Through its branded stores, the company has the capability to offer sophisticated designs to its customer at relatively lower prices. This strategy has attracted the fashion oriented customers in masses, which creates repeat customers. The use of backward integration has enhanced efficiency in manufacturing through control of inventories in conformity to customers’ demands (Cuc & Tripa, 2007). Zara products emphasize on the changing product lines, the fashion contents, and reasonable physical quality. The product line has been segmented to men, women and kids, which has enabled the pricing of products to be relatively lower than those of the competitors, mostly due to reduced promotion requirements. The pricing for its products has been classified to high profile designs priced relatively higher than regular fashions that conform to all customers purchasing power. The awareness of its brand has reduced advertisement, as its marketing relies on the large customer base, and the continuous innovation of new designs. This has the tendency to attract fashion oriented, to look for fresh new fashion trends in their stores. Offering of freshness to its market, and its mode of creating scarcity coupled with attractive word of mouth, have enhanced Zara to acquire a competitive advantage. The location of Zara stores is strategic along areas of high masses and shopping. The stores which prove to be ineffective are relocated to strategic positions, which cater for traffic flows and the customers turn-over.
Zara Company has adopted a face to face customer service that enhance gathering of information regarding customers needs, preferences and expectations. This is because the attractive service offered to their customers enables them to gather feedback of existing products. The feedback specifications are relied on by the department of research and developments, which designs products with respect to the customer’s demands and specifications (Gallaugher, 2009).
The structure of Zara has been classified in departments by which every department has a crucial faction in the operations of the firm. The organizational infrastructure consists of the top management that makes decisions in relation to operation of all business units of Zara. The finance and planning departments ensures that funds are available at the required time to enhance a smooth operation in the facility.
Human Resource Management
The human resource department is critical in the processes, as it has responsibility of hiring of effective and efficient labor at a relatively cost effective. The department have hired and recruited personnel to fit to various operations of the company. The department has hired material handling, administrative staffs, sales, distribution and manufacturing, with a continuous training and relations. This enables the company to price their products at lower prices than its competitors. Zara has thus, located its manufacturing facilities to the location where the cost of labor is low for labor intensive processes (Gallaugher, 2009).
Technology/ Research and Development
The department of technology and development play an important role in Zara Company. This department researches on the trends of consumers and their preferences designing fashions that conform to current trends of consumers. The team tracks customers’ preferences and information concerning sales potential, which supports the analysis of product life cycle, repeat orders and inventions of new designs. The feedbacks of consumers are used to re-engineer the existing designs in the market to new designs that offer satisfactions in regard to the customers’ specifications. The department also has adopted to trends across markets, while sourcing information from the industry publications and attending fashion shows. This enables the designing of new model that conform to current fashion trends.
The department of procurement is concerned with outsourcing quality raw materials for the firm. Zara procurement department has been strategically placed to enable the supply of raw materials to manufacturing flexible. Raw materials are sources from Asia where the procurement is located (Cuc & Tripa, 2007). The sourced garment by Zara are usually not dyed, and this eases the research and development department work and time pressure to design their garment in relation to current market trends and consumer specifications (Gallaugher, 2009). Through the use of the value chain by Zara in defining the core competence of the firm, the firm was able to achieve a competitive advantage through cost effective advantage. This enhanced Zara to eliminate costs that do not add value in the value-chain processes. Zara was able to focus on the activities that are associated with the core competence to acquire its competitive advantage.