Global Brand: Zara's Business Model Typically, retailers outsource a significant portion of their production while focusing on retailing and marketing products. This is because the garment industry is "labour-intensive" globally and is not capital-intensive. Fashion retailers and clothing manufacturers are always looking to reduce costs by outsourcing production to developing countries that offer the lowest labor rates. On the contrary, Zara has developed a rich and diverse method of doing business in the fashion industry. Zara works across the entire value chain and is very vertically integrated and capital intensive. Say no to plagiarism. Get a Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get Original EssayVertical integration, a special feature of Zara's business model, has helped the company develop a strong advertising strategy. This strategy allowed Zara to create an environment of scarcity, opportunity and a fast fashion system. Zara manufactures more than 60% of its own products. As Zara owns its in-house production, flexibility in the variety, frequency and quantity of new styles produced increases. In addition, 85% of this production is done throughout the season, which allows the chain to constantly offer its customers trendy and current products. Traditional retailers do not have this level of flexibility. Traditional retailers are required to place production orders with foreign manufacturers at least 6 months before a particular season. Rather than pushing its factories to maximize production, the company deliberately leaves extra capacity. Rather than seeking economies of scale, Zara produces and distributes its products in small batches. Instead of relying on outside partners for production and logistics, the company manages all design, distribution and warehousing functions itself. Even its daily operating procedures differ from those of traditional players. Their retail stores operate a rigid schedule for placing orders and receiving inventory. Price tags are placed on items before they are shipped, rather than at final stores. Vast areas remain empty in its expensive retail stores. They tolerate, and even encourage, occasional stockouts. Keep in mind: this is just a sample. Get a custom paper now from our expert writers. Get a Personalized Trial The logic behind Zara producing in small batches works brilliantly to create a feeling of exclusivity. . Customers need to make quick purchasing decisions as there is always a high possibility of stock being out of stock the other day. Customers therefore visit Zara stores more often to discover new products. This creates a huge amount of traffic and revenue. Each of their product development teams has its own designers, supply, sales and production planners, similar to cellular manufacturing. This helps Zara to streamline internal communication to a large extent. Since Zara believes in time-based competition, automation is the essential element that helps it increase the speed and accuracy of its operations..

Essay / Global Brand: Zara's Business Model Typically, retailers outsource a significant portion of their production while focusing on retailing and marketing products. This is because the garment industry is "labour-intensive" globally and is not capital-intensive. Fashion retailers and clothing manufacturers are always looking to reduce costs by outsourcing production to developing countries that offer the lowest labor rates. On the contrary, Zara has developed a rich and diverse method of doing business in the fashion industry. Zara works across the entire value chain and is very vertically integrated and capital intensive. Say no to plagiarism. Get a Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get Original EssayVertical integration, a special feature of Zara's business model, has helped the company develop a strong advertising strategy. This strategy allowed Zara to create an environment of scarcity, opportunity and a fast fashion system. Zara manufactures more than 60% of its own products. As Zara owns its in-house production, flexibility in the variety, frequency and quantity of new styles produced increases. In addition, 85% of this production is done throughout the season, which allows the chain to constantly offer its customers trendy and current products. Traditional retailers do not have this level of flexibility. Traditional retailers are required to place production orders with foreign manufacturers at least 6 months before a particular season. Rather than pushing its factories to maximize production, the company deliberately leaves extra capacity. Rather than seeking economies of scale, Zara produces and distributes its products in small batches. Instead of relying on outside partners for production and logistics, the company manages all design, distribution and warehousing functions itself. Even its daily operating procedures differ from those of traditional players. Their retail stores operate a rigid schedule for placing orders and receiving inventory. Price tags are placed on items before they are shipped, rather than at final stores. Vast areas remain empty in its expensive retail stores. They tolerate, and even encourage, occasional stockouts. Keep in mind: this is just a sample. Get a custom paper now from our expert writers. Get a Personalized Trial The logic behind Zara producing in small batches works brilliantly to create a feeling of exclusivity. . Customers need to make quick purchasing decisions as there is always a high possibility of stock being out of stock the other day. Customers therefore visit Zara stores more often to discover new products. This creates a huge amount of traffic and revenue. Each of their product development teams has its own designers, supply, sales and production planners, similar to cellular manufacturing. This helps Zara to streamline internal communication to a large extent. Since Zara believes in time-based competition, automation is the essential element that helps it increase the speed and accuracy of its operations..

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