1. An Introduction of Quality Management Studies // Lecture: Dr. Ir Hazmand Zusi MSc. // Trisakti Master Management 2010
Case Study :
Presented by:
Abraham Ardiles
Firmans Nur Gafy

2. ZARA is the flagship chain store of Inditex Group owned by Spanish
tycoon Amancio Ortega , who also owns brands such as Massimo
Dutti, Pull and Bear, Oysho, Uterqüe, Stradivarius and Bershka. The
group is headquartered in A Coruña, Spain, where the first ZARA
store opened in 1975.
It is claimed that ZARA needs just two weeks to develop a new
product and get it to stores, compared with a six- month industry
average, and launches around 10,000 new designs each year. ZARA
has resisted the industry-wide trend towards transferring fast fashion
production to low-cost countries. Perhaps its most unusual strategy
was its policy of zero advertising; the company preferred to invest a
percentage of revenues in opening new stores instead.
About ZARA
ZARA
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

3. About ZARA
This case focuses on the Spanish retail giant,
Inditex and how its largest retail chain ZARA
has been so successful through its simple
business model of speed, flexibility, and high
fashion. As of 2002, Inditex operated six
separate chains: ZARA, Massimo Dutti, Pull &
Bear, Bershka, Stradivarius, and Oysho.
ZARA developed a business model that
incorporated the following three goals for
Operations :
1. Develop system the requires short lead
times
2. Decrease quantities produced to
decrease inventory risk
3. Increase the number of available styles
and/or choice
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

4. AGENDA :
Competitive Advantage, Strategies
and Objectives
International Strategy :
• Market Selection
• Market Entry
• Marketing approach
Financial Position Compare to
Competitors
SWOT Analysis
Resolution to Grow the ZARA chain
in best
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

5. Amancio Ortega Gaona, the founder of Inditex,
thought that consumer would regard clothes as a
perishable commodity just like yoghurt, bread or fish
to be consume quickly, rather than stored in
cupboards, and he has gone about building a retail
business that provides “freshly baked clothes”
Competitive Advantage, Strategies & Objectives
ZARA
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

6. Competitive Advantage,
Strategies and Objectives :
Competitive Advantage :
• Cost Leadership
• Fashionable (quality) at reasonable product
• Based on Product Positioning :
“ZARA is cheaper price than Benetton and
GAP, and still being fashionable”
• Fast Production
• Ability to Design and finish goods in stores
within 4 to 5 weeks
• Very quick to get designer-influenced
products into their stores
• Product Variation
• Ability of ZARA to launch new trends, design
and variation of product.
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

7. Competitive Advantage,
Strategies and Objectives : (cont’d)
Competitive Advantage :
• Low Level of Inventory
• Efficient Distribution System
• Turnover of Product is High
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

8. Competitive Advantage,
Strategies and Objectives : (cont’d)
Objectives :
• Maximize Profit
• Maintain and ability to go further fashionable
(quality) at reasonable price
 ZARA positioning
Transform
Before Objective/Expectation
+ Price + Price
+ +
- ZARA fashion - Fashion
ZARA
- - (New)
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

9. Competitive Advantage,
Strategies and Objectives : (cont’d)
Strategy :
ZARA are placed on board market scope. ZARA provided cost
leadership and differentiation strategy combined it to win the
competition. ZARA compete at reasonable price by build cost
leadership startegy, so even they set at reasonable price they still
could gaining reasonable margin and develop differentiation
strategy, in this case ability ZARA to design and finishes product
within 4 to 5 weeks (unique competences).
Narrow Segmentation
Market Strategy
Scope
Broad
Differentiation Cost
Market
Strategy Leadership
Scope
Uniqueness Low Cost
Competency Competency
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

10. Competitive Advantage,
Strategies and Objectives : (cont’d)
Objective :
Continues & posibly to go further with time cycle of generate
design, finishes product & distribute it.
Creative Departments;
Three areas,
Delivery; garment s Samples; prototypes
200+ staff
Arrive in store within Made in-house and
48 hours of ordering By suppliers
Design, Product
And market Cycle;
Shipping; from Mattress; material for
Logistics centres to Final design : 1 day Garments laid out in
stores, road & air Manufacture : 3-8 days layers and marked
Transport : 1 day
Selling : 17-20 days
Total : 22-30 days
Finishing; garments Cutting; a machine
Are pressed, dressed Cuts the fabric according
and quality checked Sewing; cut fabric is To the patterns
Shipped to workshops
to be stitched
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

11. Competitive Advantage,
Strategies and Objectives : (cont’d)
Strategy :
Value Chain Framework
MIS
Production Objectives Marketing
Design
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

12. Competitive Advantage,
Strategies and Objectives : (cont’d)
Strategies :
• Production & distribution :
• Maintain quality
• Cost Leadership
• High Bargaining Power to Supplier
• Distribution System  Fast Distribution
• Marketing :
• Market Penetration
•R&D
• Market, Location of Stores, Consumers
Behavior Analysis
• MIS (Management Information system) :
• Order Information Flow  Stores Ordering System
• Improving Inventory System
• Product Distribution System
• Design :
• Coordinate with R & D and also with stores itself to get new
trends
• Ability to Produce New Design & Trend
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

13. Competitive Advantage,
Strategies and Objectives : (cont’d)
Value Chain :
MIS
Production : Store Store
MIS Factory & distributor
Store Store
Inventory
Store
Check the
Material availability
then deciding
How much this Close watch
product will be On trend and
Produce Buying Behaviors
Commercial Team
Marketing :
Design Market Research MIS
& designer
and Analysis
MIS
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

14. ZARA was described by Louis Vuitton fashion director Daniel
Piette as "possibly the most innovative and devastating
retailer in the world." ZARA has also been described as a
"Spanish success story" by CNN
International Strategy
ZARA
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

15. International Strategy :
ZARA International Strategy :
• Good In International Strategy
• Combined of Strategy :
• Cost Leadership is usualy capture in mass
production (mass product, less
differentiation)  Standardization
• Differentiation Strategy is ussualy capture
to produce goods that has more value
added  fashionable, fast delivery 
customization
• Good Consideration in market sellection ,
marketing, and market entry
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

16. International Strategy : (Cont’d)
ZARA International Strategy :
Market Sellection
International Marketing
Market Entry
Strategy Approach
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

17. International Strategy : (Cont’d)
Market Sellection:
• Consideration
• Labor cost and productivity, distribution cost
and shipment cost of raw materials (suppliers)
Labor Cost Value added
EU Countries
German 18 23
Spain 7 11
Italy 14 20
Portugal 4 6
UK 11 13
Major Suppliers
Turkey 2 12
China 0,4 na
India 0,4 2
Egypt 0,7 2
Others Major Market
US 10 20
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

18. International Strategy : (Cont’d)
Market Sellection:
• Consideration
• Characteristic or behavior of Consumers
Country Character of Consumers
French More Fashionable (Quality Oriented)
German Price Sensitive
Italian More Fashionable
USA Less Trend
Japan More Trendy
British Stores Based on Social Affinity
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

19. International Strategy : (Cont’d)
Market Entry:
Economics Factor
Market Entry
Market Entry Government
Consideration
Barriers Factors
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

20. International Strategy : (Cont’d)
Market Entry:
• Consideration
• Economics
• Macroeconomics Factor :
• tax, political condition, export tariff
• Microeconomics Factor :
• Local Competitors
• Demand
• Location of Store
• Government
• Regulation from Government
• Barriers
• Local producers protection issues
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

21. International Strategy : (Cont’d)
Marketing Approach:
• Consideration
• 4 P consideration  Product, Price, Promotion
and Placement. Each Country has different
marketing approach.
• Product  local preferences, design, trends
• Price  different pricing strategy for each
country. For example: Italy and Paris has no
problem for price but quality-oriented, but
German has sensitive price.
• Promotion  different promotion strategy
for each country
• Placement  efficient distribution, location
of stores
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

22. Financial Position
Compare to Competitors
ZARA
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

23. Financial Position
Compare to Competitors:
At the end of 2001, ZARA operated 507 stores around the
world (40% of Inditex), posted EBIT of 441M Euros (85% of
Inditex), and sales of 2,477M Euros (76% of Inditex).
Currently, H&M is Inditex’s major competitor. The ratio
analysis below shows H&M and Inditex’s competitive
standing in the industry.
GAP H&M Benetton Inditex
Net Margin -0.06% 9.60% 7.05% 10.46%
Asset Turnover 1.82 1.96 0.74 1.25
ROA -0.11% 18.78% 5.25% 13.05%
ROE -0.27% 24.85% 11.93% 22.88%
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

24. SWOT Analysis
ZARA
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

25. SWOT analysis:
Internal Factor Analysis :
Weight
Strength Weight Rating
Score
Cost Leadership (Standardization) 0,2 4 0,8
Different Strategy (Customization,
0,2 4 0,8
unique competences)
Efficient Distribution 0,1 3 0,3
Information tech. 0,1 2 2
Fast Delivery of New Products,
0,3 4 1,2
Design & Trends
Weaknesses
Centralized Distribution System 0,1 3 0,3
TOTAL 1 5,4
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

26. SWOT analysis:
External Factor Analysis :
Weight
Opportunities Weight Rating
Score
Global market penetration 0,2 4 0,8
Online market 0,1 2 0,2
Distribution center in the US 0,05 2 0,1
Threats
Local Competitors 0,1 3 0,3
Global Competitors 0,3 4 1,2
Product Cannibalism 0,05 1 0,05
Lack of Vertical Integration 0,1 3 0,3
TOTAL 1 3,35
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

27. Resolution to grow the ZARA
chain in best
ZARA
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

28. Resolution to grow the ZARA
chain in best :
• Change the system
• Centralized  Transform  Decentralized
• Build decentralized distribution & Production
in each region (Asia, Europe & America, more
is better) to highly penetrate new market &
trend to decrease the complexity of process
• Moreover, would tend to fastest in producing
new product (design, production & distribute)
• Keep maintain the value chain, nothing to
change but it should be expanded in each
district/region
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

29. Resolution to grow the ZARA
chain in best :
Value Chain in each Region :
MIS
Production : Store Store
MIS Factory & distributor
Store Store
Inventory
Store
Check the
Material availability
then deciding
How much this Close watch
product will be On trend and
Produce Buying Behaviors
Commercial Team
Marketing :
Design Market Research MIS
& designer
and Analysis
MIS
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010

30. Terima kasih
Thank You
Vielen Dank ありがとう
Gracias 감사합니다
ZARA
An Introduction of Quality Management Studies – Case Study : ZARA // Lecture : Dr. Ir. Hazmand Zusi MSc. // Abraham Ardiles, Firmans Nur Gafy // Trisakti Master Management, Jakarta 2010