Question
Zara: Planning not to plan The first of four functions in the management process is planning, which involves setting goals and deciding how to achieve
Zara: Planning not to plan
The first of four functions in the management process is planning, which involves setting goals and deciding how to achieve them. An organization should adopt planning and strategic management to provide direction and momentum, encourage new ideas, develop a competitive advantage, etc. you are asked to apply your knowledge of planning to the analysis of this case.
Planning is defined as setting goals and deciding how to achieve them. Alternatively, it can also be defined as coping with uncertainty by formulating future courses of action to achieve specified results. Planning takes place at different levels of management, and each level will utilize different types of gals in their planning process. For goals to be effective, they should have the characteristics of being specific, measurable, attainable, results-oriented, and having target dates. This case will highlight the planning process at Zara.
Read the case below and answer the questions that follow.
Zara is a large global clothing and accessories retailer that has continually appeared in lists of the top 50 global brands. By implementing a specific vision statement in a unique and thoughtful way, Zara has become one of the biggest success stories in fashion history. Zaras vision statement is as follows: Zara is committed to satisfying the desires of our customers. As a result we pledge to continuously innovate our business to improve your experience. We promise to provide new designs made from quality materials that are affordable
As a luxury fashion company can reasonably expect, Zaras customers desire a quickly changing selection of items. Customers are only interested in this seasons styles and therefore, items leftover from the last season become obsolete with every new product introduced. Because of the rapid and changing nature of the fashion market Zara has implemented a plan to plan less.
Most apparel retailers commit to designs for up to 90% of their seasonal lines six months in advance. This strategy guarantees that new products are available by the start of each season and costs stay low because companies can choose to outsource production if necessary. But, as stated above, the fashion market is highly volatile and constantly changing. Once a retailer commits to a design, the only thing they can do is sit and hope with fingers crossed that the designs they have chosen are the designs that people will want in six months.
Zara, on the other hand, only commits to 50-60% of its designs six months in advance. As a result, Zara responds to demand as it develops and changes during each season rather than forecasting demand in advance. Not only does Zara keep its initial design production low, but the company also stocks extremely limited amounts of each design in stores. These scarce inventories are a result of small and frequent shipments that continually deliver new designs. As a result, customers are compelled to visit stores frequently and buy items immediately because they are in short supply and may not be available at any other time.
Zaras retail managers provide valuable information about customer wants and preferences and continually change out poorly selling designs with new options. This quick response system reflects the markets quickly changing demand and results in happy and stylish Zara customers.
1. Zaras identification of customer needs can be categorized as which planning and strategic management step?
Maintain strategic control
Establish the mission and vision
Implement the strategy
Formulate the grand strategy & strategic, tactical, & operational plans
Assess the current reality
2.
Why did Zara choose to take a chance and pre-order much less of the coming seasons designs than its competitors?
It was a new idea.
It corresponded with the companys mission statement.
It is what the customers wanted.
It allowed the company to save money.
It provided opportunities for the company to develop a competitive advantage.
3.
Decisions that retail managers make on which products to pull from the floor and which products to order more inventory are considered as _________.
operational planning
bargaining planning
tactical planning
task planning
strategic planning
4.
Zaras goals should have all of the following characteristics except __________.
being attainable
being measurable
being specific
being differentiated
including target dates
5.
Making periodic deliveries of products to each Zara store is an example of ________.
controlling the direction by improving future plans
controlling the direction by comparing the results with the plan
controlling the direction by correcting deviation in the plan
making the plan
carrying out the plan
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