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Strategic Management

Essay by   •  April 30, 2017  •  Research Paper  •  1,583 Words (7 Pages)  •  437 Views

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Strategy management

Student ID: 15001613

Introduction

This paper mainly introduce the importance of Resource Value Based for the company development. Valuable, rare, imperfectly imitable, and non-substitutable are the four key factors to decide whether the resources of the company have sustainable competitive advantage or not. Thus if the resource of the company can satisfy these four conditions this company has the ability to keep their competitive. In this paper I provide ZARA as a case to support this theory. ZARA is one of the retailing chain of Inditex and ZARA is also the most popular apparel brand around the world now.

        

Main body        

Imperfect imitability is the basic factor for the manager to identify whether the resources could sustain competitive or not(Barney, 1991). The retailer management strategy is one of ZARA’s intangible assets, which is hard to copy.  ZARA understands that retailer is a very important role in the fashion industry and it is also the key point to keep up the industrial competence. Managing the retailers through the significant method can expand the sales market.         

        

Clear market segmentation is the one of ZARA’s competences advantage. ZARA have three product lines which are for women’s, men’s, and children’s. And the manager consider that women are the main purchasers so the segmentation of women line will be clearer. The selling speed of the products in ZARA’s shop always faster than other competitors because ZARA refresh their products quickly and customers notice that if they do not buy it now then the product will “disappear” soon. (Z13)

Non-substitutable is the key point for the company to have competitive advantage. If the resource or management strategy already become generalizable that will lose their competitive. (Barney, 1991). ZARA is the first company using computer system to assist the company operation. They understand the consumer preferences through the system. It achieved a great result. This system can keep tracking the customer’s preferences. Furthermore, ZARA produce 11000 pieces of distinctive products per year, which is more than other competitors with large amount. Every department in the organization are cooperate with each other to make the process very clear. The product will be directly sending to the distribution center and some of the popular stores from the internal or external suppliers, which will be reducing lots of time and the warehouse spaces within this process. Another advantage of an integrated system is that reducing the working capital and continue design new products to attract customers. Zara made a significant investment on 1990 which is the Just in time system. Zara factories was corporate with TOYOTA to install this very useful system. It was very interesting to note that this is the first experiments of its kind in Europe. Just in time system which is helping the company to reduce time within the production process from the suppliers and to the customers (z11).

According to the resource based View, the resource of the management more rare is more valuable (Wernerfelt, 1984). In this ZARA case, Inditex,which is the owner of ZARA( had six retailing chain which are operated independently. Each chain has to manage their own design, production and so on. The home base will select employees who have working experience from the old brand to exchange the employee from the new brand. This meaningful arrangement from headquarter get a good result that different brands managers and employees can communicate with each other and share their experiences.

Each production line has their own creative team. (For woman, man and kid). Each of the team are composed by their own designers, sourcing specialists and product development personnel. ZARA’s designers are always invited by some famous fashion show, which means ZARA’s products are recognized by the market. The designer team have opportunities to receive the latest fashion information. After that, the designer were cooperate with the store manager before the new collection started. The market segmentation of Zara is more accurate. All of the employee will much more focused on their own working area. Production information system is the one bright spot of ZARA in the apparel market which is using the information demonstrate on the system to keep tracking preferences of the customer. Therefore, this system are able to save the time of seeking customer’s preferences, which is in turns to provide the designers specific basis and ideas to make new product(Z13).

   

To sustained competitive advantages that means the company resources cannot possessed by other competitors (Bob de Wit, Ron Meyer, 2010) the special raw material supply channel is Key Competitive advantages of ZARA. Half of the fabrics are supplied by Comditel which is one of the subsidiary of Inditex. This results in that the supply channel is more reliable as well as the supply of raw material will be more timely and the purchasing cost will be also less than other competitors.

Furthermore, a part of the item of ZARA were sourced from Europe, North Africa and Asia. ZARA has long term of relationship with these suppliers. A good relationship with supplier is very essential as not to create small mistakes and results in bigger problem for the organization Therefore, ZARA has successful collaboration with them so it has solved many problem of the external production step such as lower prices, higher level services from the supplier (Wilson, R.2012).

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