Background of Zara
Zara is one of the largest international fashion companies. It belongs to Inditex, one of the largest distribution groups in the world. They have a customer centric business model, which integrates design, manufacturing, distribution and sales through a wide network consisting of their own stores.
Inditex operated 1558 stores in 45 countries out of which nearly 550 were Zara stores. 46% of the group’s sales were from Spain with France as the largest international market. Zara generated 73.3% of the group’s sales and 60% of the Zara sales were from its products for women. In the year 2002 the group earned revenues of USD 4554 million and there was a scope of further growth and expansion.
Technology issues of Zara
• Zara’s POS terminals are currently running on the old DOS system which Microsoft no longer supports.
• Since Zara does not own its POS terminals it is possible that the vendor can change to new machines that do not support the old DOS operating system. All other customers of the vendor had upgraded to new systems.
• Within a store, POS terminals and PDAs could not share information.
Recommendation Options
1. Maintain current DOS based POS system and ordering, fulfillment and design processes.
2. Upgrade to new OS based POS hardware and software, new modems and add new functionalities to the system.
3. Reengineer the POS systems with custom software for ordering, manufacturing and distribution integrated fully over a high speed network.
Evaluation of Options
Strategic fitness as per Core Competencies:
• Option 1 capitalizes on lack of formal structure, PDA technology, ...