Making periodic deliveries of products to each Zara store is an example of

A. Controlling the direction by improving future plans.

B. Controlling the direction by comparing the results with the plan.

C. Controlling the direction by correcting deviation in the plan.

D. Making the plan.

E. Carrying out the plan.

The answer is E:  Carrying out the plan. The brief explanation is given below.

The management process can be broadly classified into four major functions with the first of the lot being planning. Planning deals with setting specific goals and deciding how these can be achieved.

Every organization needs to adopt management of their individual plans and strategies in order to give momentum and direction to the business, encourage the development of new ideas, and establish a competitive advantage.

Zara is a good example of how a business can plan effectively to promote itself among its target customers.

Defining planning

Planning may be defined as establishing goals and taking decisions on how these can be achieved. It is possible to define it as the ability of a business to cope with uncertainty through the formulation of a future course of action that helps achieve specific results.

Planning occurs across different levels of management with each level making use of different goalsetting types in the planning process.

In order to make these goals effective, they need to be specific, attainable, results-oriented, measurable, and with a specified target date. The planning process followed by Zara is a wonderful example of how a business can plan effectively to promote itself among its target customers.

Zara – A brief introduction

Zara is a leading global name in the clothing and accessories retail segment, having appeared regularly in the lists of top 50 global retail brands.

Zara has implemented a specific vision statement in a very thoughtful and unique way to emerge as an outstanding success story in the history of world fashion.

Their vision statement reads thus: “Zara is committed to satisfying the desires of our customers. As a result, we pledge to innovate our business to improve your experience continuously. We promise to provide new designs made from quality materials that are affordable.”

Keeping up with changing demand

As can be the reasonable expectation of a luxury fashion company, Zara’s customers are forever interested in having a rapidly altering selection range to choose from.

They show interest only towards the latest styles and trends of the season so, anything that is left from the previous season is rendered obsolete every time a new product gets introduced.

This rapidly changing nature of the fashion market was the reason behind Zara’s decision to implement a plan that would allow them to spend less time planning in the long run.

Zara, the business model

Most of the apparel retailers give design commitments six months in advance for as much as 90% of the seasonal lines they are planning to stock. With the help of this strategy, they can ensure that new products can be availed by the start of every season at low costs since companies enjoy the option of outsourcing production, if necessary.

However, as already mentioned, the fashion market is always in a state of flux and experiences high volatility. Once a retailer makes a commitment to design, they can only sit and hope with fingers crossed that their chosen design will still be in fashion and find demand with the customers after six months.

Zara has a unique approach in this regard, committing to only 50-60% of its designs in advance of six months. This allows them to respond as the demand develops and changes every season rather than having a set demand forecast made well in advance, long before the major influencing factors even come into the picture.

Zara also ensures that its initial design production is kept at low levels while also stocking every design in extremely limited amounts across its stores. Small and frequent shipments that regularly deliver new designs to its global stores is the main reason why such scarce inventory is held together.

This compels the customers to make frequent visits to the stores and make immediate purchases since everything is in short supply and could end up going out of stock at any time.

Retail managers employed with Zara also act as important sources of information about wants and preferences of the customers, making continuous changes to designs that sell poorly in favor of new options.

Such a quick response system mirrors the rapidly changing demand of the market and results in stylish and happy Zara customers.

What industry analysts have to say

For long, industry analysts held the opinion that this supply chain model of Zara would not be sustainable in the future. Many of the fashion retailers were moving their manufacturing setups to China and India, and experts felt that Zara would have to follow suit as well if they were to retain their competitive edge in the market.

The analysts, however, were also of the opinion that moving the manufacturing setups to Asia would handicap Zara in terms of rapidly refurbishing its product line, thus taking away the unique side of its business model.

Analysts also gave a caution to Zara against expanding too aggressively. They opined that moving operations further away from Spain would take things far away from the centralized distribution system and result in higher costs.

Vertical integration, which was heralded a strength for Zara, could also end up becoming a weakness if they continued expanding into far off locations in America and Asia.

Lack of economies of scale was one of the major disadvantages of having a vertical integration, and this prevented Zara from reaping the benefits of the large quantity of production that could be sold at competitive prices in the market.

Conclusion

Most retail analysts said that Zara’s main focus should be on completing its expansion plans for the European markets before stepping into the Asian region.

Any desire to expand further would also require a decentralization of the famed production process of Zara with a new center of production being established for a cluster of countries along with their respective distribution centers.

References

  1. Zara Fashion Management CaseStudy: Taken from academia.edu
  2. Zara’s Management Chain Strategy: Taken from academia.edu
  3. Analysis Report on Selecting the Right Planning Approach: Retrieved from writepass.com

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