & Barry, C., 2003, The resource-based view and sustainable competitive advantage: the case of a financial services firm, Journal of European Industrial Training 27 (5): 220–232

Dishman, L. 2012. The Strategic Retail Genius behind Zara. Forbes.

Neha, K., 2011. Online Sales Central to Zara’s US Growth Strategy. Power retail.

Kotler, P., Armstrong, G., Cunningham, P. H. & Trifts, V., 2008, Principles of marketing 8th, Canadian edition, Toronto, ON: Pearson Education Inc.

Olsen, E., 2012, Strategic Planning Kit for Dummies, 2nd Edition, John Wiley & Sons, Inc.

Porter, M.E., 2008, Competitive Advantage: Creating and Sustaining Superior Performance, Simon and Schuster.

Powell, T.C., 2001, Competitive advantage: logical and philosophical considerations, Strategic Management Journal 22 (9): 875–888

Speer, J.K, 2012, Top 5 Sourcing Strategies, Apparel Magazine, 47 (12).

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