Chapter 3 Team Critique Zara: Fast Fashion From Savvy Systems Brandi Muller, Leelina Dagim, and Chenmei Quian

Stated Objectives 1.Competitive Advantage: Understand how Zara’s parent company, Inditex, leveraged a technology-enabled strategy to become the world’s largest fashion retailer. 1.Zara’s production process: Contrast Zara’s approach with the conventional wisdom in fashion retail, examining how the firm’s strategic use of information technology influences design and product offerings, manufacturing, inventory, logistics, marketing, and ultimately profitability. 1.Traditional Industry Costs: Detail how Zara’s approach counteracts several profit-eroding challenges that many fashion retailers struggle with. 1.Environmental Threats: Identify the environmental threats that Zara is likely to face, and consider options available to the firm for addressing these threats. Footnotes of Value 1.None

Critique 1)How did Inditex use an information technology strategy to gain a competitive advantage? Inditex used PDAs and a high tech point of sales system to track consumer preferences and allow managers to make quicker more efficient decisions. 1)How does Zara’s business strategy differ from the strategies of its competition? Zara is very vertically integrated which allows it to improve coordination among suppliers, optimize their inventory, and use just-in-time manufacturing.

Critique Continued 3.How did Zara use information technology to counteract the traditional costs of fashion retail? Zara increases the chance that customers will buy full price quickly and return to the store using a high tech point of sales system and highly automated factories. The use of technology to detect mid season fashion changes, optimize inventory, and send certain products to certain stores increases the exclusivity of Zara’s products. 4.What threats will Zara face ? How can they overcome them? The firm is vulnerable to disruptions in the region and currency fluctuations since all of Zara’s production is in one place. Zara is also vulnerable to transportation costs. Zara has to continually look for new opportunities to use developing state of the art technology to keep its competitive advantage.