According to porter model, there are five main forces to analyze the structure of competition of a given industry. Despite some limitations, this model is of High relevance to identify the main forces of the competition in a given industry. Market growth: the dynamic of the market is relatively strong and stable, especially at the time of the case. However, the current economic crisis has affected the consumption of fashion clothes. Nevertheless, the market growth slows down, but can be considered as relatively stable, meaning less exposed to economic fluctuation and speculation. Fixed costs - To compete internationally in fast fashion garment industry, the costs of entry are high. The operational costs to develop and run the business are also high. However, the structure of these costs will depend of the type of organisation and the extent of scope integration both up and down stream.
[...] Being less expensive Inform designers of fashion styles, best selling etc. Inform the HQ of market trends Inform financial department of sales level, margin profitability, stock rotation etc. This non-exhaustive list shows how much room is left to be exploited through the use of a more sophisticated IT system. However, there are also human factors to consider such as resistance to change, and capacity of adaptation to a new IT. The risk of system failure and the time of implementation have to be estimated. [...]
[...] Internally, it might develop an efficient intranet and other ICT tools for better knowledge management, and management of change, to support the group's fast growth, and then gain from the finest practice, and catch market trends even faster. The use of more sophisticated IT applications might also impact the business process for even faster and more cost efficiency production. Externally, ICT could be used for customer relation management. Gathering data about customers will help to sense market trends, customer tastes and consumption habits, and also customise offers to target groups and individuals in order to improve brand loyalty and customer satisfaction Zara's perspective of strategic alignment Zara's approach to IT is clearly business driven, meaning that IT is used to implement business strategy and support business operations. [...]
[...] Zara's competitive advantage, being an outperforming lead-time based performer on frequent orders and fast processing, IT could support it for an optimisation of information flows, orders and supply tracking, and at a better cost effectiveness, while the theoretical inventory application is reliable at only 95%. In factories, IT applications were also quite basic, planning production only on quantity and due dates. A more sophisticated application could support quality control, cost efficiency, and enhance speed of production. Then, the competitive advantage of fast, flexible, and the low cost supply chain process might be defended and improved. [...]
[...] Furthermore, market trends could be anticipated for an increase in speed to market fashion products with fewer risks to miss business opportunities and fashion trends Pos project POS impact is of high importance all over Zara's business process. Since its first use is to record sales transactions, this data collection can be processed for many operational and strategic uses: Input sales transactions, references and prices, and print bills to customers Store performance and then subsequent allocation of resources Stock management: order/supply match management and theoretical stock level optimisation. [...]
[...] New entrants: The determinant barriers for entry into the fast fashion industry are: Government: Quality control and quota on importation in the EU (gradually offset since the time of the case study) Stores: request for heavy investment to build distribution networks, and intense fights for strategic location on ‘high streets and fashion areas'. Economy of scale: since it is a global competition, it is very high, but reduced by the limited quantity of each SKU in fast fashion. Brand: Despite low loyalty, brand awareness is of high importance and hard & time consuming to build. [...]
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