Key Factors Giving Zara a Competitive Advantage in the Market

Zara owns and manages numerous resources that can be categorized as tangible, intangible or organizational capabilities. The interactions between tangible and intangible resources help create organizational capabilities that provide value to the end consumer. Zara has a large variety of tangible resources due to its international expansion and vertical integration. Zara has 507 stores around the world with a total selling area of 488,400 m ² and €1,050 million of Inditex s capital invested into them. It also owns a 130,000 m ² warehouse in close vicinity to its headquarters in Arteixo, Spain. In order to accommodate the company s initiatives for backward vertical integration, Zara purchased 20 factories that were highly†¦show more content†¦Computers from stores then sent orders to the distribution centre twice per week on a regular basis. Also, there are consumption information systems that track customer preferences to support product life cycle analysis as well as send repeat orders and new designs to internal and external suppliers. Most of the policies, processes and procedures that Zara has in place have been perfected through the company s years of experience in this industry. Zara s organizational capabilities include the processes that turn its tangible and intangible assets into valuable outputs. Its just-in-time inventory system in collaboration with the company s vertical integration has allowed Zara to minimize storage expenses for inventory. Most goods are held in the warehouse for a few hours, with a maximum stay of three days. Vertical integration has helped the company develop shorter cycle times, which in turn allows it to commit to product lines for a season longer than its key competitors. The process of production and merchandising are flexible and unique because risky, new items are first produced in small quantities and tested in a few stores; only if there is a positive response from consumers are they mass produced. This has caused failure rates for products to be a mere 1% and markdowns to be uncommon. Zara ensures thatShow MoreRelatedZar Business Model And Marketing Tactics1308 Words   |  6 PagesNicole Tsenes Professor Wolf April 10, 2015 FM117 OL3 Zara Zara is an international retailer that is continuously growing in popularity due to the store’s trend-sensitive and affordable styles. Inditex, Zara’s distribution group, is one of Spain’s greatest successes in that they have dominated the global market. Their unique business model and marketing tactics have a lot to do with this company’s worldwide success. 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