Zara case study

Essay by mmoawadUniversity, Master's November 2014

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What is the conventional wisdom of the fashion industry with respect to design, manufacturing and advertising?


Conventional wisdom of fashion industry "suggests leveraging cheap contract manufacturing in developing countries to keep the cost of goods low while the company focuses on design and advertising."

Firms can lower prices and sell more product or maintain higher profit margins-all good for the bottom line. However, global competition among contract firms has led to race-to-the-bottom cost-cutting measures. This means that in order to have the low-cost bid, contract "firms skimp on safety, ignore environmental concerns, employ child labor, and engage in other ghastly practices."

What role does Information Technology (IT) play in enabling Zara's counter-intuitive strategy quite opposite to this conventional wisdom? Could the firm have executed its strategy without the help of IT? Why or why not?


IT plays an important role in the success of Zara. It is crucial in the processes of:

"Data Gathering", "Design" and "Manufacturing and Logistics"

Zara's store managers lead the intelligence-gathering effort that ultimately determines what ends up on each store's racks.

Armed with personal digital assistants (PDAs)-handheld computing devices meant largely for mobile use outside an office setting-to gather customer input, staff regularly chat up customers to gain feedback on what they'd like to see more of.

PDAs are also linked to the store's point-of-sale (POS) system-a transaction processing system that captures customer purchase information-showing how garments rank by sales.

Using these two systems, managers can quickly and regularly send updates that combine the hard data captured at the cash register with insights on what customers would like to see.

Zara designs follow evidence of customer demand. Data on what sells and what customers want to see goes directly to "The Cube" outside La Coruña, where...