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Index Company Profile Unique Business Model Strategies ZARA Analysis Recommendation Company Profile ZARA is: Spanish clothing and accessories retailer Based in Arteixo, Galicia Founded in 1975 by Amancio Ortega and Rosalia Mera The most profitable brand of the Inditex group. Video http://youtu.be/qhCM0F81vEg Objectives Develop system the requires short lead times Decrease quantities produced to decrease inventory risk Increase the number of available styles and/or choice Unique Business Model Business Model (cont`d) Design: Creative Teams Different sources of ideas (store managers, TV, internet, fashion on street & fashion show, trend spotter) Business Model (cont`d) Sourcing & Manufacturing Assistance of purchasing offices in Barcelona & Hong Kong More than 200 external suppliers In-house production (40 % of clothes produces internally, 60 % externally) Business Model (cont`d) Distribution Central distribution center in Arteixo Satellite center in Argentina, Brazil and Mexico Center works on dual-shift basis Equipped with mobile tracking system Delivery on Europe takes 24 hours and outside Europe takes 48 hours Scheduled shipments by time-zone Business Model (cont`d) Retailing consists of merchandising and store operations Stores places in premium streets and city centers Set fabulous window-display store Main retailing tactic: create scarcity Very low advertisements Aims: reduce inventory and marked-down prices Competitive Advantage Fast production Ability to design and finish goods in store within 4 to 5 weeks Very quick to get designer-influenced products into their stores Strategies Design Technology System Order information flow to store ordering system Improving inventory system Product distribution system HRM & MIS Training Designer Training Store Manager Training Buyer Connection with distribution system and IT system Design Coordinate with R&D and also with stores itself to catch new trends Ability to produce fast fashion Marketing Market Penetration: Own subsidiaries Joint Ventures Franchising Strategic location of stores, Tracking consumers preferences analysis Low cost of advertisements (0-0.3%) Pricing Strategy Market based prices Analysis of market Customer sensitivity to prices Vertical Integration Supply Chain Central distribution system in La Coruna, Spain In-house production Short lead-times Forward vertical integration Reduces bullwhip effect Backward vertical integration Reduces costs & Improves quality Production & Distribution Centralized distribution Maintain quality Cost leadership High Bargaining power to supplier Distribution system to fast distribution ZARA Analysis Porter Analysis of ZARA SWOT Analysis Recommendation Change the system: Centralized Transform Decentralized Build decentralized distribution & production in each region Tend to fastest in producing new product (design production& distribute Keep maintain the value chain Decentralized Model Value chain Reference Carmen, L. and Ying, F. (2009) Internationalisation of the Spanish fashion brand Zara 13(2), pp.279-296. Marilyn , H. and Judy, N. (2010) “Exploring SWOT analysis – where are we now?: A review of academic research from the last decade.” Journal of Strategy and Management, 3 (3 ),pp.215-251. Saurabh Jindal (2012). Zara Strategy Analysis SWOT 5 Forces. [ONLINE] Available at: https://www.elance.com/samples/zara-strategy-analysis-swot-forces-strategy-development-consulting-research/46474856/. [Last Accessed 9 March 2013]. Reference Images of Zara (online) Source: http://kameraphoto.photoshelter.com/image/I00000rA0aj9PNDk Company profile of Zara (online) Source: http://inditex.com/en/press/information/press_kit# Alan, B. and Philip, J. (2001) “Does Training Generally Work? The Returns to In-Company Training.” Industrial and Labor Relations Review, 54(3), pp. 647-662
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