Zara International Retail Store supply chain problems

Zara International Retail Store

Zara is a Spanish retail store for clothing and accessories and is based in Artexio. Galicia. It is owned by the Inditex fashion group. The main products stocked in Zara are men’s and women’s clothes, each of which consist of the lower garments, the upper garments, shoes, cosmetics and compliments. Zara also deals in children’s clothing. Zara is a major international store. It engages in activities such as designing, manufacturing, supplying and distribution of its products. Zara has a factory which is its own for the textile industry. It is interesting to note that unlike its competitors with whom it competes very favorably, Zara can design a new product and have it in its stores in a span of four to five weeks. Some of the countries to which Zara distributes and supplies its products are Turkey, the Asian Continent, Spain where it has about 50% of its products being manufactured, all the rest of Europe, United Kingdom, Portugal, Germany, Italy and African countries. Zara mainly gets its financial support for the international operations from its equity. In 2001, Zara had its first initial offering through the Inditex firm. This has fetched over 19.1 million dollars in sales volume. This has created the basis for expansion on an international scale, by enabling the company to open up more stores in more countries. it has empowered more manufacturing operations, more modernized designs as well as more staffing and technological advancement. This equity has also given the company a better financial stability compared to its rivals in the textile industry. The Zara International has stakeholders from all over the world. These stakeholders create a strong financial base by their consequent buying of shares which expands their equity.

Zara business strategy

The kinds of logistics employed in Zara international are both inbound and out bound depending on the operations. They are inbound in cases where their operations are centered within the boundaries of a specific country and are applied in marketing and staffing activities. They are outbound in cases where their operations are on a global scale involving marketing, distribution and staffing across the borders of many different countries. This constitutes their value chain activities and extends to their supply and distribution chains that have been established in the various countries where they have their stores. Zara international employs three types of staffing, i.e. ethnocentric, polycentric and geocentric staffing. In ethnocentric staffing, they make use of the specific country’s natives and involve the members of the company in making key decisions, employing citizens of the same home country in various capacities as well as the subsidiaries involved in resource management practice. In polycentric staffing, each of the subsidiaries runs the firm on a local basis, the local employee is held incharge of a subsidiary since the managers at the headquarters fail to have sufficient local knowledge and hence make use of the locals. Human resource management is established by the subsidiaries. In the geocentric staffing, it is done on a global scale with integrated business strategies, managers and employees recruited on a global basis. Zara recruits international managers who run various offices in various countries at a ‘global’ office. These international managers and employees are from diverse countries. the ethnocentric staffing in Zara is usually dominated by cultural values of the home country whereas the geocentric staffing enjoys a diversity of cultures from the various countries represented. Zara’s organizational structure encourages a high level of performance and also reduces the number of managerial ladder levels as well as dispersed decision making. It employs the various forms of organizational structures such as divisional. Area. Product and matrix. In the divisional structure, also referred to as the product structure, the firm is divided according to their organization, depending on the resources and operational functions within it. This forms a division. It is also defined by the product produced within the particular division and it is set apart from the rest of the operations. It may also be set apart on a geohraphical basis. For instance, Zara has divided some of its divisions in Spain where much of the manufacturing is done while other countries specializing in sales form their own geographical divisions within the industry. In such divisions, there are sales, and marketing departments established to run them specifically. In the matrix structure, Zara divides and organizes its employees in to various groups based on their functions in the firm as well as the products they deal in. zara has matrix structures for designing employees, for sales and marketing employees as well as those who specialize in the manufacturing operations. These employees are put in to teams and use the idea of division of labour although within their specific area of functions. In order to best place these employees to achieve quality performance at the individual level, the organisation closely considers the employees strengths and weaknesses, talents and capabilities at an individual level. A study of these combined will enable the best employee to be placed in the area which best suits them. This has been one of the reasons why the Zara International has achieved such levels of success in their production, sales and profit margins over their competitors.

Conclusion

The Zara international retail store continues to expand globally with the establishments of new stores worldwide and production of its high quality and unique products gaining a competitive advantage over its rivals. The stakeholders’ base continues to grow as more stakeholders are attracted by the stores attractive business practices. More markets are also being discovered for their products in areas where they never existed. Very soon, the firm may grow to the point of dictating the market prices for all clothing, which may pose a threat to other firms along the same lines of operations.