Managing Information and Technology Case Study

This case study analyzes ZARA's business strategy and competitive environment using Porter's Five Forces and Value Chain models. It discusses ZARA's innovative use of information technology, its unique marketing strategies, and how these elements contribute to its competitive advantage in the apparel industry. The report concludes with recommendations for further innovation and improvement in ZARA's business processes.

Managing Information and
Technology-1

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduce ZARA.....................................................................................................................1
Identify its current business strategy......................................................................................1
Briefly discuss the products and services of Zara..................................................................2
Analyse the competitive environment of Zara by applying Porter's forces analysis..............2
Analysing two primary and support activities in porter's value chain along with strength and
weaknesses.............................................................................................................................4
Building the understanding gained by these activities and reflect how Zara can adopt new
innovative ideas to improve its business processes and to enhance competitive positioning 7
CONCLUSION ...............................................................................................................................8
REFERENCES .............................................................................................................................10

INTRODUCTION
Information technology (IT) is the umbrella of hardware, software systems which is
necessary for the company in day to day activities. In modern era, company introducing new
techniques with the help of IT tools and techniques. Present study based on the case study of
ZARA. Zara is the most leading clothing company which makes good and long term growth in
the market. In present report, it will be discussing about Company strategy and applying some
essential models in order to analyse the competitive advantage.
MAIN BODY
Introduce ZARA
ZARA is the well known retailer brand based in Arteixo in Galicia. ZARA is
established in 1975 by Amancio Ortega and Rosalia Mera. ZARA is one of the best brand in
apparel sector. It has around 7475 stores across the world. Zara is very faithful towards its core
value and introduce simply four key words that define the company values beauty, clarity,
functionality and sustainability (Bell, Bryman and Harley, 2018). ZARA adopts very unique and
different culture and also ZARA designers respond to customer needs and reacting towards the
positive environment.
ZARA is also implemented Radio Frequency identification Technology (RFID) system
in its every store to keep track the location of garments instantly and making those most in
demand rapidly available to customers. This technology helps ZARA to manage its integrated
stock and manage online platform as well.
Zara maintained join life and eco-store technique to maintain the sustainability and to
improve customer experience. This overall system and new techniques helps company to adopt
new innovative projects and brand enhancement into the competitive market.
Identify its current business strategy.
ZARA's main strategy is focuses on pulling people in, not pushing product out
(Brownlow and et.al., 2015). Zara owned by Inditex which introducing an augmented reality
experience in its stores. Client can easily access the models dresses or new fashion adopted by
the brand (Why Zara Succeeds: It Focuses On Pulling People In, Not Pushing Product Out,
2018). This new technology is implemented by Zara in only 120 stores. With the help of this
business strategy company can easily meet the customer satisfaction and long term effectiveness
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on the leading market. It helps ZARA to motivate customers to buy their product or services in
order to meet out the best productive task and effective leading goals.
In other words, ZARA has adopting pull marketing business strategy where they gain
customer curiosity and attract them towards the company growth. Augmented reality experience
(AR) can easily pull clients towards the new closet. This business strategy is also proves to be
very fruitful for the company to compete with its biggest rival H&M which remains fixed on
pushing its brand and product out to the customers (Christopher, 2016).
Zara also adopt 4Es of marketing strategy that helps company to invent new marketing
strategies and goals. This marketing strategy is related to Exchange in new price, experience
replaces products, evangelism is now promotion and every place is new place to promote product
or services with great enthusiasm. Zara is customer oriented which shares new innovation and
technological innovation for attracting customer.
Briefly discuss the products and services of Zara
Zara deals with several product or services, company deals in Woman, Man and kids
clothing. Zara launched its stock as per the current trend of the market. Zara is the only brand
who ships new product twice in a week (Chuchrova, Vilamova and Kozel, 2016). All the
products of Zara has processed in Spain. Zara has adopts Zero advertising policy that helps
company to meet out the best productive source.
Analyse the competitive environment of Zara by applying Porter's forces analysis.
Porter's Five Forces Model of Zara
Zara is the leading apparel brand across the world which is owned by Inditex group of
companies. Zara is the most growing merchandise company worldwide. As per the fiscal data of
year 2012 , Inditex has earned total $20.7 billion sales, Zara reported 66% of total sales. Zara
owns the shopping outlets in 400 cities of Europe, Africa, Asia which brings in about 80%
business to its parent company.
Competition in the Industry (Moderate)
The biggest competitor for Zara include H&M, Benton and Gap. Zara is the most
reasonable brand which is most famous and adaptable in terms of customers. It helps to meet out
the company structure and new innovation development goals. As compare to its competitors,
Zara is the first brand who launch new product in very fast manner. Other brands takes a month
to launch new product but Zara has taken only a week to launch new product or services. These
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great services helps company to beat the competition level in fashion industry (Dale and et.al.,
2016). Zara itself is the most leading and popular brand that reduces the chances of competition
level and make good profit in the competition market.
In Zara the chances of buyers shift is cost of switching brands are relatively high in case
they do not like the price setting. The buyers purchased in small quantities so that they have no
choice to bargain the price so that, they controlled in an more appropriate manner. Zara also
provides the best quality stuff to its customers, which helps in retaining them for longer term
and gaining high competitive advantage in market.
Threat of new Entrants (High Pressure)
As per the growing industry high pressure of fiscal crises it affect the company economic
condition and increase company cost pressure (Fleisher and Bensoussan, 2015). this economical
condition affect the company profitability growth and reduce the profit margin. However on the
other side, Zara is having a good reputation in market due to its shortest sales cycle and high
brand equity. It can easily attract the buyer's attraction towards its product or services.
Zara owes profitability in both the direction vertically or horizontally which set the
benchmark for the other companies. In today's modern era, new companies are ready to take
over the market with their innovative ideas. In terms of clients, they always attract to those
brands who introduce best material or trendy products (Grant, 2016). Major Competitors of Zara
are H&M, Gap, Zara are the strongest holder in the current scenario. As compare to their
competitors, Zara's parent Inditex whose store is spread more in 448 stores in 2005, while H&M
commence 145 stores. For example: recently Zara invested huge amount on real state to open
new outlet in prime locations.
Power of Suppliers (Moderately high)
Suppliers are the main source for providing raw materials to the companies to make profit
in the market. In order to gain good profit and maintained long term position in the market,
organisation needs to make good reputation in front of customers (Hsiao and Chuang, 2016).
Zara having proper security measures that provides licensed contracts so they are never stuck
with the requirements. For that, company needs to maintained good position in the eye of
suppliers. In terms of clothing market there are huge pressure of suppliers in terms of making
good image in front of the market areas. Suppliers are more powerful in Zara case that affect the
stability of Zara and affect their profitability growth.
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Power of Customers (Moderate Pressure)
In spite of the existing world economic crisis, garment fashion industry is constantly
growing and becoming trendy these days. Due to high range of products or options, customers
always looking for a change and buying innovative product. It is very important for the
company to analyse the market trend and make different kinds of new trendy products for its
customers. Therefore, due to high competition or number of sellers, customers get confused to
make a choice. Generally, target group of Zara is from middle class to upper class who
considerably posses a high buying power as they seem to have more income at their disposal
(Janicot, Mignon and Walliser, 2016).
Threats of substitute Products (Moderately pressure)
In terms of threats of substitute products, Zara has facing moderate pressure because of
dynamic market environment where new trend and innovation has been introduced daily.
Clothing is the act as a symbol of socio economic class or the person identity who shows his/her
cultural values (Koc and Bozdag, 2017). There is a threat of duplication which has been found in
China, India and Indonesia. In respect of Zara, it provides reasonable range of product with high
quality. Sometimes, due to cultural issue people prefer to go to tailor to make their own designs
at low cost. But sometimes, customer is not satisfied with tailor and prefer to go at retail shop to
buy a clothes.
Analysing two primary and support activities in porter's value chain along with strength and
weaknesses.
Customer value is the primary function of the company that affect the company
reputation and image in front of the company development growth. In this model, company
needs to think as being a customer rather than business owner and manager. Before purchasing,
customer looking for different identified channel of task that makes things more innovative and
creative (Mathooko and Ogutu, 2015). They looking for a great deal so that they satisfied with
spending money on that commodity. Porter's value chain model is the tool or technique that
helps company to create value for the customer. In this model company has to generate value by
primary activities and support activities.
The Primary activities
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Primary activities of porter's value chain model is the backbone of the primary activities
that have been identified by porter's which is most related to the company (Pearlson, Saunders
and Galletta, 2016). There are given two activities below to describe the importance:
Inbound Logistics
Every activity or process of the business is to creating related to make product falls into
the inbound logistics. For example: Zara purchase raw material from their suppliers and than
keep those raw material into the warehouse all this system or activity is nicely fit into this
category. In other terms inbound logistics consist receiving, handling, storing, raw material
inputs etc. for example of this system is just in time is the technique that helps to give profit cost
advantage. Zara having 12 inventory turns per year compared to 3-4 per year for competitors.
Stores place orders twice a week and this drivers factory scheduling (Prajogo, Oke and Olhager,
2016). Zara Accelerated more saving on sales and earn good money to save inventory cost. Zara
logistic market is very fast they usually gets very fast raw material as compare to their
competitors.
Marketing and Sales
Marketing and sales is the most primary function for the company without which
company cannot run its business function smoothly. Marketing never take back company in the
market, if they having good strategy to promote services or products in front of customers. Such
as Zara attract customers by introducing innovative and creative clothes in the market. It helps to
promote services into more efficient manner. Marketing promote or enhance the product
awareness across the world and make product differ from its competitors. Marketing and sale
also play a very crucial role to promote company's products at large extent (Sekaran and Bougie,
2016).
The Support Activities
Company cannot performed all functions with only primary activities, primary activities
are the direct way for the company to add value to the business or products. Elsewhere, support
activities also essential for the company's betterment as well. It wouldn't impossible for the
company to run the functions without main four support activities. Such as procurement, firm
infrastructure, technological development, human resource development (Sternquist and
Goldsmith, 2018).
Technological Development
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Technology is the most essential part in this current modern world. It motivates company
to enhance the overall functional activities and development areas of the company. Another
reason or benefit of technology development is that it reduces the company's manual cost and
make bring quality products to market for sale at low prices. Such as Zara is the leading clothing
company which invest huge amount on the technologies to upgrade company's capabilities or
strength and its image in the market such as including big data, online experience for its
customers (Taran, Boer and Lindgren, 2015). As per the statement of Inditex it focussing on the
technology “location intelligence” which is the ultrasound technology that keep track the footfall
in stores as well as virtual assistants to help buyers in store.
Infrastructure
There are some elements that helps business to run smoothly such as accounting management,
legal, administrative handling etc. these are some necessary tools that helps to make business
different from others. Infrastructure is one of those elements which makes customer curious to
revisit the company's location. For example: Zara's store is having digital screen where they
display latest fashion. Uncluttered physical racks of clothes with overshadowed with big screen
this is the new technology that might attract customer focus towards the company outlets.
(Wrigley and Straker, 2016). overall, it has been observed Infrastructure is the first attribute that
make good impression in front of their customers and make them happy with the product quality.
Strength & weaknesses of ZARA
Strength
 Zara has huge number of fashion outlets which are digitally innovated to meet the
customer's needs.
 Zara has big brand portfolio with having different categories of products of Woman,
Man, Kids.
 It has a strong distribution channel which help company to easily reach to the potential
market. Zara always getting good rate of return on its overall expenditure or investment by
executing new product generated goods.
Weaknesses
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 High attrition rate of work force can make Zara low effective and profit oriented
company.
 Lack of good product forecasting demand due to which company missed the future
opportunities and gains.
Building the understanding gained by these activities and reflect how Zara can adopt new
innovative ideas to improve its business processes and to enhance competitive positioning
Innovation or new business idea is very vital for the company to rebuilt the better growth
performance (Pearlson, Saunders and Galletta, 2016) Business process re-engineering is a
business management strategy through which company can easily meet out the customer needs
and wants. Overall, it helps to brings new management and long lasting impact on the business
management process.
In present modern world, technology has been given positive impact on the current
business in terms of enhancing the quality services and attract new managing work performance
in order to meet out the customer attraction. Advanced technology is the best source that affect
the all over the advancement and give positive impact on the managing effective performance.
Present technology gain competitive position for the company to make good impact on the
business performance task. Such like, ZARA is the most leading company that can benefit from
technology that can might be given good future oriented.
New information or advancement in technique can help in fast sharing of information
among members of the supply chain. This helps to make the proper and effective management
task. Zara can get several benefits by adopting this technology The best innovation in Apparel
industry in latest technology, knitting technology and in information technology. Information
technology can easily built the customer attraction and new business growth for the future
stability. In order to adopt new technology for new idea ZARA needs to follows the steps for
new business model. This is the best way to motivate new development growth and best leading
resourceful channel.
Zara can improve its logistic management system in order to improve its management
activities and goals. Above provided are some information technology ideas from which the
company can enhance its immediate access.
Shipment Tracking information system
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In earlier days, customers found a variety of problems while tracking their shipments.
(Mathooko and Ogutu, 2015). But nowadays, buyer can easily track its order 24/7. this process
not only enhance the customer experiences but also minimize the time and cost. Zara can adopt
this system and make their customers satisfied and happy. It helps the organisation to develop
new management ideas and developing new technologies' to meet the logistics department set
objectives
Zara can also develop or enhance the scope of marketing and sales activity by using
different technologies. For that, Zara can start to adopt some new IT systems to attract customer
It helps the organisation to enhance and develop growth channels and ensuring company's
growth and success.
Embrace the cloud can be useful for the company to enhance marketing and sales of the
company apart from that, it also helps to make the best and leading channel of better distribution
growth for the better company enhancement. This system can help team to become more agile
and integrating those technologies together to increases work productivity.
This CRM system helps to make the best effective and leading different technological
growth manner. This allows team to motivate new management and most effective task
implementing process.
Quality tech department is the best way to make better understanding and leading
development growth (Koc and Bozdag, 2017). Zara can also make a good customer relation with
the help of information technology that can help company to rebuilt the better advancement
process.
Other technologies which ZARA can make use of is POS which is Point of Sale. The
organisation with the help of POS ensure smooth operations in its overall organisational
accounting. The technology has seen to be very effective and can provide the organisation with
effective ways to deal with any related issues while improving its business process.
CONCLUSION
As per the above report it has been concluded that, managing information technology is
the most important process for the businesses to meet the current trends or market demand.
Present study discussed about the Zara Case study and presented different models of marketing
such as porter five forces or porters value chain model to analyse or get understanding of market
to make some innovative products or services. The explained strategies have helped the company
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in implementing new ideas. Along with it, the understanding gained by these strategies
developed reflect in what ways Zara has adopted innovative ideas to improve its business
processes and to enhance competitive positioning.
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