Running Head: CASE APPLICATION 1: FAST FASHION 1

Case Application 1: Fast Fashion

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1. How is strategic management illustrated by the case history?

Strategic management involves all basic management functions like planning, organizing,

leading, controlling, and all of these areas are illustrated by this case story. Strategic

management is illustrated in this case story when Mr. Ortega opened his first Zara clothing

store and the business model of the company was to “sell high-fashion look-alikes to price-

conscious Europeans. Strategic management is illustrated in this case story when Zara

clothing store planned to do “fast fashion” which means getting designs to customers

quickly. Strategic management is when Zara’s employees look at the computers to scrutinize

sales at every store. In this way they can see what is being sold at every store and they are

able to produce more of the popular items.

Strategic management was illustrated by this case when Zara produced most of its

clothing close to home where they are being sold

2. How might SWOT analysis be helpful to Inditex executives? To Zara store managers?

Zara is owned by the Spanish fashion retail group Inditex SA. They recognize that success in

the fashion world is based on a simple rule which is getting products to market quickly which

involves a clear and focused understanding of fashion, the ability to adapt quickly to trends,

technology, and their market. SWOT analysis is helpful to all businesses, Inditex executives,

and Zara store managers because it is an analysis of the company’s strengths, weaknesses,

opportunities and treats. By doing a SWOT analysis the Inditex executives can study the

opportunities for the company to grow and expand. They can also study about the threats to

the company like negative trends in the external environment. An internal analysis strengths

of Zara is that stores are stocked with new designs twice a week which is very quickly
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because clothes are shipped directly to the stores from the factor approximately two weeks as

they...

3. What competitive advantage do you think Zara is pursuing? How does it exploit that

competitive advantage?

Zara is ‘fast fashion’. The designers go to fashion shows, they develop sketches and

while they select fabrics, the price of each product is already determined. The collection has

to arrive in the stores at the start of the selling season. In order to keep up with the trends

they not only look at the sales data but they also have frequent conversations with the store

managers. They do this through the whole season, not only at the end. When there is an

obvious trend, they adapt their products immediately, if possible.

They have an efficient process: it took only one week to finish fabric. Zara’s factories are

heavily automated and focused on the capital-intensive parts, the final finishing and

inspection. In 1990 Zara did an investment for using just in time management.

The director of logistics of Inditex (Lorena Alba) regarded the warehouse as a place to

move merchandise rather than to store it. The clothes never stayed longer at the distribution

center than three days. The distribution center is more than needed. For example: At the

beginning of the two selling seasons there are more than 1000 workers employed in the

distribution center in Zaragoza (Spain).

The price of Zara’s clothes is supposed to be lower than the price of most competitors.

This is possible because of a shortened supply chain, reductions in advertising and markdown

requirements. Zara spent less revenue on advertising compared for most specialty retailers.

Because they only advertised at the end of the season with the start of a sales period, they did
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not create a strong Zara image of a specific target group. Zara wanted to create a climate of

scarcity and opportunity.

4. Do you think Zara success is due to external or internal factors or both? Explain?

The internal environment of an organization refers to events, factors, people, systems,

structures, and conditions inside the organization that are generally under the control of the

company. The company's mission statement, organizational culture, and style of leadership

are factors typically associated with the internal environment of an organization. As such, it

is the internal environment that will influence organizational activities, decisions, and

employee behavior and attitudes. Changes in the leadership style, the organization's mission,

or culture can have a considerable impact on the organization.

The external environment are those factors that occur outside of the company that cause

change inside organizations and are, for the most part, beyond the control of the company.

Customers, competition, the economy, technology, political and social conditions, and

resources are common external factors that influence the organization. Even though the

external environment occurs outside of an organization, it can have a significant influence on

its current operations, growth, and long-term sustainability. Ignoring external forces can be a

detrimental mistake for managers to make. As such, it is imperative that managers

continually monitor and adapt to the external environment, working to make proactive

changes earlier on rather than having to take a reactive approach, which can lead to a vastly

different outcome.

5. What strategic implications does Zara's move into online retailing have?

Despite Zara’s success at fast fashion, its competitors are working to be faster. But CEO
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Pablo Isla isn’t standing still. To maintain Zara’s leading advantage, he’s introducing new

methods that enable store managers to order and display merchandise faster and is adding

new cargo routes for shipping goods. And the company has finally made the jump into online

retailing. One analyst forecasts that the company could quadruple sales in United States by

2014, with a majority of that coming from online sales.

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References

Robbins, S. P., & Coulter, M. (2016). Management (13th ed.).