ZARA

Zara

Zara

Current problems and issues in Zara

Zara is one of the leading fashion brands in the international markets. It was the launch in the 70s from Spain. Zara has been a success story in the field of fashion, and the essence behind its achievement is that the management believes in being responsiveness to consumer demand, changing preferences, and meeting those needs by maintaining control of nearly all aspects of the supply chain. Zara is the pioneer of "living collections" designed, manufactured, distributed and sold almost as quickly the fickleness of customers changes their tastes. Zara has annual sales of two billion Euros and more than a thousand stores in thirty countries around the world. Zara realized that profit margins are reduced due to competitive pressures, integration, supply chain, cost, and labor problems which may force organizations to cut down their costs and compromise on excellence in customer services. Zara has faced many problems on which the paper will mainly focus upon.

Zara is ranked No. 73 among the world's most valuable brands, according to the ranking "Best Global Brands." Zara is the first Spanish company among the hundred most valuable brands. Productive growth of Zara's Store depends on its capabilities to retain loyalty of customers with high level of availability of products, lower level of idle inventory and responsiveness to demands of customers (Alexander and Myers, 2000).

Responsiveness

In the present globalize economy, organizations all over the world are facing pressures around short product life cycles, increasing product range, reducing product cost and demand responsiveness. Almost all the organizations realize the necessity of responding to short product life cycles, increasing expectations of customers, fluctuations in the level of inventory and changes in costs. However, only a few organizations realize the influence of responsiveness and the changes they are required to make in order to proceed from efficient functions to responsiveness

Cost

Zara's Store realizes that one of the major factors motivating responsiveness is the cost. In present economical conditions, agility and responsiveness can lead Zara's Store to higher return on assets as compared to reduction in costs (D'Souza and Williams 2000, p. 577). However, if Zara's Store missed motivating factors, such as increasing expectations of customers, rising competition, volatile demands and globalization, it will gain responsiveness in the long run. Direct investment strategy is considered as the most expensive mode while entering a country and involves strong control and risk in case the firm exits the market. Zara adopted this strategy for most South American and European countries that were perceived to have high growth potential and low business risk. It created problems in America because when going for the green investment it requires a clear understanding of political and economical situation of the country. Most importantly, competition and consumer perception and desires should have to be kept in mind when entering into a new country. Strong competition and diverse requirement created problems for Zara in America (Euromonitor, 2002).

The prices that have set by Zara in U.S. market are double in terms of Spain and other ...