diagram for business model

 just wanted a diagram in a file for zara’s business model to be attached as an appendix i am attaching the files to be read. By reading the files, you will get a fair idea about the business model of the company. Just wanted a diagram of zara’s business model in so i could enclose it in appendix.  

thats about it.

      

Zara Case

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Zara Case
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Zara is a successful multinational firm that retails and manufactures apparel. The company is a success due to its linking of the retailing process to the manufacturing process so as to reduce the situation in the apparel industry whereby it is difficult to forecast customers demand. The firm responds quickly to the target customers’ demand, most of whom are young and fashion-conscious city dwellers. The firm responds quickly due to the fact that the customers’ tastes are hard to predict and change very fast. By so doing the company outsmarts its competitors in the industry such as Gap. Zara, through its innovation creates and captures a new market thereby displacing new technology.

Zara spends heavily on its stores rather than on advertising unlike its competitor Gap. The store layouts are usually changed every four to five years, altering the artworks, the windows displays and sales racks. In so doing the customers are attracted by the stores which are strategically placed, along busy streets. Gap on the other hand invests heavily in marketing, as it believes that marketing attracts and convinces the customer to buy its apparels. Zara has a 1,500 square-meter pilot store that is used to test store layouts before being rolled out to the world. The firm operates 1, 558 stores in 45 countries, 550 of which are part of Zara chain. In the fiscal year 2002, Inditex which is the companies head made a net income of $502 million U.S. dollars in revenues. It maintained its profitability in a continuous trend.

Operations

In its operations, Zara quickly and accurately responds to the ever shifting demands through its ordering, fulfillment and manufacturing cyclical processes. Every major section of the firm’s store place orders twice a week to for the group of “commercials” at La Coruna. Through talking to the salespeople the hand held computers, the managers learn about newly available garments. The clothes are then shipped to the stores so as to satisfy the orders. That thus matches up the supply of finished clothes from the factories with the demands from the stores. Deliveries show up at the stores after a period of one or two days after the order is placed. Zara has no storage room where excess inventory may be kept.

Zara introduces new design collections at the start of the fall and spring buying periods and besides that it introduces new items throughout the year. The constant introductions of new items throughout the year are enabled by the company’s vertically integrated manufacturing operation. The company has no chief information officer and no formal processes for setting the IT budget, which therefore makes the firm consistent with its preference for speed. The systems that supported ordering, fulfillment and manufacturing were largely developed internally.

The applications used in Zara to plan production are simple ones. The applications simply present the factory managers with quantities and due dates for all the production requests. The only complicated machines are the ones that are used to cut clothes into patterns. The company’s distribution centers rely on automated conveyor belts which facilitate the ongoing task of receiving bulk quantities of each garment from factories rather than recombining the garment into shipment for each store.

The stores of the firm uses technology such as the personal digital assistants to reduce the much time wasted to transfer order forms from store to store around the world. The technology is also used in tasks such s handling garment returns to distribution centers and transmitting the information from headquarters to all the firm’s stores. Zara constantly upgrades its technology so as to remain technologically valid in terms of efficiency and effectiveness.

The core competencies that Zara has built up to allow them to effectively execute the behavior drivers are:

· Forty-six percent of the groups sales were inside Spain in 2003

· 60% of the sales was to women

· 20% of the sales was to men

· 20% of the sales was to children

· In 2002, inditex posted a net income of $502 million on revenues of $4, 544.

In its operations, as the company’s goal is, it quickly and accurately responds to shifting consumer demands through its three cyclical process of order fulfillment, design and manufacturing. Ordering process is the most regular, precisely defined and standardized around the world.

A business model is the plan implemented by a company in order to make more profits than its competitors in a highly competitive industry. The model includes the company’s components and functions of the business, and the revenue it generates.

Distinctive competencies of disruptive companies.

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Ability to create a timely and accurate “one-number plan” that drives all the business functions and enables planning initial assortment at the store level.

· To develop a synchronized supply chain with the ability to, react to trends and real-time market opportunities.

· To identify the recent fashion trends at the store level in real-time to determine how best to maximize sell-through

The competitive advantage of the disruptive companies is that they are able to meet the clients’ needs when the time is right. They are flexible and can manipulate technology to suite the market trend.

Gap spends more on advertising since advertising is believed to convince the customer into buying a product. Gap believes that by advertising the sales will increase and so will the revenue and profits. The primary objective of the advertising is to convince its customers to buy more products which are lying in their “backrooms” and thereby increasing sales.

Gap introduces a new line of clothing twice in a fiscal year. That is done during the fall and spring buying periods. Gap manufactures at the preseason level, before the early season wets in.

The primary sources of risk for Gap with the approach to the apparel manufacturing and retailing business

Agile vertical retailers, mass merchants and retail private label brands are the primary source of risk that the apparel manufacturers face. This erodes the prices and profit margins and demands more flexibility.

Gap makes money by using the product life cycle. At first forecasting of the product demand is done, followed by identifying demand trend versus forecast. After that is done, the right price strategy to maximize revenue is identified. Additional shipments for the fast moving replenishes able items are done and then finally transfer the products not yet sold to another store.

Gaps core competencies are:

· To create a timely and accurate “one-number plan” that drives all the business functions and enables planning initial assortment at the store level.

· To develop a synchronized supply chain with the ability to, react to trends and real-time market opportunities.
· To identify the recent fashion trends at the store level in real-time to determine how best to maximize sell-through

The competitive advantages are:

· The company brand is known to many and enjoys a large market share

· It enjoys the economies of scale that are associated with being in the company for long.

· It has financial advantage as it has many financial partners.

Zara’s target customer group is the young, fashion-conscious urban dwellers. The customers are fashion conscious and their taste change quickly.

Zara in response to that the rapid change of taste, developed an operation system that ensures the products get to the market when the product is hot in demand. The firm links the manufacturing unit with the retail unit and the retail unit with the supply unit.

Zara ensures that the customers’ behaviors of going with fashion are fulfilled by producing the right apparel at the right time to the customers. The customers’ taste and preference changes very fast, since they follow the fashion trend. Zara ensures that happens by linking the manufacturing department with the retail and by linking the suppliers with the retail.

In highly competitive industries such as that of apparels, disruptive model gives the company a competitive edge over the rest of the companies. In disrupting the technology of the other companies, Zara increased its profit margins and increase sales. Zara is the best example of how such disruptions increase revenues of a firm as it is the world’s leader in terms of revenue and growth rate.

References

(2013, 13). Zara’s case Quest. Retrieved from

http://www.casequest.net/Zara%20CaseQuest/process.html

(2013, 13). Responding to new challenges in the branded apparel industry. Retrieved from http://www.veritypartnersllc.com/files/phatfile/Verity%20Branded%20Apparel%20whitepaper%20final ?&MMN_position=31:31

Worksheet #1

What business is Zara in?

Worksheet#1

Answer to the question from learning Task#2

Zara is a Zara is a successful multinational firm that retails and manufactures apparel. The company is a success due to its linking of the retailing process to the manufacturing process so as to reduce the situation in the apparel industry whereby it is difficult to forecast customers demand. The firm responds quickly to the target customers’ demand, most of whom are young and fashion-conscious city dwellers. The firm responds quickly due to the fact that the customers’ tastes are hard to predict and change very fast. By so doing the company outsmarts its competitors in the industry such as Gap. Zara, through its innovation creates and captures a new market thereby displacing new technology.

Answer to the question after completing Learning Task #9

Task #9-The core competencies that Zara has built up to allow them to effectively execute the behavior drivers are: · Forty-six percent of the groups sales were inside Spain in 2003 · 60% of the sales was to women · 20% of the sales was to men · 20% of the sales was to children · In 2002, inditex posted a net income of $502 million on revenues of $4, 544. In its operations, as the company’s goal is, it quickly and accurately responds to shifting consumer demands through its three cyclical process of order fulfillment, design and manufacturing. Ordering process is the most regular, precisely defined and standardized around the world.

Work sheet #2

Learning Task #3: Disruptive Business Models

Discussion Question #1: Briefly discuss the business model and key elements of the disruptive businesses identified. 

A business model is the plan implemented by a company in order to make more profits than its competitors in a highly competitive industry. The model includes the company’s components and functions of the business, and the revenue it generates.

Discussion Question #2: Be sure to identify at least two distinctive competencies of the disruptive companies

They are:

· Ability to create a timely and accurate “one-number plan” that drives all the business functions and enables planning initial assortment at the store level.

· To develop a synchronized supply chain with the ability to, react to trends and real-time market opportunities.

· To identify the recent fashion trends at the store level in real-time to determine how best to maximize sell-through

Discussion Question #3: Discuss the key competitive advantage(s) of the disruptive companies?

The competitive advantage of the disruptive companies is that they are able to meet the clients’ needs when the time is right. They are flexible and can manipulate technology to suite the market trend.

1. There is a very good description of disruptive technology in this Wikipedia post –

http://en.wikipedia.org/wiki/Disruptive_technology

. Please don’t confuse disruptive technology with disruptive business models. 

2. Clayton Christensen of Harvard first adopted this theory.  His groundbreaking book, The Innovators Dilemma, defines the notion of disruptive business models quite succinctly.  Search Google on this topic and find a rich array of information pertaining to this topic.

3. Neusa Hirota wrote this informative article on disruptive innovation . . .

http://www.12manage.com/methods_christensen_disruptive_innovation.html

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4. Here is a Wired article on Dell as a disrupter . . .

http://www.wired.com/wired/archive/10.07/dell.html

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5. MITWorld has this video of Clayton Christensen describing disruptive innovation in a 36 minute lecture at MIT. If the flash video below does not work you can click on this link to view it from MITWorld’s web site –

http://mitworld.mit.edu/video/108

.  Well worth a watch.

Worksheet#3

What business is Zara In?

Worksheet#3

Target Customer and Trained Behaviors

Learning Task#5

Zara Customer Characteristics

Describe the core characteristics of Zara’s target customer group in the space provided. Be sure to “draw a picture” of who the primary Zara customer is and what their basic behaviors and attitudes are towards their apparel. Please note this section is not specific to Zara, only their customers. You are essentially building a profile of Zara’s target customer group.

Zara’s target customer group is the young, fashion-conscious urban dwellers. The customers are fashion conscious and their taste change quickly.

Work sheet 4

What business is Zara in?

Worksheet#4

Core Competencies & Competitive Advantages

Learning Task#8

Zara Competencies

There are essentially business results and primary business measures which are reflective of Zara’s competitive advantages and core competencies. These are financial and operational. Write them down in the space provided on Worksheet #4

Zara’s core Competencies and how Zara has built them to execute the behavior drivers.

· To create a timely and accurate “one-number plan” that drives all the business functions and enables planning initial assortment at the store level.

· To develop a synchronized supply chain with the ability to, react to trends and real-time market opportunities.

· To identify the recent fashion trends at the store level in real-time to determine how best to maximize sell-through

Learning task #10

Now that you have completed learning task’s 5-9, you should behave a good picture in your mind of how Zara’s approaches the apparel manufacturing and retailing industry. Draw a pictorial view of Zara’s business model. Make sure this view somewhat compatible with the Gap Inc’s business model from learning task#4. Please do this in power point(or an equivalent application) as you will need this for your final presentation. This model should clearly define how Zara approaches this business, the results of those efforts and how the standard industry risks are mitigated.

Name

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introduction

Companies can effectively compete within an industry through innovative models.

Zara is an example, and its competitors are such as Gap, Southwest airlines, Wal-Mart and Dell among others.

Business model and key disruptive elements

Model Innovation disrupted market

-Deliver styles while still hot -marketing to convince buyers

-Reduce marketing cost and increase- -Increase marketing cost

layout cost.

-Hasten shift to customer demand -clearing the stock

Disruptive business model

The disruptive business model reduces the performance of the competitors by introducing new technologies that disrupt the normal activities in the industry.
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most demanding use 1 2 3 4 3 4 5 6 30 1 2 3 4 2 3 4 5 low qu ality use 1 2 3 4 1 2 3 4

Ordering- orders are made on time and regulation made to ensure that the order is not late.
Fulfillment-the order is fulfilled by the La Coruna team.
Design and manufacturing- Design is made so as to meet the customers taste and ever changing desires.
Operations

The disruptive models change the way the operations are done. It introduces new operation models such as Zara’s the process of ordering, fulfillment and design.
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Approaches and organization-consistent with the preference for speed and decentralized decision making.
Application development and other IT activities were the responsibility of an Is department of approximately 50 people
Information Technology(IT)

In side the factories,, relatively simple applications were used to plan production.
Most sophisticated ones were large computer controlled equipment that cut cloth into patterns.
Factories

Automated distribution centres e.g miles of automated conveyer belts facilitated the ongoing task of receiving bulk quantities of each garment from factories then recombining the garments into shipment for each store.
Distribution centres

Personal digital assistants(PDAs) and POS systems. Allows redundancy and division of labor.
Constantly upgrades PDAs to meet technological advancement.
POS terminals remained unchanged since they are remarkably stable, effective and easy to roll out and maintain over time.
stores

Zara leads in the profit margins and growth rate due to unique business model within the industry.
conclusion