Major Resources and Capabilities
All the organizations have some resources and capabilities that separate them from rest of the competitors. Some of the core resources and capabilities of Zara that create distinctive competencies are discussed below.
One of the core capabilities of Zara that is a distinctive competency of the company is that it follows a customer centric approach. The company focuses on its customers and provides them with the designs that are specifically for their body shape. The company is concerned about the body shape of the customers that allows them to make such products that fit the customers best. It not only focuses on the body shape but also on the skin color of the customers that helps the company to satisfy the demand of the customers.
The products of the company are also the distinctive competency of the company because of their unique features. As the brand Zara focuses on customer loyalty, they make the products that are according to the needs of the customers. Zara aims towards product symbolism that helps them in maintaining a brand image for the company. The promotional strategies adopted by Zara also provide it with distinctive competency. The company has the capability to promote its products in a way that is not yet followed by any of its competitors. The company uses above the line print advertising to reach to its customers. It also uses the Internet to provide information to the customers about the new products or the events of the company (Ghemawat and Nueno).
The investments of Zara have helped them in attaining a brand image in the international market. The company has heavily spent on manufacturing logistics and IT. It has helped the company to develop just-in-time manufacturing system. Most of its competitors avoid the investment in these two areas in the international market but only because of such investments, and the company has been able to increase its share in the international market. Zara was the only brand of the Inditex chain to establish this business system. The most distinctive feature of the business system was that it allowed the company to manufacture sensitive fashion products .
Zara also adopted a policy to track the preference of their customers and order placement of internal and external suppliers. The policy of such tracking helped the company in manufacturing 11,000 distinct items. It also allowed the company to produce in small batches with vertical integration. The policy to adopt vertical integration was also helpful as it assisted them in reducing the bullwhip effect. The policy increased the manufacturing process of the company as the company was able to develop new designs and have finished goods in the market in a span of four to five weeks. It indicates that the sales of the company are increasing because the company is able to bring new items to the market more frequently than its competitors. It is a distinctive feature of the company as it has increased the cycle of designing and manufacturing. Whereas in the traditional industry models, the cycle of designing takes around six months, and that of manufacturing takes three months. The short cycle time is also beneficial because it reduces the intensity of the working capital and allows them to manufacture new items continuously. The strategy of retailing of Zara can also be considered as its distinctive competency because it has a unique objective. The company aims to provide designer products at relatively low prices and in stylish stores in prime locations. The company adopted this strategy was to attract large groups of fashion conscious customers towards them. Apart from this plan, the company maintained a very limited stock of good and the inventories were strictly controlled. Even if the demand of the customers were unsatisfied, the company would focus on its strategy of producing new designs .
CAGE Analysis
The CAGE analysis of Zara provides information related to its best growth in the international market (Ghemawat, Distance Still Matters). For this analysis, instead of a single country the Asian market is targeted for further growth of the company’s business. The reason is that the Asian markets are showing better growth prospects. However, some countries with poor economic and social conditions must not be included in the company’s plan.
Works Cited
Cavusgil, S. T., G. Knight and J. R. Riesenberger. International Business: Strategy, Management, and the New Realities. New Delhi: Pearson Education India, 2009. Print.
Ghemawat, Pankaj and Jose Luis Nueno. ZARA: Fast Fashion. Boston: Harvard Business School, 2006. Print.
Ghemawat, Pankaj. "Distance Still Matters. The Hard Reality of Global Expansion." Harvard Business Review 79.8 (2001): 137-147. Print.
