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How did Zara’s capabilities lead to a quick production process and…
How did Zara’s capabilities lead to a quick production process and new apparel?
Multiple Choice
Zara’s design team uses inspiration from high fashion and real-time feedback from their stores.
Zara’s manufacturing facilities are close to their headquarters and design team.
They have engineered their production process to maximize turnover and turnaround time.
Up to half of the merchandise is designed and manufactured during the season.
All of these are correct.
How does Zara encourage their customers to visit their stores every few weeks?
Multiple Choice
They have lots of sales on their merchandise.
They manufacture small lot sizes to encourage impulse shopping.
They ship new merchandise to their stores once a quarter.
They have a long lead time for production, so customers must wait for the “new” line.
They have one of the biggest advertising budgets among other high fashion retailers.
Does the execution of the company’s site selection capability also contribute to its competitive advantage?
Multiple Choice
Yes, aside from placing their stores in high traffic areas, they also have stores in Outlet Malls.
Yes, they select the sites for their stores near other mass market retail outlets.
No, site selection has never been important to Zara as they sell most of their clothing online.
Yes, Zara places their stores near the high-fashion houses it imitates.
No, site selection is not important because of their large advertising budget, which drives customers to their locations.
Why does Bezos begin meetings of senior executives with 30 minutes of silent reading? How does this focus the group?
Multiple Choice
To test the reading skills of each executive
As background information for a more detailed PowerPoint presentation
To guarantee the group’s undivided attention
To catch up on the latest industry trends in trade journals
To review Amazon’s latest advertising campaigns
Why does Bezos insist new ideas must be written and presented in memo form?
Multiple Choice
To ensure legally defensible inter-office communication.
Because he does not communicate via computer, only in hard copy memos.
To ensure that all senior managers have a copy of the proposals.
Because forcing ideas to be submitted in narrative form helps ensure clear thinking.
To ensure intellectual property is protected.
If you were a senior executive at Amazon, which of these traits would be the least likely for Jeff Bezos to tolerate?
Multiple Choice
tardiness
seeming ill-prepared and incompetent
shopping on competitors’ websites
long memos
Assurance of Learning: Key Components of the Strategy Execution Process at Zara
Read the overview below and complete the activities that follow.
When a company’s strategy fails, it is often due to poor execution. Even a brilliant strategy can fail if managers do not ensure that it is implemented well. Proficient strategy execution depends foremost on having in place an organization capable of the tasks demanded of it. Building an execution-capable organization is thus always a top priority. As shown in Figure 10.2, three types of organization-building actions are paramount: (1) Staffing the organizationputting together a strong management team, and recruiting and retaining employees with the needed experience, technical skills, and intellectual capital; (2) Acquiring, developing, and strengthening the resources and capabilities required for good strategy executionaccumulating the required resources, developing proficiencies in performing strategy-critical value chain activities, and updating the company’s capabilities to match changing market conditions and customer expectations; and (3) Structuring the organization and work effortorganizing value chain activities and business processes, establishing lines of authority and reporting relationships, and deciding how much decision-making authority to delegate to lower-level managers and frontline employees.
If the strategy being implemented is a new strategy, the company may need to add to its resource and capability mix in other respects as well. But renewing, upgrading, and revising the organization’s resources and capabilities is a part of the strategy execution process even if the strategy is fundamentally the same because strategic assets depreciate, and conditions are always changing. Thus, augmenting and strengthening the firm’s core competencies and seeing that they are suited to the current strategy are also top priorities.
The goal of this exercise is for you to understand what managers must do to execute the company’s strategy successfully.
Before completing this exercise, be sure to review Chapter 10, “Building an Organization Capable of Good Strategy Execution;” specifically, Illustration Capsule 10.2, “Zara’s Strategy Execution Strategies” (following).
Zara, a major division of Inditex Group, is a leading “fast fashion” retailer. As soon as designs are seen in high-end fashion houses such as Prada, Zara’s design team sets to work altering the clothing designs so that it can produce high fashion at mass-retailing prices. Zara’s strategy is clever, but by no means unique. The company’s competitive advantage is in strategy execution. Every step of Zara’s value chain execution is geared toward putting fashionable clothes in stores quickly, realizing high turnover, and strategically driving traffic.
The first key lever is a quick production process. Zara’s design team uses inspiration from high fashion and nearly real-time feedback from stores to create up to-the-minute pieces. Manufacturing largely occurs in factories close to headquarters in Spain, northern Africa, and Turkey, all areas considered to have a high cost of labor. Placing the factories strategically close allows for more flexibility and greater responsiveness to market needs, thereby outweighing the additional labor costs. The entire production process, from design to arrival at stores, takes only two weeks, while other retailers take six months. Whereas traditional retailers commit up to 80 percent of their lines by the start of the season, Zara commits only 50 to 60 percent, meaning that up to half of the merchandise to hit stores is designed and manufactured during the season. Zara purposefully manufactures in small lot sizes to avoid discounting later and also to encourage impulse shopping, as a particular item could be gone in a few days. From start to finish, Zara has engineered its production process to maximize turnover and turnaround time, creating a true advantage in this step of strategy execution. Zara also excels at driving traffic to stores. First, the small lot sizes and frequent shipments (up to twice a week per store) drive customers to visit often and purchase quickly. Zara shoppers average 17 visits per year, versus four to five for The Gap. On average, items stay in a Zara store only 11 days. Second, Zara spends no money on advertising, but it occupies some of the most expensive retail space in town, always near the high-fashion houses it imitates. Proximity reinforces the high-fashion association, while the busy street drives significant foot traffic. Overall, Zara has managed to create competitive advantage in every level of strategy execution by tightly aligning design, production, advertising, and real estate with the overall strategy of fast fashion: extremely fast and extremely flexible.
Assurance of Learning: Staffing the OrganizationJeff Bezos and Amazon
Read the overview below and complete the activities that follow.
Assembling a capable management team is a cornerstone of the organization-building task. While different strategies and company circumstances sometimes call for different mixes of backgrounds, experiences, management styles, and know-how, the most important consideration is to fill key managerial slots with smart people who are clear thinkers, good at figuring out what needs to be done, skilled in managing people, and accomplished in delivering good results. The task of implementing challenging strategic initiatives must be assigned to executives who have the skills and talents to handle them and who can be counted on to get the job done well. Without a capable, results-oriented management team, the implementation process is likely to be hampered by missed deadlines, misdirected or wasteful efforts, and managerial ineptness.
The goal of this exercise is for you to understand why hiring, training, and retaining the right people constitute a key component of the strategy execution process.
Search online to read about Jeff Bezos’s management of his new executives. Specifically, explore Amazon.com’s “S-Team” meetings at the following links:
https://www.inc.com/justin-bariso/jeff-bezos-knows-how-to-run-a-meeting-here-are-his-three-simple-rules.html
https://www.cnbc.com/2019/10/14/jeff-bezos-this-is-the-smartest-thing-we-ever-did-at-amazon.html
https://money.com/amazon-meetings-no-powerpoint/management.fortune.cnn.com/2012/11/16/jeff-bezos-amazon/
Before completing this exercise, be sure to review Chapter 10, “Building an Organization Capable of Good Strategy Execution.”
