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The H &R and Zara production company is a Swedish company that outsources its main operations; the company does not own a facility and is a clothes manufacturing unit. The management buys its food from a network of suppliers who also supply them with clothing. Zara Business is the polar opposite of H & R Company, which also specializes in clothing, and it is one of the first to grow the industry in Spain. The corporation is owned by a Spanish indirect group. Zara has created a one-of-a-kind business model by vertically integrating retailers. The corporation has complete control over the whole value chain and primarily outsources clothing with a longer shelf/fashion life. H& R business model focuses on outsourcing and Zara Company uses the in-house model to increase its production.
The Mission and vision statement
The organization conducts a resource-based assessment in preserving its assets standards and improves its production. It also aims at implements generic business-level strategy to face its competitive market. The approach will help the firm to sell its products at a standard cost around the world. The organization aims at using the generic business-level strategy allows the organization to scale down its economic of scale because of producing normal goods. The H &R firm aims at conducting a transaction analysis of its products to determine the core problem in the organization, and the study fosters the mechanisms used to determine the price of goods by managing the activities within the firms and lowering the rates as compared to others.
Supply chain process
Supply Chain Management is founded on two major concepts. Every product that the consumers get is as a result of several organizations that work together to ensure that the new products get to the consumers. These institutions that collaborate to move products to the customers are known as supply chain. Secondly, the organization does not consider how to manage the supply chains organizations. Therefore, supply chain management can be described as the process of controlling of supply group actions to increase customer value and accomplish a maintainable competitive market. It characterizes a deliberate attempt by the organization to primary and manages several the supply chain companies to grow and succeed in the most operational and well-organized techniques feasible. Activities conducted by supply chain cover all items from the development of a new commodity, sourcing, invention, and procedures used in the invention, as well as the information needed to organize these processes(Suminather 46).
The organization uses 7000 independent suppliers who manage the supply chain process. The production officers in the organization have a responsibility to make sure that the right price of a garment is sold to the customers, and that their invention is conducted in good condition. The organization expands and determines new markets through the establishment of its one developed companies. Presently the company imports 60% of its procurements from Kina, 40% from China, and the rest of Europe this is done do avoid delays and over-dependence on a particular country. The firm works with distributors to offer the best to its consumers, and it considers the customers using the product, and then it considers the middlemen who are the retailers and wholesalers that sell the products to consumers and get feedback from the users. The firm buys the right items from the suppliers and the right market using distributors. Moreover, the organization has a creative experience in design and markets that consider fashion and textile(Suminather 52).
Distribution is the process of getting the organization's products to the consumers, and the company uses distribution as the channels of marketing that distributes the products around the market. The company has a well-developed distribution channel, and it depends on the IT system to enable it to work efficiently. Lastly, the company has a collaborate philosophy that works in agreement to make sure well-organized sales of its creations. In addition to this, The firm distributes its products through direct sales that include those made to the beauty therapists, beauty parlor, supermarkets, and shops in town. Direct selling to the consumers allows the organization to be in charge of its prices, get responses from the clients, and take charge in the presentation of the products to the customers (Suminather 53).
The intermediaries contracted in the organization buys the right items from the suppliers and the right market. H &R has a creative experience in design and markets that consider fashion and textile. The company aims at working with the economic minds of its consumers. Distribution is the process of getting the organization's products to the customers. Distribution is one of the channels of marketing that distributes the products around the market. The firm has an excellent distribution channel, and that it depends on the IT system to enable it to work efficiently. Lastly, the firm has a cooperate culture that operates in harmony to make sure it obtains efficient sales of its products (Madhok 44).
The company distributes its products through direct sales that include those made to the beauty therapists, beauty parlor, supermarkets, and shops in town. Direct selling to the consumers allows the organization to be in charge of its prices, get responses from the clients, and take charge in the presentation of the products to the customers (Madhok 46).
When the company sales to retailers, they sell product directly to the retailers and the retailer becomes the middlemen between the organization and the consumers. The disadvantage here is that the retailers will always negotiate what they want to sell and chooses the products. There is the need for continuous supply to these stores because they buy in bulk and the demand is high. The organization sells its products to the wholesalers who in turn sell the product to the retailers and other wholesalers. This is helpful because they know several buyers who buy the products faster than the retail shops. Concerning promotion of the product, the organization has to let the market know its products through market development. The team uses development strategies to promote its product. Using promotion strategies, the group uses the several business channels to promote product sales (Suminather 56).
Inbound and outbound logistics
Inbound logistics are the transport, storing, and delivery of merchandises coming into a business. Outbound logistics are to the same for goods going out of business. The Incoming and outgoing logistics works together with supply-chain management to maximize the dependability and competence of delivery networks to reduce costs and minimize transportation. The organization depends on different supply chain companies to maximize the reliability and efficiency of distribution channels (Suminather 56).
The Logistics management process supply management in the organization plans and implements the efficient, actual forward, and opposite flow and storing of goods. The company performs procurement, which includes activities like market research, which require proper planning for successful business implementation. The company also implements advanced logistics which includes consists of the actions need to set up or build a program for logistics exercises to occur within the organization (Suminather 56).
The Zara company took over H&R as the biggest well-developed clothing firm in the country. The organization belongs to the industrial De Diseno textile. It is known as Inditex, and it owns over 3000 shops in more than 70 countries. The firm developed its in-house team of designers that made clothes based on current fashion, and at the same time, they produced their fashions.
The significant associations of machinery are done at a center in Spain, and the company does not allow cheap outsourcing of products on the market. The policy is a good approach because it deters the staff member from getting involved in unethical activities. The company has also developed a smooth management process that focuses on making new strategies that can be used to improve the manufacturing process(Madhok 44).
The administration in the organization organizes all its activities from the team headquarters in Spain, and it offers fresh designs to its customers twice a week. This seems to be very surprising since at that time outsourcing was the hottest trend in the clothing industry. The firm conducts measures to its office layout, and it is designed to make information flow as easy as, possible without influence on detailed procedures. Zara responds to tests in fashion. Therefore, social challenges are not financial constraints. In addition to this, Zara controls the production process that makes it different from competitors; the use of technology in the firm also gives rise to better production possibilities. The setup of the warehouse rules and it stock systems that are set up in all its stores enable it to keep the firm inventories(Madhok 47).
The organization has created the ultimate Threesome of fashion, which includes textile manufacturers who are organized to work under the parent company Inditex and the workers. The organizational structure is made in such a way that the staff members work together to ensure that the organizational objectives are attained.
Information about suppliers
Zara integrates its retailers by controlling the invention process. The firm keeps on assessing its worth chains and attaining control of its production as possible. Zara manages every step of its chain. 50% of its supply is produced in house, and 20% are produced in other countries, 24% are produced in Asia. Most of the clothes are made in Spain, and the low-cost clothes are outsourced to Asia(Madhok 44).
Information about target customers
The organization does not have a well-developed marketing department, and therefore, budgeting does not exist within the firm. The stores draw attention to its customers through media and the firms’ magic. The company mainly focuses on production and business models. Its success arises from its uniqueness described as coordinated activities, and inter-functional activities rooted in the company’s foundations(Suminather 56).
The organization's success has made it possible to expand internationally in several European shops, and the company produces 11000 products as compared to other competitors. The firm developed its concepts to make the consumers feel valued. The company works by satisfying the customer’s needs by reducing the cloths life cycle. In that designs can stay in the stores for around two to three weeks. This makes the customers visits the shops often because they believe that the clothes will remain in the shop for very few days and that the following week they will not be in the store. This is beneficial to the firm in contrast to the other competitors(Madhok 48).
Specify the challenges it faces or it may face
Most manufacturing organizations are not sensitive to the effects of motivation on their business. Therefore, it is important for the company to familiarize with the factors that initiate current workforce within a business. Motivation is something that can be approached from different perspectives of business, and the process of its implementation depends on the staff members within an organization, though it is the owner of the company who initiates motivation to attain the business objectives (Suminather 56).
Madhok (44) noted that motivation refers to the fact that drives one to perform something. Motivation is mainly influenced by individual needs to be satisfied these motivation strategies needs do vary from individual to another individual. The hard work one tries to do on work is created by the kind of motivation provided thus increasing the output. Motivates in a person’s characteristics of people motivation can affect the business outputs and is mainly concerned with quality and quantity. In this organization, the manufacturing section depends so much on production stuff to increase production, so if these employees lack motivation, the production rate will decline leading to a very dangerous consequence in business.
The organization is uncertain about the future in that the mangers are nit in a position of predicting the future market trends. It is important for the organization to predict the possibilities that are likely to affect the business in future. However, most management teams ion the company are not in a position of predicting future effects that are likely to affect the organization (Madhok 47).
The organization is likely to experiences Buyer power challenges, and these challenges are associated with dominance held by the consumer, which in turn creates a reflect the seller power because it is inspired by the worth of purchasers from the organization. Buyer power occurs when the demand side of a market is concentrated that the clients can practice market power faster than sellers, and the buyers. The buyer power usually emanate from one buyer or several buyers, and it is the image of control or oligopoly, and it can negatively affect the organization. The organization is affected by the number of customers, price sensitivity, size of each order, cost of changing the products (Suminather 49).
In the same way, the Threat of Substitutes affects the organization because different companies manufacture the same products and present in the same markets. The organizations faced with a lot of market rivalry that affects the business activities in the organization because different organizations are in a position of presenting substitutes products for the same consumers (Suminather 50).
The organization is likely to experiences cases of Supplier Power, whereby, the providers supplying the raw material and the finished products may affect the prices of goods presented in the market. The company has tried to influence supply power by using the unique products but because other manufactures tends to produce the same products the organization still experience challenges to supply power (Madhok 51).
The organization suffers the threat of competitors because the company focuses on a lot of competition in the market. There are many other manufacturing companies like H&M, Benetton, Gap, among others. The high level of competition in the region appears to be too complicated which in turn affects the company. The increase in the number of competitors in the market has contributed to the slow growth rate of the organization in the market. The cloth industry is packed, and it is difficult for the company to face the complicated market situation in the region. Customers are usually forced to select fabrics from a verity of manufactures in the area which in turn affects the organization (Suminather 67).
Politics are generally linked to the organizational performance in any given country. However, the significant effects of policies can have an adverse impact in the performances of an organization. Any activity implemented by the organization will not go unnoticed. Thus government interference can be noticed through the tax imposed on the company and however, the government control business activities in the enterprise. The company is a bid organization that has vertical integration whereby the company owns different companies transport system and their various outlets’ systems. Therefore, it is important for the management to understand the business rules in the region for successful implementation of business activities. Political instability also affects the running of the organization thus the more stable the political situation, the more the company succeeded in the market (Suminather 60).
Manufacturing organization needs to take consideration of the economic factors that are likely to affect the company. In this context, the company has been dealing a single currency since it was established. Economic conditions have also been fluctuating from time to time; however, the organization has managed to maintain itself in such a way that it is not affected by the different fluctuation occurring the market. The advantage that contributed to this development is that the organization is no longer dealing the dollar currency (Madhok 67).
The Social Environmental Factor like the traditional cultural roots that were established also affects the company. The country is characterized by a peaceful social setting, attracting tourists in great numbers, having many happy cultural occasions. The string tourism exchanges affect the sales the organization. Technological Input also affects the daily activities of the organization. Most of the competitors have bought new technological tools that are used in the organizations. The company had to launch the eco-friendly store's openings to meet the target market demands especially in a technological development world(Strategic Direction 1- 117).
Social factors determine the type of cloths the company should manufacture for the market. Personalities will choose particular garments that have a separate appearance when choosing stylish items. Therefore, the organization needs to develop a string brand uniqueness that is extensively identified has empowered Zara to preserve social approval. Thus apart from the management looking at the economic disparities alone they should also look at social acceptance of the brand kin the community(Strategic Direction 1- 117).
In the same way, the government has initiated rules that affect the running of the organization. The legal norms that help and endorse manufacturing development in the country have assisted in the expansion of the organization. However, the company still experiences challenges in implementing some of these rules(Strategic Direction 1- 117).
Cannibalization is another significant threat the organization. The risk occurs because the supplies that are situated so next one of each other that assists in the cannibalization of transactions between Zara and the other products administered by Inditex(Strategic Direction 1- 117).
The growth of the organization might be affected by the increase in the intercontinental market will be shortened because Zara has a very consolidated logistics representation. It will be difficult to expand distribution channeled because the primary distributor is in Spain. The location of the seller will affect their plans to go international and conduct international business. Zara needs to develop a strategy that they can use to compete aggressively in the global market(Strategic Direction 1- 117).
Companies that take part in managing supply chains involved in activities through physical movements and movement of information. The physical movement requires the change, association, and storage of new commodities and substances. Adequate flow of information within the organization promotes effective supply chain management. Therefore, the organization should aim at taking part in managing supply chains to make the organization meet its target markets(Strategic Direction 1- 117).
Supply chain movement within the organization can be divided into product movement, information movement, and finance movement within the supply chain firms. Movement of new products incorporates the flow of merchandises from a contractor to a client, as well as first client profits or package needs. The information campaign involves communicating instructions and informing the importance of distribution. The financial movement requires of acknowledging terms, expense lists, and delivery and arrangements of product ownership(Strategic Direction 1- 117).
In supply chain firms, raw materials are obtained, and substances are created in different organizations and transported to the warehouses for intermediate storage, and later shipped to consumers or retailers. Therefore, to decrease cost and increase services to the customers, the organization will consider using real supply chain approaches must consider the connections at the several levels of the supply chain management. The supply chain management consists of several developed areas, warehouses, supply points, and marketing openings, as well as materials, the process of manufacturing products, and finished produces that run between the supply firms(Strategic Direction 1- 117).
Apart from this, the organization will ensure that the management of supply chain involves all the competence that influence price and performs a role in the manufacture of the new product follow the consumer needs: from a supplier and the products invention firm's retail through businesses and distribution companies to customers and retail stores. In supply chain management, it is important to provide an explanation to the sellers’ contractors and the clients’ customers because they influence the actual performance of supply chains. The primary purpose of supply chain administration is to be well-organized and budget effectively through the whole process of supply management from transport and circulation to records of unprocessed materials, the process of creation and the product. The entire process is placed on the functional integration of manufactories suppliers, warehouses, and retail stores. It includes several levels of managing of invented products(Strategic Direction 1- 117).
It is essential for the organization to note that the method of supply chain management cannot be handled in isolation. Whereby, its implantation strategies cannot work in isolation. The entire process includes an incorporation of several activities connected with the creation of new products. Similarly, strategies used in supply chain management should be associated with the precise objectives of the association, like increasing market prices or increasing their benefits. Supply chain considers the customers as well as the manufacturer of the new products. Within an organization, it includes all activities used to fulfill a client’s requests. These activities involve the creation of new products, finance, and distribution and consumer services(Strategic Direction 1- 117).
Apart from this, the organization can quickly go around and expand its processes in several ways, and the best thing will be to simplify their activities and try to grow in regions like Europe. It is also important it is important for the suppliers to note that more reliance of supply chains, very few providers increase dependence. Similarly, politics play a significant role in influence supply chains. To control, this risks the supply chains should work towards eradication any challenges that could change the entire process(Strategic Direction 1- 117).
The top management will build up practical strategies that aid the execution of the company and company -level strategic aims. They offer nearly all the new ideas that make it likely for the enterprise and business level wide-ranging managers to prepare strategies. Apart from this, the organization will implement market infiltration, which entails the use of marketing and promotion to generate a delineation advantage to enlarge the market segment. Infiltration also produces impediments to access to markets, consequently growing business productivity and tumbling competition because businesses can be in a position to estimate their competitors’ proceedings(Strategic Direction 1- 117).
The management will also determine the market progress, which involves discovery of a new market portion where companies exploit its products or distinctive competencies. Market expansion and the development of place can cause concentrated competition between companies as new directions of engagement are formed. Furthermore, market development may offer an income for competitors to go into the marketplace, for it produces a position via which the competitors can cross the threshold. Consequently, market expansion is most likely to be the most aggressive of the product segregation approaches, as it provides the most prospects for increase or failure in marketing(Strategic Direction 1- 117).
Product expansion will also be implemented in the organization, and product development is the process of making new and enhanced products to maintain customer order for products. It makes companies be on the run and reduces the probability that an innovative competitor will be in a position to approach interested in the business with a better product to take hold of market strategy. In that, product growth acts as an impediment to marketing. Similarly, the process leads to standing and product devotion(Strategic Direction 1- 117).
Product explosion will also be implemented, and product explosion is an attempt to become constant the indecision shaped by market growth. By satisfying all the market strategy, companies are irritating to take action to competitors’ proceedings to stabilize the business circumstances. At the same time, manufactured goods production also promotes barriers to entry since it makes it challenging for the contestant to enter the market by verdict a new marketing strategy. It consequently helps the organization become firm opposition in the manufacturing industry(Strategic Direction 1- 117).
Competence manage will be used to discourage competitions, given that it gives body with a believable menace that they will act in response to the danger of access by escalating capability and pouring downward price. Surrounded by the business, the call for is an approach that leads to organizations to synchronize their right making decisions and avoid the uneconomical surplus aptitude, which can take place if all companies make the conclusions to construct new place competence. This method stabilizes rivalry and organizations effectiveness(Strategic Direction 1- 117).
The organization requites strong human management to manage the organization as it enters new markers and produces new products that are not common in the current market. The company also need a continuous presentation of current perspective of the market to balance the product image in the market(Strategic Direction 1- 117).
In conclusion, H&R and Zara are well-known firms that have succeeded in the fashion industry. H&R has been leading company for over several years, but it faces many challenging from Zara, its competitor. Zara has different ways of implementing its strategies that make it succeed in the clothing industry. The firm has developed its ways of developing new clothes that are fashionable ignoring the old methods of fashion designs. H&R deals with the old ways of creating garments make it face stiff competition on that makes it not to have high sales as compared to its competitors. More research should be conducted to determine how the businesses are dealing with the present challenging markets that is highly influenced by technological developments.
Madhok, B. Transaction Cost Analysis Model. Management Business journal 23 200-400. 2002
Strategic Direction Leading garments designs Business review 1-77-98. 2003
Suminather, T International Production Progress, Mac Grew, New York. 2007
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