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Zara's Disruptive Business Model

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Case Analysis Disruptive Business Models Markides (2006) explains that disruptive business models are strategies implemented in a company which enables it to outshine the competitors in an individual market. The disruptive model focuses on distorting the existing market and making the customers prefer the new business as opposed to the others (Magretta, 2012). Disruptive business models may include offering higher discounts, after sales services and premium products. Such a model is often sudden, and it takes over the entire market which sometimes leaves the other market players disoriented. During this time, such a company takes advantage by acquiring massive customer following and ultimately more profits. Understanding why a company may perform …show more content…

The company has a short time frame within which an idea is implemented. For instance, Zara designers may conceive a particular design that may seem fashionable at the current time and ensure that clothes are within the retail outlets within ten days. The speed of innovation and invention favors the versatile customers who love moving with the fashion trends. Zara, however, ensures that it releases few clothes to test the market thus saving the company on huge inventory costs that would lead from a dead stock. Notably, Zara has shied away from the top-down decision-making approach because the company understands that the employees are more inclined to understand the consumer trends. The retail brand has formed a close association with its employees thus ensuring that they also play an active part in decision making. In effect, the company has divided itself into different segments that enable the manufacturers to produce goods that move fast within the …show more content…

For instance, the company manufactures its clothing in high-end countries which evidently take up much capital and after that stocks high-end stall with them. Moreover, Zara’s clothes are usually 15% cheaper as opposed to the other brands which also leave them on the losing end (Hansen, 2012). Zara regularly opens new stalls in different cities globally further extending their presence. Gap, on the other hand, focuses on advertising and opening up many stores as Zara but it ends up consuming more costs instead of surpassing Zara’s profits. While gap focuses on filling up their store with clothes, Zara stocks few high-quality products which are never

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We have to emphasize that we don’t have any intention to transform Abercrombie and Fitch to another Zara or H&M, we will try to preserve the uniqueness of the company, but at the same time we will implement a bunch of changes that we think will be relevant in the current market conditions.

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Largely, the entry of the company into the distribution channels has limited the threat of major or powerful suppliers. The company has created its own retail stores and online web marketing. This approach aims at capturing the consumers that would want to order the product directly from the manufacturer. In fact, the online marketing model does not only enable the firm to sell directly to the respective consumer, but also enables the firm to identify the unique needs of the consumers. The direct link between the consumers and the company is critical to continuous growth of the company.

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On the other hand the fact that Zara produces the remaining 40% internally, is a strong asset, providing better control, and short lead-times. Finally the fact that Zara owns 450 workshops were garments are to be sewed is a major asset ensuring quality. Another important asset in terms of production, is the technologies involved, for instance the cutting machines, to minimize waste (Ferdows & co. 2014 p9), used in combination with the last-final hand-made sewing. The ease of the connection between the production center and the distribution center is also an important time-saver element, and therefore

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EXECUTIVE SUMMARY Zara can be identified as one of the largest international fast-fashion organizations which is owned by the fashion group Inditex. Their first store was opened in 1975 and from that point of time, they have had an unstoppable growth throughout the years as up to now. After 42 years of operations, today Zara has been able to expand themselves with 2169 stored over 82 countries all over the world. Rather than they were a high fashion brand in the country, Zara has focused themselves as a fast fashion brand where they will change their fashions at a great pace where no one can reach them. Also, the most attractive thing is that all those latest fashion designs are introduced to the public at an affordable price.

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B. How firms can respond to the emergence of potentially disruptive technologies and innovations. The term, disruptive innovation was coined by Clayton Christensen.16 In his book, The innovator’s dilemma, 17 he describes two types of innovations: sustaining and disruptive innovation. According to him, sustaining innovations are those that improve product performance in ways that the mainstream or high-end customers would normally value, while disruptive innovations have new features that generally target the low end, less profitable part of the market, or even create a market for new customers.

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In terms of differentiation, ZARA’s “fast fashion” philosophy is unique, which create demands and lead the trend in the garment market.   They respond very quickly to the demands of target customers and focus on young fashion.   In production, they design quickly, production quickly and update quickly.

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One advantage of this globalization is the possibility of creating international fashion chains accompanying consumers wherever they are. Inditex took advantage very well that factor. • MICRO: It is formed by forces close to the company that affect its ability to satisfy customers, the business, consumer markets, marketing channels used, competitors and public. Zara 's main competitors are: Sfera, H & M, GAP, Mango, Pull & Bear and Stradivarius. In the graph we see as Zara drink market both national and European business.

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(BARNAT, "Concurrent Control") As fashion trends tend to change every now and then, Zara could use this control to work on latest trends and future trends. This to ensure that employee work activities produce the correct results without any major wastage and unacceptable services. This also allows Zara to be up to date with its fashion knowledge and also sustain its position in the

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