Zara: IT for Fast Fashion, Spanish Version SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zara: IT for Fast Fashion, Spanish Version
In 2003, Zara's CIO must decide whether to upgrade the retailer's IT infrastructure and capabilities. At the time of the case, the company relies on an out-of-date operating system for its store terminals and has no full-time network in place across stores. Despite these limitations, however, Zara's parent company, Inditex, has built an extraordinarily well-performing value chain that is by far the most responsive in the industry. The case describes this value chain, concentrating on its operations and IT infrastructure.
Authors :: Andrew McAfee, Anders Sjoman, Vincent Dessain
Swot Analysis of "Zara: IT for Fast Fashion, Spanish Version" written by Andrew McAfee, Anders Sjoman, Vincent Dessain includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zara's Extraordinarily facing as an external strategic factors. Some of the topics covered in Zara: IT for Fast Fashion, Spanish Version case study are - Strategic Management Strategies, Manufacturing, Mergers & acquisitions, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Zara: IT for Fast Fashion, Spanish Version casestudy better are - – increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, etc
Introduction to SWOT Analysis of Zara: IT for Fast Fashion, Spanish Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zara: IT for Fast Fashion, Spanish Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zara's Extraordinarily, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zara's Extraordinarily operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Zara: IT for Fast Fashion, Spanish Version can be done for the following purposes –
1. Strategic planning using facts provided in Zara: IT for Fast Fashion, Spanish Version case study
2. Improving business portfolio management of Zara's Extraordinarily
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Zara's Extraordinarily
Strengths Zara: IT for Fast Fashion, Spanish Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zara's Extraordinarily in Zara: IT for Fast Fashion, Spanish Version Harvard Business Review case study are -
Successful track record of launching new products
– Zara's Extraordinarily has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Zara's Extraordinarily has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Zara's Extraordinarily is one of the most innovative firm in sector. Manager in Zara: IT for Fast Fashion, Spanish Version Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Zara's Extraordinarily is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Zara's Extraordinarily is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Zara: IT for Fast Fashion, Spanish Version Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Zara's Extraordinarily is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Zara's Extraordinarily has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Zara: IT for Fast Fashion, Spanish Version HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Zara's Extraordinarily is present in almost all the verticals within the industry. This has provided firm in Zara: IT for Fast Fashion, Spanish Version case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Zara's Extraordinarily digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Zara's Extraordinarily has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Training and development
– Zara's Extraordinarily has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Zara: IT for Fast Fashion, Spanish Version Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the Zara: IT for Fast Fashion, Spanish Version Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Zara's Extraordinarily has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Zara: IT for Fast Fashion, Spanish Version - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Zara's Extraordinarily has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zara's Extraordinarily to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Zara's Extraordinarily has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses Zara: IT for Fast Fashion, Spanish Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zara: IT for Fast Fashion, Spanish Version are -
Capital Spending Reduction
– Even during the low interest decade, Zara's Extraordinarily has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As Zara: IT for Fast Fashion, Spanish Version HBR case study mentions - Zara's Extraordinarily takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Zara's Extraordinarily is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Zara's Extraordinarily needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Zara's Extraordinarily to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Zara: IT for Fast Fashion, Spanish Version that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Zara: IT for Fast Fashion, Spanish Version can leverage the sales team experience to cultivate customer relationships as Zara's Extraordinarily is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Zara's Extraordinarily has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Zara: IT for Fast Fashion, Spanish Version, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Need for greater diversity
– Zara's Extraordinarily has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of Zara's Extraordinarily products
– To increase the profitability and margins on the products, Zara's Extraordinarily needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Zara's Extraordinarily needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Zara: IT for Fast Fashion, Spanish Version, it seems that the employees of Zara's Extraordinarily don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zara: IT for Fast Fashion, Spanish Version, is just above the industry average. Zara's Extraordinarily needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Zara: IT for Fast Fashion, Spanish Version | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Zara: IT for Fast Fashion, Spanish Version are -
Better consumer reach
– The expansion of the 5G network will help Zara's Extraordinarily to increase its market reach. Zara's Extraordinarily will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Zara's Extraordinarily can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Zara: IT for Fast Fashion, Spanish Version, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Zara's Extraordinarily can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Zara's Extraordinarily can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Using analytics as competitive advantage
– Zara's Extraordinarily has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Zara: IT for Fast Fashion, Spanish Version - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Zara's Extraordinarily to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Zara's Extraordinarily can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zara's Extraordinarily in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Zara's Extraordinarily to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Zara's Extraordinarily to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Zara's Extraordinarily can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Zara's Extraordinarily can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Zara's Extraordinarily to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Zara's Extraordinarily in the consumer business. Now Zara's Extraordinarily can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Zara's Extraordinarily is facing challenges because of the dominance of functional experts in the organization. Zara: IT for Fast Fashion, Spanish Version case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Zara's Extraordinarily has opened avenues for new revenue streams for the organization in the industry. This can help Zara's Extraordinarily to build a more holistic ecosystem as suggested in the Zara: IT for Fast Fashion, Spanish Version case study. Zara's Extraordinarily can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Zara: IT for Fast Fashion, Spanish Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zara: IT for Fast Fashion, Spanish Version are -
High dependence on third party suppliers
– Zara's Extraordinarily high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Zara's Extraordinarily will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Zara's Extraordinarily demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Zara's Extraordinarily in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Zara's Extraordinarily with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Zara's Extraordinarily has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Zara's Extraordinarily needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Zara's Extraordinarily business can come under increasing regulations regarding data privacy, data security, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Zara's Extraordinarily in the Technology & Operations sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Zara: IT for Fast Fashion, Spanish Version, Zara's Extraordinarily may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Zara's Extraordinarily can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Zara's Extraordinarily needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Zara's Extraordinarily can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Zara's Extraordinarily needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Zara: IT for Fast Fashion, Spanish Version Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Zara: IT for Fast Fashion, Spanish Version needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Zara: IT for Fast Fashion, Spanish Version is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Zara: IT for Fast Fashion, Spanish Version is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Zara: IT for Fast Fashion, Spanish Version is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Zara's Extraordinarily needs to make to build a sustainable competitive advantage.
