Table of Contents
The following essay is a design of how the clothing brand Zara can open a new branch in India. The company, Zara, is a clothing and accessories brand based in Spain. Since India is a country that is developing fast, Zara can effectively establish a successful store with effective business strategies. The science of management will help the company to provide an insight into the planning as well as the decision-making that is required to open a new branch in the target city. The essay will introduce management science and state its importance to lay out a plan for making the decisions required for opening a new store in a new location. The advantages of management science will also be outlined, which will further support the argument of how important it is in this regard. The next part of the essay will discuss the background of Zara in brief, and a SWOT analysis will be conducted to assess where the organisation stands in the global market at present. The subsequent parts will chalk out the plan for the new clothing store, and take into consideration the different aspects like the size of the store, the required staff strength, infrastructure, and stock space, with emphasis on the delivery services that could be implemented. Management science will be applied to these factors to determine how the problems could be solved in a manner that is in the best interest of the company.
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Management science encompasses research on all spheres of management, including strategy, entrepreneurship, information technology, innovation and organisations (Anderson, Sweeney, Williams, Camm & Cochran, 2015). It also involves the functional aspects of business, such as finance, accounting, marketing, and operations. The management science approach involves rational thinking with intuitive insight in order to resolve the different concerns of management, such as production, costs, and levels of service.
Advantages of Management Science
Business owners can utilise management science approach to frame the measures that would help to identify and assess the efficiency of specific decisions or processes. An organisation can use the different tools and techniques of management science to organise, plan, lead and control the operations within a workplace (Tallis & Polasky, 2009). This ideally gives way to an increase in productivity, along with industrial peace and specialisation benefits. Moreover, the workers would also feel more motivated and feel safer in the work environment as this approach also focuses on improving the workplace conditions. In order to get maximum advantage out of management science, information on the target market should be collected and processed to direct the facilities, purchasing, marketing, and the allocation of personnel and resources (McGrath, 2010).
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Planning and Decision Making
A background on Zara
Zara is one of the main brands under the Inditex group, which is the world’s largest retailer of fashion apparel. The company manages around twenty clothing collections every year. International expansion had begun when stores were opened in Portugal at first, followed by United States and France (Lopez & Fan, 2009). At present, Zara’s reach needs to increase considerably, as sales are made primarily through stores owned exclusively by the company, and there are few or no stores in smaller displays or shopping complexes, especially in Asia. The competition on this front is high, and this can be resolved only if the company decides to open more stores and increase its reach. This will prevent the competitors from affecting the brand equity. Proper planning with management science will ensure that the brand launches new stores in a successful manner.
SWOT Analysis of Zara
- Strengths: The clothing line of Zara has some unique designs, and the designers who work with the company are well aware of the ongoing fashion trends and are therefore able to cater to the needs of the consumers efficiently. The brand equity and strong global presence has helped the organisation to expand quite successfully throughout the world in the past couple of years (Cortez, Tu, Van Anh, Ng & Vegafria, 2014). The highly efficient supply chain is an added advantage, as Zara gets its products to the storefront in two weeks, while the same takes almost six weeks for the competitors.
- Weaknesses: Zara’s clothing line is highly generalised and it does not specialise in any one particular thing. The company is also not into advertising, which would have otherwise doubled the profits and the turnover by attracting more customers (Asarpota, 2014). The low inventory rule that Zara uses to keep customers interested in buying the latest fashion items can also be counted as a weakness. For instance, if a particular style of clothing becomes a hit, it is unlikely that the design will reach its full potential since there is no reserve or buffer stock for those products.
- Opportunities: Zara can utilise the benefits of e-commerce and make the clothes available not only on the company website, but on the other e-commerce stores such as Amazon. This will bring about a hike in the sales rate of the company’s products. Most of the top clothing brands have their signature or flagship designs, and Zara should incorporate that strategy to increase the demand and build a positive identity for the brand (Cortez, Tu, Van Anh, Ng & Vegafria, 2014). The company is overall gaining a lot of popularity and that has brought about an increase in the market potential.
- Threats: Zara needs to consider whether the policy of no advertising is being harmful for the brand or not. The question to be mulled over in this aspect is whether the company has ruined the chance of roping in more customers by not promoting the brand through advertisements. The competing brands such as Vero Moda, Mango and H&M offer unique and equally chic designs, and the only advantage that Zara has is the lower prices (Willems, Janssens, Swinnen, Brengman, Streukens & Vancauteren, 2012).
Size of the new store
Zara has a very strong positive aspect when it comes to the physical stores: one does not feel cramped and there is a sense of open-mindedness as compared to other clothing showrooms (Gallien, Mersereau, Garro, Mora & Vidal, 2015). For the new store, the company should use a wide and deep layout that would enable the customers to walk around the shop. A relaxed space for picking and trying out the clothes will help attract more customers and foster a good reputation in their minds.
The staff’s requirement depends on the size of the store and the quantity of stock that will be housed. Since the store should ideally be wide and spacious, it will be advantageous to have workers at every aisle to make sure that the buyers do not face any inconvenience while shopping for their favourite designer outfits (Cachon & Swinney, 2011). During peak sales seasons, such as autumn and early summer, the staffing could be increased to prevent a drop in efficiency.
Zara can offer home-delivery services, including same-day delivery, in order to create a strong relationship of trust and reliability with the customers that walk into its new store. This is because the customers will get the assurance that their time matters to the company, and therefore feel special. This would result in the inculcation of a positive brand image as word would pass around the consumer circle and consequently, sales would increase (Chen, Chang, Hsu & Yang, 2011). There would be a lesser tendency of piling up of stock, which would also increase the level of productivity. Hiring of riders or maintaining delivery vans will be a cost-effective measure for Zara, as home delivery can incur huge expenses of transportation. Taking help from such third parties will considerably reduce the costs and increase the revenue, which is favourable for the company (Ehmke & Mattfeld, 2012). Another added advantage to the same-day delivery options is that the production and sales of the clothing items will run side by side, and thus there will be little or no space that would be wasted behind stock piling, and the time saved can be utilised for other business activities (Agatz, Campbell, Fleischmann & Savelsbergh, 2011).
Zara is usually able to shift newly designed items to its stores within two weeks as compared to the average time of four to six weeks that the competitors take. This automatically makes the company the trendiest store, housing the latest fashion clothing. On an average, around 450 million products are designed yearly (Gabrielli, Baghi & Codeluppi, 2013). Zara has the tendency to not have a safety buffer for the products, which implies that the space required for housing the goods need not be huge. However, the rate of sales for the company is quite high as the other brands such as H&M and Vero Moda are more expensive, which ultimately means that the space required for holding the stock needs to be considerably large.
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The store needs to have its own parking space so that the customers can park their private vehicles in a convenient manner (Barter, 2010). The number of spaces required would depend on the location of the store as they are an important factor in determining the number of customers that would be drawn to the outlet. Due to the affordable prices, Zara attracts a large number of customers from that section of the social ladder who are not capable of affording the luxury clothing items from the competing brands. A store located in such a convenient locality will attract more customers (Miller, 2013).
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