Growth Case: Inditex and Zara

free essayExpansion and growth are signs of improved performance for organizations. The manner in which a corporation manages its growth amid numerous challenges creates perception in the eyes of customers, which influences their relationship with the firm. Zara and Inditex have been an epitome of excellence performance, especially due to their aggressive growth strategy amid an economic downturn. The corporation has increased the number of stores across the world at a time when its competitors are closing down because of reduced business. Its performance has been supported by innovative ideas, which have enabled it to differentiate from its competitors.

There are a variety of ways, through which Inditex has ensured the speed of ‘fast fashion’. One of the means, through which operations at Inditex are fast, is the new system that empowers managers to order products and display them fast. Although the retailer sells tangible products, the business is affected by the quality of service to the customers. When clients arrive at any of Inditex’s stores, they expect swift service. That is why the company has instituted systems to request and display orders faster than competitors. Secondly, the business has increased the routes, through which it ships its cargo. Having several routes reduces the risk of delays in case one route has a problem. The aspect of speed is evident through the frequency of restocking. The company ensures that new collections are stocked in its stores twice per week. When customers realize that the products are frequently changed, they also increase their visits to the stores to sample new arrivals. Another practice that promotes speed at Inditex is the flow of products from factories directly to stores. When items are transferred to stores from factories, a lot of time is saved. Inditex reduces the time and labor that would be required to pack and unpack products at warehouses. Compared to other competitors that must warehouse products before delivering them to stores, Inditex is fast and likely to attract more customers than rivals. Finally, the retailer has planned its operations such that the production unit is close to the distribution centers and warehouses. As a result, the transfer of products is fast, which enables the company to meet customer demands and maintain its reputation for speedy service to customers.

The essential attributes of ‘fast fashion’ are different from the customers’ and managers’ perspectives. A customer’s view is based on the satisfaction the customer gets from shopping at a store. On the other hand, a manager’s perspective is based on the manager’s ability to deliver high-quality products and services to the clients swiftly. The first feature that a customer perceives to represent ‘fast fashion’ is the ever-changing collection of products. The high frequency of changes in terms of collections is beneficial to the client because it provides exciting offers each time the customer visits a store. A customer is assured of a new product each time he or she decides to enter a store. The changes represent progress in fashion, which promises the customers that the store will always present the latest fashion. Consequently, customers are likely to increase the number of visits to the stores to get a glimpse of new arrivals. One of the essential attributes of ‘fast fashion’, according to the managers, is access to the real-time data for decision-making. The dynamics of ‘fast fashion’ requires a manager to implement changes based on the market trends. As such, data from the market must be available to guide decision-making. At Inditex, managers use hand-held computers to track the sales’ trend and determine the high-selling products to schedule their orders. The second characteristic of ‘fast fashion’ from managers’ point of view is the streamlined flow of goods from the factory to the stores to meet customer demand.

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A retailer’s introduction of online stores country by country is influenced by a number of factors. First, each country represents a different market because conditions in it differ significantly from those in other countries. Therefore, the perception of customers towards online shopping may limit or encourage its usage. There are countries with less developed technologies that would promote online shopping. A retailer is likely to delay the introduction of online retailing in such a country until there is technological infrastructure to promote online shopping. Additionally, other countries may not meet safety and privacy standards to promote shoppers’ confidence. As such, a retailer may schedule the introduction of online retailing in that country last. Although Inditex is known for technological incorporation in its business model, it was slow to introduce online sales. One of the reasons for its late consideration was the complexity of its operations. The retailer makes numerous real-time changes to its operations, which include introduction of new products. As such, adding online sales would have increased the complexity, which could have disrupted business. Additionally, its collections changed frequently, which would have made it tedious to manage all the changes.

For Inditex to continue its expansion and growth, there are several growth opportunities that it can pursue. The first one involves broadening its product offerings to capitalize on its economies of scale. If the company increases the number of products in its mix, it can maximize the usage of its production lines. Such products would utilize the same systems as those used by its core products. The second opportunity is to shift production facilities to Asia. Most of the chances for growth are in Asia. As such, production facilities should be located near the large market. However, the change is expensive and likely to cost the company millions of dollars. The third chance is to partner with an existing production firm in Asia to cater for its expanded operations in the continent. The move would reduce the cost of re-locating the production operations. The drawback with the option is that the collaboration may lead to the loss of control over operations by Inditex. The fourth opportunity is to diversify other products, which would spread their risks. The final opportunity is to restructure the supply chain to accommodate all the changes caused by the increased number of stores.

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The advantage of broadening the product offerings is that the avenues of profits will increase with the number of products added. Secondly, the company will utilize its production lines fully to ensure efficiency. The disadvantage of this opportunity is that the broad offering leads the company to lose its exclusivity. Customers may no longer feel special after buying the company’s product.

In conclusion, Inditex does several things to ensure that ‘fast fashion’ is really fast. These include creating systems for managers to display and order merchandise fast adding cargo routes, stocking stores twice a week, and shipping clothes from factories to stores directly. An important attribute, according to customers, includes changing collections. Attributes, according to managers, include real-time data and hand-held gadgets showing the sales volumes. Launching online sales on a country-to-country basis depends on the nature of the market. The complexity of operations, safety and private issues influence a company to launch online sales on a country-to-country basis. The opportunities for Inditex include broadening of product offerings, shift of production to Asia, partnering with Asian manufacturers, diversifying and restructuring of supply chain. Broadening the product base increases revenue avenues and maximizes production lines. The disadvantage of broadening the product mix is loss of exclusivity.