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Zara, the leading trade network of the Inditex group of companies, belongs to the Spanish tycoon Amancio Ortega, who also owns such brands as Massimo Dutti, Pull and Bear, Oysho, Zara Home, Uterqüe, Stradivarius, Lefties and Bershka. The main office is in La Coruña, Spain, where in 1975 the first store was opened. It is claimed that Zara takes only 2 weeks from the design development to the receipt of a new line for sale, compared to the average in the industry - 6 months. Moreover, over 10,000 new designs are being developed during the year (McAfee, 2007). Zara was able to resist the widespread trend in the clothing industry in locating production points in countries with low production costs. Perhaps they chose the most unusual strategy - the company preferred to invest part of the profit in opening new outlets.
ZARA “Ready Image”
Table of Contents:
Abstract
In the course work is presented a business analysis of the company Zara. The purpose of the course work is to discuss the question of whether to add to the site a feature such as "Ready Image". The work will reflect the project plan using the WBS diagram, as well as the main advantages of implementing these functions.
Case Description
Zara, the leading trade network of the Inditex group of companies, belongs to the Spanish tycoon Amancio Ortega, who also owns such brands as Massimo Dutti, Pull and Bear, Oysho, Zara Home, Uterqüe, Stradivarius, Lefties and Bershka. The main office is in La Coruña, Spain, where in 1975 the first store was opened. It is claimed that Zara takes only 2 weeks from the design development to the receipt of a new line for sale, compared to the average in the industry - 6 months. Moreover, over 10,000 new designs are being developed during the year (McAfee, 2007). Zara was able to resist the widespread trend in the clothing industry in locating production points in countries with low production costs. Perhaps they chose the most unusual strategy - the company preferred to invest part of the profit in opening new outlets.
Zara stores have 7 main lines of men's and women's clothing. According to 2007 data, each product line consists of 5 subsections.
Brand Lines:
Zara Woman has a special, inherent only this line, cut and sewn in an exquisite business style of natural materials - cotton, wool, silk. Collections are aimed at women from 25 to 45 years, who value elegance, comfort and quality of products. Zara Woman is the most expensive brand line.
Zara Basic is the base line of the brand. Collections of men's, women's and youth clothing are made in a casual style from materials combining natural and synthetic fibers. Products line Zara Basic have a more affordable price than the model Zara Woman, but not inferior to them as a tailoring.
Zara TRF (Trafaluc) is a line of youth clothing designed for guys and girls under the age of 25 years. Products are sewn in sports, club and casual styles, mostly from natural materials. The clothes have bright, unusual colors and original constructive solutions. The concept of collections is the expression of individuality through clothing. In the line of Zara TRF are inexpensive things.
Zara Man - a line of men's clothing in a classic business style. Products of collections are made of natural materials and are designed for men who want to simultaneously look presentable and fashionable. The men's line is in the middle price range.
Zara Kids - a line of children's clothing made of natural materials.
Zara Home - a line of products for home and interior. Collections include home clothes and footwear, textiles and bed linen, tableware and serving items, as well as vases, photo frames, etc.
There have been cases when the goods absolutely ran out of stores. Zara offers much more products to its customers than any other company in the industry. Compared with 2,000-4,000 items produced by their competitors, Zara produces more than 11,000 different items per year. The company takes only 4-5 weeks to put the product out of the design stage, and only 2 weeks to make minor changes in the design of the products already manufactured. Acceleration of the production process allows the company to respond faster and more easily to customer requests. If the model is poorly sold, it is immediately removed from sale, orders for its production are canceled and the new design is immediately launched. No models are in stores for more than 4 weeks, which is why customers tend to visit the store more often. The average store in Spain, located on the central streets, expects to receive one customer 3 times a year, for Zara this figure is 17 times a year.
Zara is a vertically integrated retail network. She herself is engaged in design, production and trade. Unlike similar distributors of clothing, Zara controls most of the production chain. 50% of products are produced in Spain, 26% - in other parts of Europe and 24% - in Asia, Africa and other countries (McAfee, 2007). While competitors take production to the countries of Asia, Zara produces its most fashionable models in its own factories in Spain and Portugal, or rather in Galicia and northern Portugal, where the labor of wage workers is cheaper than in the whole of Western Europe. Products with a longer shelf life, such as standard T-shirts, are produced in Asia and Turkey.
In June 2017, Inditex Corporation announced plans to launch new production facilities that will produce Zara clothing in Russia.
Zara stores are open in 88 countries and more than 2100 as of October 2015.
Merchandising
One of the main points that determine the appearance, as well as the style of ZARA stores, is coordination or merchandising (the competent representation of clothes in the store, according to the ZARA concept), i.e. design of the store and such presentation of the goods, in which he appears before the buyers in the most advantageous light.
The internal space of the ZARA stores is organized under the collections of the current season, represented on the walls and on the racks in a certain order, in accordance with the principle of color and style compatibility. For each collection is characterized by a certain color scale, as well as a set of materials and elements of finishing products.
A benefit is strategic for a company if it is the enabler to provide superior performance to the company and is coherent with the company strategy. The Zara strategy is twofold, it wants to be able of closing the loop between clothing design and sales in the shortest possible time and to differentiate offering new fashionable designs. To attend this challenge the company has to be agile and flexible. To achieve an outstanding level of agility and flexibility the company relies on the way people is organized and the way information flows inside the company, that is why Information Technology plays a key role inside the company (McAfee, 2007). Roughly, the IT Zara invest is the one that allows Zara to capture the customer demand on real time (PDA), is the one that allows to be fast on the logistics (POS and MODEM), is the one that allows to make fashionable designs fast and in a cost effective way (CAD), etc.
Once we know Zara rely partially on IT to be a fast and flexible company, they will use an IT technology that solve – not creates – problems. Regarding the POS, which is the case gadget, it has to be upgradeable on a day by day basics, while the stores are open and selling, it has to be possible to set up a new device without technician presence, and because the business process are embedded into the software applications, they know better than none how to fast attend the new needs, that’s why they have their own developments (Rasmusson, 2014).
Zara manages the use of existing technologies and their application to their needs, and also manages a good tradeoff between in house developments and outsourcing.
Considering that a lot of people buy goods through the online store, the content on the site needs to be constantly improved. At the moment on the site of the content that is viewed by a regular buyer, there is only a directory.
Goals and Strategy
Zara is an example of exemplary business conduct and unique strategy. To date, the brand has a leading position in the fashion industry, with annual sales of € 13.628 billion, the state for 2015. Its cost is included in the top 50 most expensive, leaving far behind its main competitors, and the founder - Amancio Ortega, pushed on top of the richest people on the planet Bill Gates. To such success it is impossible to come for one year. For the brand and its founders, it was a long path of trial and error, which led to the affirmation of the unshakable principles underlying the functioning of Zara.
Four principles that determine the brand strategy Zara
As the car does not go without fuel, the company will not be able to work without a general plan of action. For the Zara brand, it was determined by one of the founders - Rosalia Mera, expressing the strategy of the company in 4 principles, which remain unshakable to this day:
Track customer needs. This postulate is widely known to everyone: Zara does not create a fashion, it displays it. Designers of the company regularly visit the world podiums, look to people on the street so that their sketch is on the crest of the wave. Hence the number of collections in the year (up to 17).
"Fast response". It is thanks to such speed in the creation of new collections that Zara manages to react immediately to the slightest changes in the mood of potential buyers. The goods do not linger on store shelves, updated every two weeks, and the novelties are sold almost without rest. If there is a low demand for some element of the collection, it is immediately removed from the store and sent for revision.
Introduction of new technologies. Zara is in many ways an innovator. She belongs to the development of a new approach to the organization of the production process, which at times reduced the time for the whole cycle. Another important innovation is the automated accounting of goods arriving at the store, which provided unprecedented control over the flow of goods, proper efficiency in the work of the store.
Affordable prices. The brand is distinguished by affordable prices, and the creators of the strategy were against their winding up. In Zara, it is impossible to meet one digital value on the product tag when it arrives and is significantly reduced on the last day of finding this collection in the store. This encourages people to buy their favorite thing here and now, because they know: the price will not change, and in a couple of days this thing in the store will no longer be.
Apart from exceptionally productive moments, Zara is famous for the right strategy for expanding its business. Since 1988, a course was taken to conquer the world market of fashion industry. As a result, the company now owns about 2000 stores around the world. A significant business item is the sale of Zara franchises, which helped the brand enter the markets of many countries.
Project plan
Project background analysis
With the help of the global Internet, people can not only get all the necessary and interesting information, communicate with friends at any distance, work on a free schedule and remotely, but also easily and quickly make purchases. Modern companies pay much attention to online stores, as at the moment it is relevant, in view of the following advantages for customers:
- Buyers have the opportunity to purchase the necessary goods without leaving home. It is only necessary to choose the necessary thing from the online catalog presented on the website, to make sure that the goods are in stock, and to place an order.
- You can make purchases at any time. Thus, there is no need to go to the store after a hard day's work or to sacrifice for the sake of purchasing the right goods with your weekend.
- To buy the right thing in the online store, it does not matter where you are right now: at home, at work, at a party, or maybe even in another country. You can make purchases from your phone or tablet. All that is required is access to the worldwide Internet.
That is why the improvement and development of the site is necessary. The idea of the project is to create an additional application in the website "Ready Image". The essence of this application is that you can "try on" several things at once online, you can choose trousers and pick up a shirt, shoes, headdress, etc. It all looks like you're putting on a dummy.
Project goals or objectives.
The purpose of the project: to develop a web application "Ready Image", through which the buyer can select a combination of several things online.
The objectives of the project are:
- Creating a dummy for which you can add any items from the catalog;
- Develop an application design that will look good with the site;
- Link the application to the product catalog;
- The ability to authorize the buyer to make their own sizes and thereby make an automatic selection of the right size of things.
- Application link with the shopping cart and further payment for the goods.
The project implementation period, according to the tasks set, takes 120 days.
Assumptions & constraints
Assumptions:
Constraints:
Developing the work breakdown structure
Personnel table
To be engaged in this project will be:
WBS Chart Example
WBS Outline Example
0.0 Web App
1.0 Project Management
2.0 Requirements Gathering
3.0 Analysis & Design
4.0 App Software Development
4.1 HTML Design and Creation
4.2 Backend Software
4.2.1 Database Implementation
4.2.2 Middleware Development
4.2.3 Security Subsystems
4.2.4 Catalog Engine
4.2.5 “Ready Image”
4.2.5.1 Creating a Model
4.2.5.2 Link to the directory
4.2.5.3 Ready Collections
4.2.5.4 Contact Basket
4.2.6 Transaction Processing
4.3 Graphics and Interface
4.4 Content Creation
5.0 Testing and Production
Responsibility Assignment Matrix
Project Manager |
Duty supervisors |
Web Designer |
Programmers | |
Project Management |
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Requirements Gathering |
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Analysis & Design |
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App Software Development |
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Testing and Production |
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Project risk assessment
Risk analysis and preliminary strategies for risk mitigation
Risks can exist in three stages: before the development of the application, at the stage of application development and after the release of this application. Consider the possible risks at each of these stages and immediately describe the mitigation strategies for these risks.
Before developing an application, you need to select the right tools for implementation. To mitigate, you need to monitor the following key points:
During development, risks include loss of control. Proceeding from this, we need:
After the release, the risks include poor project support. The strategy for mitigating this risk is as follows:
Developing the project schedule
Network diagram according to WBS at the work package level
From the network diagram according to WBS at the level of the working package, it is clear that the development of the application from the beginning of planning and to its release into the release will take 83 working days.
Developing the cost estimates and budget
Time-phased budget according to WBS at the work package level
Given that the staff responsible for the implementation of this project are part of the company, the project costs look like an additional payment to wages.