Operations Management and Risk Analysis Project for Zara Company

This project provides a comprehensive analysis of Zara's operations management, focusing on resource allocation and strategic risk analysis. It delves into various resource management strategies, including a systematic approach and the use of resource management software. The project explores the Resource Based View (RBV) and the VRIO model to understand Zara's competitive advantages. It also examines the application of JIT and Lean techniques, along with McKinsey's 7S model, to enhance operational efficiency. Furthermore, the project discusses the cost-benefit model for decision-making and strategic risk analysis, including risk management standards, SWOT analysis, and risk mapping. The analysis highlights Zara's strengths, weaknesses, opportunities, and threats, offering insights into how the company can mitigate risks and maintain its market position.

Project

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO3..................................................................................................................................................3
P7: Allocation of resources for operations management.............................................................3
LO4..................................................................................................................................................6
P8: Strategic Risk Analysis (SRA)..............................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Operation management is a business activity which is cover by the top-level management
of the company to operate their all business activities in proper channel. Companies are uses
major resources in the company to run their all activities in productive way. This also discusses
the strategic risk analysis in the business operations of the Zara which mainly helpful to deal
with risk factors in their business environment.
LO3
P7: Allocation of resources for operations management
Resource management strategies
Resource management strategies are some logical and systematic methods which
companies or businesses are using in their workplace to perfect management of the resources.
There are many resources uses by the Zara in their organization to produce products and services
for the customers (Mkala, Wanjau and Kyalo, 2018). In which company necessarily need to use
some strategies in their business environment to manage these important resources. It included
some major resource management strategies below;
1. Systematic approach: Zara company need to take advantage from this strategy of the
resource management. Systematic approach indicates preparation of the baseline which
shows the previous performance of the company to improve it in the future. This strategy
help to the Zara to analyse the previous mistakes of the company and provide such
specific paths to the management to avoid such mistakes in the future.
2. Resource management software: This is also very helpful tool for the Zara to manage
their resources effectively. This management software really comes under the resource
management strategies which is using by many of the successful businesses in their
particular business environment (Terwiesch, 2019). It is help in the scheduling of
resources use which provide specific ways to the company to manage their useful and
productive resources in the business environment.
Resource Based View (RBV)
Resource based view is an important method which company use to gain competitive
advantage in the market. RVB model shows the major roles of the resources in the company to
improve the performance of the organization. There are the Zara has two types of resources
called; Tangible and Intangible which are explained below.

 Tangible: This is indicates the tangible assets in the company which includes; building,
land, capital, machinery, and other equipment etc. These assets are also known as
physical resources which help to the Zara to increase their performance in the market.
The company is easily able to buy these resources in the market for personal use.
 Intangible: Intangible assets are those assets which has zero physical presence in the
company but it can still play major role for the Zara. These assets include; Goodwill,
reputation, intellectual property, and trademarks of the company which are helping to the
company to gain huge competitive advantage in the market (Jaisinghani and PayPal Inc,
2016). It also provides specific paths to increase the productivity of the company.
VRIO Model
VRIO Model is a useful framework to the company which also help in the gain
competitive advantage. It includes examines of four questions called; question of value, rarity,
imitability, and organization. These questions are important in the analysis of resources and
capabilities of the Zara.
A. Question of Value: If resources are helping to the Zara in improving it performance in the
market of competition, in this case these resources are valuable.
B. Question of Rarity: Rare resources are very necessary for the company to produce such
exclusive products and services for the customers. In which because of this, the Zara is able to
achieve huge competitive advantage in the market.
C. Question of Imitability: The valuable and rare resources are achieved at least short-term
competitive advantage. In which resources are need to be some costly also for imitate aspect in
the market. It is help to the company to gain long-term competitive advantage.
D. Question of Organization: The Zara company is need to capture the specific value form
resources (Riley and Ellegood, 2018). The management of the company is capable to use the
valuable, rare and imitable resources to achieve competitive advantage in the particular market
segment.
These two models are very helpful for the company to perfectly manage their resources.
These are help to the Zara to increase their productivity or revenue, minimize costs and waste,
and also improve brand reputation in the global market.
JIT and Lean techniques

Just in time (JIT): Just in time is effective management strategy which help in the aligns orders
of raw material directly form suppliers according to production schedules. Implementation of
this technique is help to the company to decrease waste and increase efficiency of the production
process, because it makes capable to the company to receive only that goods which are highly
needed in the production process.
Lean manufacturing: Lean manufacturing is a systematic technique which is specially uses by
the Japanese manufacturing industry for the purpose of waste minimization. This technique is
also helpful for the Zara to avoid waste aspect from the production process. It provides specific
framework to the company to prepare perfect schedule of raw material purchase. For example;
the Zara is want to produce new fashion clothes, in this case company is responsible to analyse
the major material need for the produce new fashion or trends clothes, and then try to order only
that raw material from directly from the suppliers which are truly needed in the production
process (Babich and Hilary, 2019). So, at the final result with the help of this, the company is
able to minimize the waste from production process.
McKinsey's 7S model
The Mckinsey's 7S model is an important framework for effectiveness of the Zara
company in the global market. It includes seven major internal factors of the company which
help in the achievement of organizational success, which are described below;
1. Strategy: This is the first part of the Mckinsey's 7S model which indicates the role of
business strategy in the company. In which the Zara need to develop or innovate the
specific business strategy for employ in their business environment to gain high profits
from the market.
2. Structure: The structure term refers to the proper channelization of the all business
activities in the Zara's business environment. It is helpful in the preparation of effective
organizational structure of the company.
3. System: The system term is helpful for the company to operate the all business
operations in the systematic way (Breidbach and Maglio, 2016). The system approach is
also helpful in the making productive work environment for the employees.
4. Shared values: It includes moral values, norms, and standards within the Zara, that
positively influence the organizational behaviour of the company.

5. Skills: Employees and staff of the company are need to be skilful and creative at their
workplace to increase the performance of the company.
6. Style: Style generally indicates the workability of the manager and the leader of the
company. It includes various ways of the top-level management to handle each condition
within the company.
7. Staff: Staff and employees are one of the major resources of the company which always
work for the company growth. They put their all efforts at their workplace to increase the
performance and profit ratio of the Zara in the international market.
Cost benefit model
Cost benefit model is a logical and systematic approach to the company to analyse the
weaknesses and strengths, and decisions of the organization. It is helpful when company start
work on the new project, because this model analysis of all the costs and revenues which
company will generate from this new project. It is shows various future cost opportunities to the
management which really help in the process of decision-making (Kumar Mangla, Bhattacharya
and Luthra, 2018). The Zara is able to gain huge competitive advantage in the particular market
segment after implementation this cost benefit model in their business environment.
LO4
P8: Strategic Risk Analysis (SRA)
Strategic risk analysis is a specific tool which is used by the many of the MNCs in the
world. This is also helpful for the Zara to analyse the risk factors in their workplace. The
company is able to avoid these risk factors after their analysis.
Risk management standards and benchmarks
Risk management standards and benchmarks are very important for the businesses to
manage their risk aspect easily in their business environment. Every business has its particular
risk factors, and each of them need to deal with it to run all business activities smoothly. These
standards indicate the better paths to the top-level management to avoid such risk factors in the
business environment (Fang and Noe, 2018). There are included some major risk management
standards and benchmarks below which are totally support to the Zara to minimize risk;
Risk identification: The company need to identify the risk factors in the company which are
depends on both internal or external business environment. This is help to the company to catch
the various risks which company will face in the future.

Risk monitoring: The Zara is able monitor existing and new risks after identification of risks
with the help of this standard. In which the company need to manage these risks with their high
efficiency to avoid handle it in proper way.
Consult and communicate: The management of the company is need to make a specific plan
after consultation and communicate with the major shareholders of the company to deal with risk
factors. This standard is make able to the company to prepare productive decisions for face this
situation in the business environment.
SWOT Analysis
SWOT analysis is a useful tool for the company to consider the strength, weakness,
opportunities, and Threats aspects. With the help of this the Zara is able to take some
improvement decisions for the company.
1. Strength: The Zara is one popular fashion brands in the multinational market. Currently
the company holds huge goodwill the clothing industry (Knapp and Vander Hoorn,
2017). The Zara has large customer base in the global market, because the company
running their business operations from past many years in progressive way.
2. Weaknesses: The company mostly focus on the production of premium products. So,
according to this reason their products are only affordable for high income group of
people. The company need to produce some additional range of products too for gain
extra profit form middle income group of people. The Zara also need to boost their
advertisements to attract more people towards brand.
3. Opportunities: Currently selling products on the E-commerce sites become popular
trend. In which there are great opportunity for the Zara to sell their products on the E-
commerce sites to gain huge market share in the clothing industry.
4. Threats: The Zara holds high brand reputation in the global market. The customers are
really satisfied with the exclusive product range of the company (Eggers and Thorne,
2017). In this case it is difficult to the competitors to take the Zara's position in the
market, but the Zara always need to provide effective products and services to the
company to run their business operations in progressive way.
The Zara is able develop contingencies and mitigate risk by use this model in their
business environment, because it shows the all internal factors of the company. These factors
help in the analysis and identification of the risks within the organization. For Example; With the

analysis of the weaknesses the management of Zara able to cover these weaknesses, and then try
to avoid related risk factors in the business environment.
Risk Mapping
The risk map is generally uses by the businesses to understand their risk profile.
According to the concept of risk mapping the Zara is also able to take advantages from this
technique, because this is help in the study of risk environment. It also shows prioritize
mitigation strategies to the company for deal with the risk term in the company. The risk
mapping is very necessary for the company to maintain consistency of the business activities
(Gatzert and Schmit, 2016). It also helpful in the gain big advantage from the insurance
premiums. The management of the company always need to prepare risk map before start work
on the new project for risk minimization.
Relationship between stakeholders and risk
Investors: In the business environment there the relationship existing between investors and
risk. Suppose the any investor invest the Zara's equity shares. In this case if company not gain
profit turn into loss, then this type of investments is basically risky for the investors.
Suppliers: Suppliers are also facing the risk factor in the dealing with Zara. For Example;
suppliers supply their raw material to Zara on the basis of specific agreement, but suddenly
market shares of the Zara is decrease and then company not able to make payment of the
suppliers on time. In which this condition is called risky deal for the suppliers with the Zara.
Customers: There are also existing the relationship between customers and risk. Suppose a
customer buy a Zara's product, but the customer is not completely know the use of that product
(Rost, 2017). In this situation it is risky for the customer to use it without proper knowledge,
because that product may probably put side effect on the customer.
CONCLUSION
It can be concluded that the resource management strategies are very helpful for the Zara
company to manage their resources in proper channel. RBV (Resource based view), and VRIO
models are make able to the company to minimize the waste aspect in production. There are JIT
and Lean techniques, Mckinsey's 7S model, and Cost benefit model really helpful for the
company to achieve specific goals. Risk management standards and benchmarks, and SWOT
analysis are important to mitigate the risk aspect in the company. There are big relationship
exiting between stakeholders and risk. So, this shows each business like Zara face risk factor in

business operations. The company need to make perfect plan to deal with these risk factors in the
global market.
Recommendations
 The Zara need to hire some highly qualified decision makers in the company to make
specific plan to deal with such risk factors.
 Company also need to implement risk management standards in their business
environment to handle any type of risky conditions.
 The Zara need to focus on making systematic future strategies for the company to deal
with risky terms in the business operations.

REFERENCES
Books and Journals
Mkala, M. D., Wanjau, K. L. and Kyalo, T. N., 2018. Operations Management and Performance
of Manufacturing Small and Medium Enterprises in Kenya. International Journal of
Research in Business and Social Science (2147-4478). 7(2). pp.1-13.
Terwiesch, C., 2019. Empirical Research in Operations Management: From Field Studies to
Analyzing Digital Exhaust. Manufacturing & Service Operations Management.
Jaisinghani, D. R., PayPal Inc, 2016. Cloud computing: unified management console for services
and resources in a data center. U.S. Patent 9,442,810.
Riley, J. M. and Ellegood, W. A., 2018. Using Simulation to Teach Operations Management to
First-and Continuing-Generation Students. International Journal of Business Analytics
(IJBAN). 5(2), pp.57-72.
Babich, V. and Hilary, G., 2019. Distributed ledgers and operations: What operations
management researchers should know about blockchain technology. Manufacturing &
Service Operations Management.
Breidbach, C. F. and Maglio, P. P., 2016. Technology-enabled value co-creation: An empirical
analysis of actors, resources, and practices. Industrial Marketing Management. 56.
pp.73-85.
Kumar Mangla, S., Bhattacharya, A. and Luthra, S., 2018. Call for Papers-Production Planning
& Control: The Management of Operations-Achieving Sustainability in Supply Chain
Operations in the interplay between Circular Economy and Industry 4.0.
Fang, D. and Noe, T., 2018. Lowering the bar and limiting the field: The effect of strategic risk-
taking on selection contests. Working Paper.
Knapp, S. and Vander Hoorn, S., 2017. A multi-layered risk estimation routine for strategic
planning and operations for the maritime industry.(No. EI2017-02).
Eggers, S. and Thorne, S., 2017. Conducting Effective Outreach with Community Stakeholders
About Biosolids: A Customized Strategic Risk Communications Process™ Based on
Mental Modeling. In Mental Modeling Approach. (pp. 153-177). Springer, New York,
NY.
Gatzert, N. and Schmit, J., 2016. Supporting strategic success through enterprise-wide reputation
risk management. The Journal of Risk Finance. 17(1). pp.26-45.
Online
Rost, M. 2017. 5 steps to effective strategic risk management. [Online]. Available Through:
<https://www.workiva.com/blog/5-steps-effective-strategic-risk-management>.