Operation Management and Quality | Literature Review

Running head: OPERATION MANAGEMENT AND QUALITY
Operation management and quality
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Literature review
This is a critical comparison between two renowned European companies in the
fashion industry. These two companies are Benneton group and Zara who are the leading
clothes line in Europe. These organizations are rivals and belong to the same market
segments. The variety of products they offer cater to similar type of consumers in the market.
This literature review will compare and analyse the promotional and management strategies
used by the respective for gaining competitive advantage in the market. The products offered
by Benetton are priced high and follow classic trends whereas Zara belongs to the fast
fashion industry. Zara provides the latest market trends to the consumers at a reasonable
price.
According to Vizard, (2013), Benetton group has always been focused on
management of stores and development of products. This policy is applied to all the products
in the product line of the organization under the same brand name which will provide a
chance for better development of the products. The brands in the group has been segregated
and the focus is on the individual growth of each of the brands. This strategy has been
adopted by the organization so that they can compete with the Zara group and is able to gain
competitive advantage in the market. The organization has been the market leader for a lot
time because of their edgy and classy promotional strategies and as it helps to break all the
stereotypes in the society. However, the organization has lost its competitive advantage in the
market due to the emergence of Zara as a fast fashion organization which is providing the
consumers with the latest fashion in the market.
Benetton has been suffering losses in their whole sale department due to the Zara
group of companies. The organization has hired a new head who is an expert in the fashion
industry to make sure that they are able to compete with their rivals Zara and recover from

OPERATION MANAGEMENT AND QUALITY2
the state of loss (Reuters, 2017). The organization is focusing on reducing the amount of loss
in the whole sale market by making use of innovative strategy. The organization was once the
leading fashion brands in the world but it has been unable to compete with the companies
from the fast fashion industry such as Zara. The needs of the consumers in the market has
changed rapidly and the companies like Zara have been able to gain competitive advantage
due to their trendier clothes line.
Benetton is an organization who had introduced franchise system in their early days
but it was unable to operate this franchises in their own stores due to the lack of funding. This
is one of the biggest mistakes made by the organization as they were unable to have any
control over the collection in these stores. The organization was unable to distribute them
merchandize to various countries (Barber, 2012). This weakness was capitalized by Zara who
learned from the mistakes made by Benetton. Moreover, the organization was to unable to
adopt to the changes in the market which is a big reason which caused them to lose their
competitive advantage in the market. The organization has been lagging for the past few
years and they have been failed in launching new products in the market where its rivals were
able to launch new products on a monthly basis. Benetton has been known for their diversity
in their products but they have failed make any improvements in their respective business
models and to understand the needs of the consumers (Alquezar, 2013). The other companies
in the market such as Zara has worked hard to capture majority of the share in the market and
become the market leader in the fashion industry. Benetton owns only 75% of all the stores
while Zara owns all their stores all around the world. The growth of Benetton is the past
decade has been 2% which is very poor when compared to their bitter rival Zara whose
growth rate in the past decade has been 10%.
Benetton and Zara are two companies who have been in the market for a long time
and they have competed in the fast fashion section. The main unique selling proposition for