Post on 01-Mar-2023
2013 NOVEMBER – 2014
FEBRUARY MBA
INFORMATION TECHNOLOGY AND
MANAGEMENT INFORMATION SYSTEM
ITMIS
ASSIGNMENT
SERKANTABLE OF CONTENTS
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I
III. CHAPTER 1
Introduction
Background of Zara
Aims & Objectives
V. CHAPTER 2
Decision-Making
Marketing Advertising
Information Technology
VII. CHAPTER 3
Problem Analysis
The Importance of Zara
Evaluation of IS Implementation
The Importance of Benefits
The Abstract impact of Costs
The Abstract impact of Benefits
XI. CHAPTER 4
Advises and Consequense
INFORMATION SYSTEM MANAGEMENT IN ZARA
XV. REFERENCES
XVI. BIBLIOGRAPHY
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II
CHAPTER 1
INTRODUCTION
Inditex the largest international fashion brands has Zara
chains which was founded in La Coruna, Spain in 1975. The
basic idea which created Zara is that Amancio Ortega,
whose founded Zara, would like to make a link between
demand, manufacturing, and distribution and therefore
Zara could easily react to any changing occurs in the
Market. In 1985, Inditex was changed to a holding and
Zara is on the top of it and with the other retails.
Ortega made Jose Maria Castellano be an important part of
the company. It is believed that immediately being able
to response to demand of consumers, capebility of
computers, and decision-makings from every part of the
company were indispensable to boom the enterprise (McAfee
et al, 2007)
In 2003, 1,558 emporiums were operated in 45 countries by
Inditex and 550 out of them were piece of Zara chain
zara supported huge part of sales of Inditex 73.3%.
Zara has still a wide range of new style of its products
in collection of men, children and especially women with
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III
a variety of prices. 60% of revenue of Zara sales came
from women section. The vital things making Zara on the
top of the its market are that instead of making
advertising the company has “ its commercials” who does
decision-making regarding what kind of products might be
in their stores and improving the garments by last styles
and trends.
Zara is the recognized company and niche player in the
markets such as Africa, Asia, Europe, America and Middle
East. The important of business model of Zara is
vertically merged. It is specialized in efficiency,
responsing to the demand of consumer as quick as it can,
and the last fahion trend (McAfee et al, 2007). All of
Zara’s product are advertised in its website
attractively.
It did not use to upgrade the old software system to the
new software system. Zara always improves its software
and applications internally by its Information
Technology. In this case of study, all emporiums of Zara
had the POS (Point of Sale) which had no full network
coverage throughout the stores. The POS had DOS system
which was not assisted by Microsoft. Although this
operating system had an age-old software, it could be
easily to support and maintain therefore Inditex used to
port1 its system extraordinarily; nevertheless, the head
1 “PORTING is the work of rewriting an existing piece of software so that it is compatible with another operating system” (Mcafee et al,
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IV
of IT of Zara realized that If the company still had the
same software, it would be a disaster for further
developments will occur in next couple of years due to
the fact that all needs came from every level of company
indicated this therefore age-old OS would not have
capability for any improvements. This study explains the
infrastructure of IT of Zara, and its operations.
Zara is the recognized company and niche player in the
markets such as Africa, Asia, Europe, America and Middle
East. The important of business model of Zara is
vertically merged. It is specialized in efficiency,
responsing to the demand of consumer as quick as it can,
and the last fahion trend (McAfee et al, 2007). All of
Zara’s product are advertised in its website
attractively.
Objectives and Arrangement
Initially, the idea was to make a link between demand of
customer to manufacturing, and distribution to
manufacturing. Zara has remained to be a Market Leader
specifically being last fashion trend, design, and
cerativity with a fast impact to the market and thus the
company could easily have lead times in terms of
competiton, less inventory stock rather then a huge mess,
a gorgeous style of garments.
2007:p.2)
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The procedure of Zara need to require the assortment of
era of incredible arrangement of pieces of clothing
throughout the entire year (Ferdows et al, 2003). 10,000
new goods was launched in comparison around 2500 of its
competitors by Zara and Zara dealed with the items as
starting point rather than dealing with them as end of
its style and supplier force (Mcafee, 2004). Zara’s
strategy is that not only did integrat its supply chain
and also dedicated to customer responsiveness. The thing
making Zara be difference from its competitors is that
focusing on fashion-consciousi young people. Notably in
the product development, infrasturucture of Information
Technology, marketing, the cost of production,
advertising, strategic partnership Zara’s capabilities
and commitments have supported extremely competitve
benefits.
CHAPTER 2
Decision-making
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VI
It is believed that Zara had to give a respond as soon as
possible in terms of changing trends of fashion which is
still not to easy to forecast and to be influenced by
Ortega and Castellano and to achieve this Zara had to
follow the tendencies of young dwellers which were
influenced by the film or pop stars, etc. Zara would like
to dispatch the styles while they were still in fashion,
rather than trying to attract the consumers demands what
Zara had had. Zara’s difference in the market is shown by
this process. The second benefits which illustrated how
Zara’s remain different from its competitors is that
there was no integrated decision-making used to come from
a small group affected the all garments in Zara. This
decision-making were given to all employees to make Zara
influence from every part of the world and thus the
company leaded to response to the market at once. For
instance, unlikely the design teams of Zara’s
competitors could decide initially the design of clothes
then launch them through the market nevertheless in
Zara’s case the store managers chose what kind of
garments would be on sale furthemore, not only could
commercials who were a small of group decide which is the
perfect design and style for every product but also colud
browse the market and decide the designs. The high level
managers did not use to challenge this decisions because
of the structure of Zara.
Marketing and Advertising
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VII
The extraordinary way of Zara’s approach in advertising
and marketing caused to be a Market Leader instead of
becoming follower was that the company spent 0.3% of its
revenue for the cost of its marketing and advertising
campaign, unlikely 3-4% were used to do expenditure by
its competitors. Miguel Diaz who was the marketing
executive officer stated that Zara’s customers could
easily advertise effectively muh more than normal
advertising campaign (Ferdows et al, 2003). The company
used to spend money on the cost of its stores rather than
its oponents and therefore Zara was able to concentrate
on its stores rather than its competitors. Furthermore,
Zara colud mainly invest money in prime store locations,
and store layouts which were changed constantly as
compared to its competitors.
Classics were not manufactured by Zara however slightly
stocked clothes in short life spans in terms of
durability and last trend and therefore customers already
knew that the merchandise of stores changed constantly
regarding 75% of the goods were used to change in four
weeks time so that the customers of Zara had purchase
garments at once before too late (Mcafee et al, 2007).
This kind of thought of trade was unique to Zara and
featured small shipments and frequent renew its stocks in
every stores (Thomas, 2006). To help in this philosophy
was the shipment Zara able to afford air travel Shipping
(Capell, 2008), although Zara had the Internet, rather
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VIII
than selling goods online and are not set distribution
centers until sales and small and the rate of return as
high as 50-60% . Diaz summarize that customers need to
try clothes, which was not possible through the Internet
(Ferdows et al, 2003). Overall, the expense benefits, the
capability to support trademark conscious dependence of
customers where were initial requirements on Zara’s
abilities and increased the worth on market were held by
Zara rather than its competitors.
Information Technology
“Zara’s use of information technology was consistent with
speed and decentralized decision-making. Zara made
minimal investment in IT and so that did not have any
specific IT budget, cost and benefit analysis. Zara made
standardized and targeted use of IT” (Mcafee, 2004). Zara
prefered to chooce mankind brain instead of the decisions
were made by computers. As Zara operated in various
continents, the company chose to port its own softwares
rather than buying the commercial suitable ones which
required its own IT team. Zara had around 50 people who
operated of section IT and split off three parties:
Administrative Systems, Logistic Assistance and Store
Solutions and furthermore the IT department of Zara had
less turnover rate. The headquarters of Zara which was
located in La Coruna centralized all operations made from
IT departments and thus, the company had the mixed
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IX
utilize of information and process so its fluent and fast
market return.
CHAPTER 3
Problem Analysis
Firstly, to analysis the issues of Zara, we have to focus
on reviewing the first and second acitivities so the
enterprise utilizing Micheal Porter’s worth linkage
theory as under (Porter, 1985).
The Importance of Zara
Michael Porter own establish of connected each other
recognized common behaviours solve the companies’ benefit
competitive. It useful was as a linked of worth make
events to model the firm. The important chain handy was
supporting lands of frail so then empowered these parts
for enterprisey’s competitiveness and profitability. The
model handy was in decideing the paths in where an
sation implement can IT or join worth to services the
goods. The aim movement of these to was make worth so
that goes beyond supplying goods or facilities the cost
of, thas produce a gain rate. The general included
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X
linkage of five movement major plus four activities
countenance. The movement major enterprises were tasks
that bound up with indirectly towards the organization’s
products the production of so on facilities and
providing connect events capacity that overhaul and
support movement (Kroenke, 2012). The lifebility
enterprise’s bounding up with display successful
movements these.
Evaluation of IS Implementation
Zara less is in this case, believed plus and at least
built utilize and venture in IT. The upper hand owns
vying Zara more racers not so due the utilize of IT and
because but of its fast answer to the outlet modifiying.
Zara owned does not a parameter task supervisor or to
period any ordinary in order to an IT founding capital.
Estimated Castellano capital of Inditex IT to 2002 was
0.5 % of revenue contrast as to 2% of revenue another
merchants of north American (McAfee et al., 2007).
Whereas there grouping no was of IT ordinary attempt, was
there not any the upper hand and payments dissect and
however enterprise make support capacity of competitive
the was most significant agent when think carefully any
judgement performing the approximate developing of IS.
Zara dissected had and contrast the concrete
(quantitative) besides the abstract (qualitative) and the
upper hand expenditure regime of the age-old and brand-
new regime.
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XI
Analysis of the Cost
Existing method Zara at least expenditure was contain its
minimum cost had involved its due bounded with erectly
treatments. Zara’s Point of Sales utilize links referring
onto the framework DOS which at least require renovation
thus and holding the down expenditures additionally
owned Zara its possess section IT, advences which the
suitable regime DOS rather than purchasing the software
commercial suitable as had Zara operations, worldwide
maintaning accounting using suitable software the
commercial difficult was. For reasons these, maintained
Zara an IT section laborers 50 of, which calculates at
least than 0.5% of manpower Zara’s (McAfee, 2004). This
verified had to operative upper expenditure be. Firstly
utilized Zara fax for purchase ordering due but to time
verylong besides huge expenditure, variation Zara to
Personal Digital Assistant the challenge clear up answer
whereas the were outlets not linked, the labourers store
did asks phone to discover so a list of goods therefore
this rose the expenditure of phone in addition to this
disbursing period time moreover this losed dropped time
even performance due to the fact that contacting fraud,
labourers more fundamental to were achieved a list of
goods, which rose expenses however and no definite
parameter countable suitable was made to the evaluation
made whole.
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XII
The Importance of Benefits
Existing method move the company’s of its IT existing
region grant allowance owned Zara drop expenditure drop
functional, and efficiency rise. Grew Zara the internally
software instead of the commercial buying software
suitable thus and, provide job Zara workers 50 simply and
its cost IT at least then was a quarter goods last trendy
quantity. Those had programme perform Zara able to do 95%
of its everyday work and a low continue to have software
expenses upgrade. These internally software grown easier
make Zara keep 15,000 hours development, vendor outer
section expenses so on a 22.9% obtain ROE above term
2002-1996.
Whenever financial examine distinctives Inditex
parameter and racers lock so we that the expense
trademark discover of Inditex sold of € 1,955 very was
at least contrasted such as Bershka, and Oysho and thus
the firm was free to with operate high ratios return.
Inditex even operating at least owned such as expenses
runners to its contrasted and so was free to own
operating returns and a bigger net distinctive of 11.02
%. on inter contrast the years 2000 so 1996, the revunue
company’s own threefold 31% rise in revenue a tendency
indicates of fast and gainful grown i n addition to Zara
hard money faster gathered then it out purchase for
example Zara with operated a unfavourable fund operating
(Ferdows et al., 2003) moreover Inditex the enterprise
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XIII
family owns an oultlet capitalized-value bigger
equation worth onto outlet of €13,981 within 2002 so on
the outlet indicated worth similar somehow indicate fixed
term above 2002-1996 and thus the IT tactic owned Zara
permitted owned supreme minor net ratio of 11.02% within
2002 the four runners top within the manufacturing so on
net ratio supreme 10.49% within 2001 moreover the
company be free its drop expenses management byside
sustain obtain linkage productive.
The enterprise operates owned processing 45 nationswithin
1558 outlets within 2003so on owns a outlet range come up
to moreover enterprise 11,000 brand-new goods attached
utilize outlet contrast to its runners about 4000-2000 in
addition Return on Assets Inditex’s even rose was
contrast to background its years and such as the Return
on Assets within 2002 was 14.54% contrast to 13.07% in
2001. Forty-six percent of selling the party’s in were
Spain which even was the top level of enterrprise’s.
Fiscal For the year 2002 told Inditex a net of yield
$502 million dollars U.S. so on the executives Inditex
that esteem Zara the had latent to grant develop valid
terms outlet not only for instant Italy had branches
limited but also Italian Zara’s outletse were likedr and
thus, thought Castellano growth probability with the
Zara’s actual manifacture substructure so on dispatching
systems and back up could further enlargement. The vital
things making Zara on the top of the its market are that
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XIV
instead of making advertising the company has “ its
commercials” who does decision-making regarding what kind
of products might be in their stores and improving the
garments by last styles and trends.
The Abstract impact of Costs
Existing method avail Zara ’ s above runners its not was
due to the utilize avail IT but due to an linkage
productive reinforcement reaction and fast variable
outlet however durability of its superiority runners be
on hazardous because the in less the IT venture moreover
that Zara’s of an purposed senescent substructure IT is
avoid the of the enterprise sprawling consediring
restricting its productivity by knowledge missed because
shortage of IT real arrangement. The software DOS
utilized did the with POS link was likely constantly
operabler, but infact that encourage did Microsoft not
the software DOS age-old so that a future making begin on
movement hazardous. Zara owned section of IT included
laborer 50 who had responsibility of all sections in the
enterprise. Althoug Zara utilized not did the system of
suitable trademark, laborer framework improved. These
labourer were operated forcedly by Zara. The software
current unable was the guess sales, for decision or
losses guess as the was method inefficient to the stock
equal.
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XV
Calculating management stock was troublesome that because
of structure of Zara branches not linked. Asking the
other outlets’ stocking to them always caused a fortune
in terms of money, time, efficiency. Moreover the
Personal Digital Assistance were used to make a list of
lack of goods in the outlets that often caused many
problems due to PDA’s havin mini display and discordant.
Upgrading age-ols framework with the brand-new technology
would lead to existing many problems such as incompatible
with the system of its suppliers, etc. On the other hand,
this improvement would lead to rise productivity,
efficiency in all part of the company as opposed to
hamper activities of the enterprise in terms of
networking.
The Abstract impact of Benefits
Existing method in those days Zara the used terminal POS,
which on organized the software DOS. Zara used had been
this for more method than in ten years, as the working
was method. The method current POS did not any need help
IT as ready to use software, and reinstallation situation
in bad of event simple wast herefore, no experience extra
of was workers important the existing framework Zara was
able to choice fast the top level person in outlet every
Zara able to were sustain their work enterprise every day
thus Zara owned a benefit competitive over competitors
its. The system current did not Zara to need its increase
section hIT and rent and finally the section IT improved
Serkan SanC0213kgkg1113
XVI
internally applications POS where successful, were
working perfect, , and easy sustain and lunch the system
by time
CHAPTER 4
Advises and Consequense
In conclusion, intangible and tangible advantages
outweighed the costs and thus the existing framework
should be upgraded to new framework by Zara. The cost of
upgrading system would be affect the budget of the
company nevertheless, this expense will be depreciate in
terms of time in the long run.
As Zara utilization POS terminals that work on the old
fashioned DOS framework and in addition it needs to
redesign the POS terminals with a more current and good
working framework and thus Current POS terminals that are
accessible work on advanced OS, for example, Windows,
LINUX and can utilize a mixture of physical layer
conventions, however Ethernet is at present the favored
framework and and for instance IBM-intuit retail results
Serkan SanC0213kgkg1113
XVII
work on Windows OS not only The POS might as well have
the client based functionalities that will record deals,
returns, trades, layaways, and so on. Likewise, "Behind
doors " workstations of the POS framework may as well
handle capacities, for example, stock control, acquiring,
and accepting and exchanging of items to and from
different areas and herefore Zara might as well likewise
utilize CRM programming and for example Sap that not just
help to address the fleeting objectives to diminish
cost and expansion the choice making, yet can likewise
help accomplish separated abilities to contend viably
over the long haul and nevertheless Zara might as well
run the old and the new frameworks side by side, until
the new framework is working easily and honestly when the
new framework is working easily, Zara might as well keep
the old framework for while and in the meantime what's
more Zara might as well utilize the web to make online
bargains and exploit the accessible free social
networking to push itself but also therefore Zara has
dependably utilized IT as an extra rather a substitute
(Mcafee, 2004) not only expansion of such capacities
will improve Zara's operations and finally these will
include more entrance boundaries for the new contenders
and the existing contenders will upgrade their operations
keeping in mind the end goal to stay in rivalry with
Zara.
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XVIII
In terms of Management Information System this study
showed us that Zara was very good at porting its
framework especially where the porting is necessary. In
the meantime, it can be mentioned that the old-fashioned
Information System which Zara had must be upgraded
gradually to the new technology with the current system.
Therefore Zara would be powerful and erect in the market
with its competitors.
Overall, Zara responsed to the demand of customers in
terms of changing market trends and fashion rapidly. The
current infrastructure of IT was still to be able
consistent with enterprise of Zara and nevetheless any
effect may be occurred by in terms of last OS from its
suppliers or/and purchasing new machines probably would
not be compatible with the existing OS anymore due to the
fact that the Microsoft had not supported DOS yet.
Although the current OS worked without any problems for
now, the company might be upgrade the software to the new
OS. In addition, Zara should do modular implementation
for upgrading its current system instead of investing
money for the current system. This approach would be
prevent to face the company any inconvenient
circumstances throughout developing OS.
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XIX
INFORMATION SYSTEM MANAGEMENT IN ZARA
DOMAIN INPUT PROCESS OUTPUT USERS INFORMATION
SYSTEM
Manifactu
ring,
Stores,
Distribut
ion
All
Relev
ant
Datas
In
Process
Purchasi
ngs and
Products
Relev
ant
Offic
ers
TPS
Serkan SanC0213kgkg1113
XX
OPERAT
IONA
L LEVE
LFinance
and
Accountin
g
Departmen
t
All
Relev
ant
Datas
In
Process
Incomes
and
Expensse
s
Finan
ce
Offic
ers
TPS
Human
Resource
Departmen
t
All
Relev
ant
Datas
In
Process
Employee
s
Records
HR
Offic
ers
TPS
Informati
on
Technolog
y
Departmen
t
All
Relev
ant
Datas
In
Process
All
Departme
nts
Records
IT
Offic
ers
TPS
TACT
ICAL DOMAIN INPUT PROCESS OUTPUT USERS INFORMATION
SYSTEM
Serkan SanC0213kgkg1113
XXI
LEVE
LManifactu
ring,
Stores,
Distribut
ion
TPS In
Process
Managin
g the
enterpr
ise
Releva
nt
Manage
rs
DSS
Marketing
Departmen
t
TPS In
Process
Managin
g
Marketi
ng and
Adverti
sing
Market
ing
Manage
rs
DSS
Human
Resource
Departmen
t
TPS In
Process
Managin
g HR
HR
Manage
rs
DSS
Finance
and
Accountin
g
Departmen
t
TPS In
Process
Managin
g
Finance
Financ
e
Manage
rs
DSS
STRAT DOMAIN INPUT PROCESS OUTPUT USERS INFORMATION
SYSTEM
Serkan SanC0213kgkg1113
XXII
EGIC
AL L
EVEL
Administra
iton
Department
All DSS
from IT,
HR,
Marketing
,
Finance,
Manifactu
ring
In
Process
Strate
gic
Decisi
ons
Executi
ves
Officer
s
ESS
[Total 3,622 words]
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