Podcast
Questions and Answers
What is one of the competitive advantages of McDonald's?
What is one of the competitive advantages of McDonald's?
- Standardization (correct)
- High pricing strategy
- Limited service hours
- Exclusivity of menu items
Zara frequently restocks items that have sold out to meet customer demand.
Zara frequently restocks items that have sold out to meet customer demand.
False (B)
How often do Zara customers visit stores on average per year?
How often do Zara customers visit stores on average per year?
17 times
Zara's business model creates variation in __________.
Zara's business model creates variation in __________.
Match Zara's strategy with its corresponding feature:
Match Zara's strategy with its corresponding feature:
Flashcards
Zara's Inventory Management
Zara's Inventory Management
Zara's inventory management system focuses on fast response to customer demand, aiming for quick replenishment and avoidance of excess stock.
Zara's Supply Chain
Zara's Supply Chain
Zara uses a supply chain that enables quick response to fashion trends. It integrates technology to facilitate communication with suppliers and store managers.
Zara's Frequent Customer Visits
Zara's Frequent Customer Visits
Zara customers visit stores on average 17 times per year, compared to industry averages of 4 visits.
McDonald's Standardization
McDonald's Standardization
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McDonald's Technology Integration
McDonald's Technology Integration
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Study Notes
Zara Overview
- Spanish fast fashion brand with over 2000 global stores
- Products move from concept to store shelves in 4 weeks (faster than industry average)
Strategic Operations
- Product Differentiation: High product turnover (twice per week) to keep up with trends and attract repeat customers
- Vertically Integrated Supply Chain: Owns their supply chain for quick responses to trends, reducing reliance on external partners
Scale of Production
- Produces goods in multiple countries, but sells globally
- Localized Manufacturing: Reduces transportation costs and improves flexibility
Technology
- Advanced IT systems track customer data for quick design and product adjustments
- Uses CAD, CAM, and robotics to enhance efficiency, lower costs and speed up production
Inventory Management
- Uses a Just-In-Time (JIT) system to match designs with available stock, reducing delays and waste
- Limits inventory to encourage immediate purchases
Sustainability Goals
- Aims to reduce carbon emissions by 50% and water use by 25%
- Uses sustainable raw materials (organic and recycled fabrics)
- Powers factories with renewable energy
- Launched a pre-owned Zara program for repairs, resale, and donations
Key Strengths (Zara)
- Design Speed: 15 days from concept to store, adapting designs during the season using sales data
- Delivery Speed: Global deliveries within 48 hours; twice-weekly restocking
- Customer Engagement: Encourages urgency through limited stock, resulting in 17 visits per customer annually (compared to 4 for competitors)
Outsourcing (Zara)
- Manufactures 60-80% of products in-house to prioritize speed and flexibility
- Outsources only long-lead items like socks and basic shirts
Supply Chain Management (Zara)
- Uses sustainable materials (organic cotton) in collaboration with organizations like OCA
- Limits outsourcing to maintain speed and flexibility
Challenges and Trade-offs (Zara)
- Higher production costs compared to competitors
- Requires sophisticated supply chain and operations management
- Doesn't bring back items to stores
Zara Customer Behaviour
- Customers visit stores an average of 17 times per year, compared to the industry average of 4.
- Store managers place orders twice per week, receiving items 2-3 days later.
- Zara's business model creates variation in demand.
Zara and Technology
- Zara leverages technology for both product manufacturing and supply chain communication.
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