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Reference no. 615-059-1
Prize winner
Kasra Ferdows (Georgetown University); Jose A.D. Machuca (Universidad de Sevilla); Michael Lewis (University of Bath)
Published in:
18 pages
Data source:
Field research
This is an updated version of the prize-winning and 15th in the ranking of top 40 overall best selling Zara case by the same authors. The parent firm, Inditex, has continued its remarkable growth since then: profits rose from 340 million euro in 2001 to 2.5 billion euro in 2014. The number of stores increased from 1284 in 39 countries to 6683 in 88 countries. This translated into an average rate of more than one new Inditex store opening every working day during the last decade. During the last decade, despite its increased size and the global reach of its operations, Zara (accounting for over two-thirds of Inditex's sales) had defied, repeatedly, the predictions of those who had suggested that it had reached the limit of its business model. In 2014 Zara remained a benchmark for speed, agility and flexibility, delivering fast accurate fashion to its 1923 stores (located in 88 countries worldwide) in just fifteen days after design. How could it continue its remarkable global growth unabated, even during the post 2008 economic crisis? The new case, like the previous one, is based on extensive interviews with company managers and employees. It presents a detailed and updated description of Zara's unique operating model and many of its best practices: its retailing, design, order administration, production, and distribution systems. It also includes new sections about Zara's on-line business and Inditex' increased attention to ethical and sustainability issues in its extended supply chain. The case can be used in undergraduate, MBA and executive levels on core or elective courses, such as: Production and Operations Management, Supply Chain Management, International operations, operations strategy, global logistics, product development, innovation and marketing. The teaching note supplement includes appendices as a power point presentation and several photographs from Zara's operations. This case has been featured on our website, click to view the article.
Learning objectives:
1. To illustrate 'world-class' supply chain management as well as to discuss important issues in the design and operations of global supply networks. 2. To illustrate the competitive impact of a strategic approach to the management of integrated (global) value chains, as well as to suggest specific lessons for achieving this goal. 3. To identify the key practices of Zara's supply chain management as well as its unorthodox strategy for creating a successful fast-response supply, production, and retail network. 4. To illustrate the advantages of a holistic approach to supply chain management, which optimizes the entire chain instead of focusing on individual parts, and how this allows Zara to cope with the challenges of being a global retailer. 5. To illustrate how, in spite of defying the current conventional wisdom about how supply chains should be run, Zara has not been overtaken by either more established rivals.
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