Zara business model in comparison with others in apparel industry Assignment

Zara business model in comparison with others in apparel industry - Assignment Example A lot of companies in the industry face the challenge of being able to predict and even respond to the fast changing trends in a manner that is swift that will be able to meet the consumer demands. In this paper I will focus on Zara business model that continually changes with the changing customer demands. I will compare the model with other business models in the industry by using Gap.inc Company as the proxy company that will be responsible in representing all other firms in the industry. It will be used in making comparisons with the Zara business model. Gap inc. specializes in clothing, personal care products and accessories. This company was the former industry leader before Zara came to the limelight. Zara’s model Zara runs a fast fashion model that has come to be known as the business model innovation. Zara’s model has three basic components which include concept, capabilities and value drivers. It has the concept of maintaining design. This is achieved through its production and processes in distribution that will enable it to respond fast to shifts in demands f consumers. It emphasizes on giving consumers what they want by putting their focus on demand and not on the supply. It maintains control over its production through in-house manufacturing and also with strategy partnerships located near its headquarters. 80% of its materials are made in Europe and 50% made in the Zara controlled facilities in Spain. Herman (2008) indicates that Zara has a unique approach to marketing and advertising. This is because it spends 0.3% of its revenues on advertising and marketing. It uses the location, layout of the store and life cycles of their products as marketing tool i.e. it locates all stores in the prime retail district in order to do visibility marketing. It also does its marketing by doing a lot of investment in the layout of its stores by making them look trendy. This model encourages the customers get to the store very often and also encour ages them to buy on the spot because of the fear that if they don’t buy at that time, the product will sell out. Zara has a core philosophy that quality and creativity with fast response to market demands yields results that are profitable. In terms of the use of information and technology, Zara has a different approach as compared to other companies in the industry that are represented by Gap inc. Communication protocols are different from others because it spends 0.5%of the total revenue on information technology and 0.5% on the employees of technology. It uses human intelligence and information technology to create hybrid in information flow from the stores to the headquarters. Using of the human intelligence on information technology made it successful since it resulted to inventories that are well managed, reduced cost from merchandise that was obsolete and also a link between the demand and supply. This strategy is advantageous in terms of cost to the operations of Zara and responds fast to the changing demands. According to Badil, (2009), Zara is able to change its designs in a fast way and quickly due to the proximity it has to the stores. It has departmental stores that modify designs of other people and send them to Asian factories that are low cost. This model supports the notion of stocking little while ensuring that it updates the collections more often. Zara does restocking of new designs twice a week as compared to other competitors in the market. Consumers in the market have characteristics of quickly losing interest in a fashion that stays for a while in the market and that is why Zara is involved in observing the trends and often changing fashion.