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Assignment Studio
Business Planning Assignment

ZARA
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Contents
Introduction:................................................................................................................................... 5

Internationalization ....................................................................................................................... 6

Global Marketing for ZARA ......................................................................................................... 6

Definition of Marketing:............................................................................................................ 8

Value: ......................................................................................................................................... 8

INNOVATION................................................................................................................................ 9

One need a lot of ideas from a lot of different places ..................................................... 9

Move rapidly from design to market. ................................................................................. 9

Innovate all aspects of the business ............................................................................... 10

Prototype and model quickly ............................................................................................ 10

Get fast feedback ............................................................................................................... 10

Flatten the structure ........................................................................................................... 10

Strategic goals ............................................................................................................................ 10

Operational Plan:........................................................................................................................ 11

Financial Plan ............................................................................................................................. 12

Forecast Revenue stream..................................................................................................... 12

MARKETING STRATEGIES .................................................................................................... 14

MARKETING PROGRAM ......................................................................................................... 14

Marketing Objectives:............................................................................................................... 14
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Short term:............................................................................................................................. 14

Long term: ........................................................................................................................... 15

Strategy........................................................................................................................................ 15

Diversification...................................................................................................................... 15

PENETRATION STRATEGIES ............................................................................................ 15

Product:................................................................................................................................ 16

Quality: ................................................................................................................................. 16

PRICING ...................................................................................................................................... 16

PLACE.......................................................................................................................................... 16

PROMOTIONAL STRATEGY .................................................................................................. 17

They aim to:......................................................................................................................... 17

Loyalty Program ..................................................................................................................... 17

Objectives: ........................................................................................................................... 17

IMPLEMENTATION PLAN ....................................................................................................... 18

Supply chain and Logistic management ................................................................................. 19

Conclusion ................................................................................................................................... 21

Appendix ...................................................................................................................................... 22

Reference List ............................................................................................................................. 25

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Executive Summary:
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Introduction:
This initial statement is a plan to disclose the intention of beginning a Zara Store

in within a new market (Bhatia, 2000). Zara is an international retail company that deals

in clothing and accessories. The company is based in Spain and was founded in 1975.

Currently it has several stores in different parts of the world especially Europe and the

Middle East where majority of its stores are located. Zara being a successful company

within the area of clothing and accessories, it can easily develop a new product and

make impressive sales in short time. There are number of brands and the company

sales in its stores including the famous pull and bear, and Massimo Dutti (reference

required). Each year, the company launches new designs of cloths to keep up with the

trend in the fashion industry and to deliver the needs and wants of its customers. The

designs are based on both local and worldwide fashion trends.

Because the company has established a well known brand in the fashion industry

worldwide, opening another store in any new market will not be a big issue for the

company. It is for this reason that the company should open a new store in Melbourne

Australia to expand its market. Currently, the customers within this particular target

market are offered with a variety of attire to choose from, many local and international

brands are already available in the market. Considering the fact that Melbourne is such

a diverse place, it would be nice to give the dwellers a taste of indigenous fashion and

clothing material from other parts of the world (reference required).

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Internationalization

Businesses either small or large are rapidly being globalized because of various

reasons, extending a business internationally has now become very much desirable and

feasible in today’s rapidly changing business environment (Mead, R (1994)). To make

such thing happen successful technology has played a major part in it. Businesses at

present need more than just well-made products and well designed services to succeed

in the global market. In order to compete and succeed internationally there are number

of factors to consider and look in to, most importa nt decisions to make are market

selection and complete understanding of the economic, cultural and political

environment of these markets. Business managers, Owners, Stake holders and leaders

who are associate with Zara needs to be well aware of the challe nges they might face if

they are willing to enter in to a completely new market, for this purpose top level

managers needs to have complete skills of managing functional areas such as

marketing and finance, promotions, interdependence of international markets, norms

that are part of other cultures and other risks associated to it (Mead, R (1994)).

Global Marketing for ZARA

Terminologies or phrases like global village and world economy turn out to be popular.

Marketing has become a complete subject and marketing has been developed into a

systematic plan since the global business existence. Even by companies like Zara it

requires proper planning and deep analysis of all the process that is going into

operation (FAO 1997)

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To make a business globalize requires planning, together with careful consideration to

global cultural and economical factors as well as likeness in products, price, marketing,
promotion, and other internal and external factors. Markets like Melbourne which is
culturally very much diversified, people of all backgrounds and cultures are present, the
company needs to be very innovative and creative to meet the needs of such
customers.

There are some external and internal factors that play very crucial role in global

marketing and can be a reason of success or downfall of an industry whether

developing or established. At first place there is need to comprehend the aspects that

could grow into internationalism and globalization (Crawford 1997).

Here we are going to demonstrate different factors that are part of external and internal
nature and have influence over marketing strategy when going global. There is a hell of
difference between national and international business strategies and advertising and
marketing plan.

A very interesting example to better understand the factor that hinders the global

marketing is the language difference, cultural norms and values. This is very common

when a European company like Zara launches its project offshore to the Western areas

(Crawford 1997).

Industry at a Glance:

The retail industry of Australia has seen several tough years, with overall cautious

consumers spending, lower prices, higher rents and most importantly global financial

crises, all playing important roles to driving revenue down by 0.7% (IBIS, 2012) This is

where Zara can take advantage, as it’s a well known brand for around the world with

exceptional supply chain in practice and selling products at comparatively cheap prices.
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Industry revenue is forecast to grow by 1.2% per annum to reach $12.9 billion in 2016-

17 (IBIS, 2012), which can be considered as a good positive sign for brands like Zara.

Definition of Marketing:
The procedure of building enduring interactions through planning, undertaking, and
handling the comprehension, price, marketing, and promoting and consortium of ideas,
products or services to create reasonable return that match specific and company
demands and goals (Carter n.d.) Marketing has a particular environment that is
comprises of various factors and has affect on the company’s assessment and verdicts.
These factors are internal as well as external and require keen observation and
consideration while making any policy to carry on a project.

Internal (5M) External

Money Micro Macro (Pestel)

Management Customers Political

Manpower Competitors Environmental

Machinery Suppliers Socio-cultural

Material (raw) Public Technological

Ecological

Legal

Value:
The value of the store will be based on its clients, associates and ideologies. The clients
are the most important value for the Melbourne Zara store. It is the clients who will
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ensure that a culture of buying cloths and clothing materials from the store a nd all its
future franchises is built (Graebner, 2005). This will be achieved by ensuring that the
services offered by Zara must be of high quality. Zara Clothing Store is going to be a
large retail store, which is designed to provide middle class income earners with fashion
styled merchandise from Spain. The store will carry designer and quality clothes, which
will give access and convenience to men to wear modern and fashionable clothes.

Zara Clothing Store will be located in the Chadstone shopping centre, one of the most
busiest malls in Melbourne Australia. The mission of the project is to provide customers
with high quality and fashionable clothing and offering superior customer service
throughout and always remembering each customer may be a source of referral
business to the company.

INNOVATION
One need a lot of ideas from a lot of different places. The Zara design team based
in Europe consists of 350 people and they are charged with generating and delivering
18,000 new product designs a year – in other words, 360 a week, which is by far the
most design by any brand.

Designers at Zara do get inspire from books, magazines and other sources but their
main differentiation is that they take feedback from their customers and follow it, Our
customers tell us what they like and don’t like. We attend shows and talks about fashion
to get ideas. It is an ongoing process.

Move rapidly from design to market. At Zara the initial idea origination to the store
shelf takes less than four weeks; they move far faster than their other competitors in the
local and international markets. They want to create waves and be ahead of the wave.
In addition, they put their products into 5,500 stores from Brisbane to Lisbon at just
about the same time. This is one of many areas where Zara is not only creative but at
the same time meet the demands of customers in a completely different way.
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Innovate all aspects of the business. Innovation at Zara does not apply only to
products but even to the whole process. The company has used creative approaches to
streamline and optimize manufacturing, supply chain management, data tracking,
inventory management, store layout and staff operations worldwide.

Prototype and model quickly. Designs and ideas are tested rapidly, before they
introduced in the market, at Zara’s headquarters in Arteixo La Coruna, Spain there are
mock shops and 25 full-size shop windows with differing displays and lighting.

Get fast feedback. Store staff use wireless communications to relay information every
day back to the firm’s Spanish headquarters about sales and inventories, from all
around the world. Fast information about what is selling and what is not enables the
group to respond to the public mood and to quickly supply more of the most popular
designs to where they are needed. Even the customers feedback and suggestions are
taken seriously and if needed appropriate actions are taken. But even the top selling
fashions are discontinued after four weeks. Zara deliberately kills them in an act of
creative destruction.

Flatten the structure. Traditional fashion companies have hierarchical management

structures with many big egos getting involved in every decision. On the other hand,
company like Zara has a flat structure with designers empowered to make fast
decisions.

Strategic goals
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 Creating a highly innovative and unique products and services that will give Zara

an edge from its competitors.

 Providing good quality of products and services to all clienteles in order to create

a customer base and brand the store.

 Providing the perfect environment to all our associates in order to retain them

and get the best skills out of them.

 Controlling the cost of operation to ensure the organization meets its target profit

margin. The elements of operation that will be emphasized in order to meet this

goal include: accounts receivable and accounts payable, order taking, receiving,

purchase, and storage.

 The average target sales for this first fiscal year is $800,000; achieved by

keeping the labor within small range of the total sales and which would translate

to a higher gross margin

Operational Plan:
General operating hours and personnel

Days Timings

Monday 9:00 am – 5:30 pm

Tuesday 9:00 am – 5:30 pm

Wednesday 9:00 am – 5:30 pm

Thursday 9:00 am – 9:00 pm

Friday 9:00 am – 9:00 pm

Saturday 9:00 am – 5:00 pm

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Sunday 10:00 am – 5:00 pm

The starting work force will consist of Store manager, two assistant managers

(one for each floor), Mentors (who will help assistant managers) sales personnel,

supervisor, account officers, IT personnel and the top management. Selection for

appointment of the each member of staff will follow through evaluation criteria in order

to select the most qualified candidates (Wheelright & Clark, 1992). The lower rank

employees will work in shifts in order to observe the requirements of the labor laws.

Financial Plan
Validation of Key Assumption:

The financial forecast of the company will be modeled using CAPM (Capital Asset Price

Modelling) which consist of the real operating cost in both Australia and its base market.

The key variables have been validated through research and the experience gained by

the founders in establishing the business so far around the world.

Forecast Revenue stream

The overall business package provided by Zara will be based on following streams:

The following method will be used to set up promotion budget.

Since Zara will be new in market; therefore, methods used must be innovative and
going to use price skimming strategy. Therefore, this is how the budget has to be
divided:
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 Personal media that requires space over the internet and a website. It requires a
negligible cost.
 Non personal media requires most of the cost. The budget can be divided in
following way:
 50% of the money has to be invested on advertising and broadcasting
expenses. The commercials can be of medium budget, where the company
can show the difference between before and after effects of using our product
or personal character execution strategy
 25% of the expenses are for designing and publishing advertisements on
Sunday newspapers and other magazines
 5% will be used for Social Media, which has become a very powerful media
nowadays
 The rest of the amount will be spent on direct selling. The right people with

the right set of skills will be hired according to the remaining budget

This means that the major cost will be used on media and publications. The costs for

the rest of the communication mediums are very minor.

Advertising 80%

Direct Selling 15%

Sales Promotions 5%
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MARKETING STRATEGIES
Some of the strategies that will be employed towards marketing include:

direct marketing, advertising, promotion, and person to person marketing. A budget for

implementing an effective marketing strategy within the first one year is $ 50,000.

MARKETING PROGRAM

Marketing Objectives:

Before the details of a marketing plan can be developed, objectives for the plan must be
stated (charles, 2008) The business function of marketing is important to Zara as it is a
strategy in which is implemented in order to achieve the business goals and promote
the product. Zara consider it as the heart of the success of their business mainly
because of the reasons that it include the promotion, product and the price of the good
and may also have control over operational areas such as finances and employees.
Zara should work on different marketing objectives which can be categorized under
short term objectives and long term objectives.

Short term:
 Attract more customers
 More awareness of Zara products in the local Australian market
 To be on the top
 To deliver the right and positive image of the company
 To be the first choice for its customers
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Long term:
 To be the market leader
 To open more and more branches all around Australia
 To associate and partnership with other companies, only if possible
 To offer more competitive and high quality products

Strategy
Diversification

Zara is known for its great designs and products that they provide to their customers.

Zara will include a variety of products in its store, like perfumes, handbags, and also will

target people of all age.

PENETRATION STRATEGIES
Before entering any country a company like Zara should and must decide on its strateg y

on how to enter that particular country. According to Doole and Lowe (2001) company

objectives and expectations, size and financial resources, existing foreign market

involvement, skills, abilities and attitudes of management, the nature and power of the

competition, the nature of the product or service itself and the timing of the move

relative to competitors should be considered, as this will definitely play a key role in it.

Since Zara is a well known brand in the world fashion industry, the company won’t have

to work hard to penetrate in the market. Soon after their launch they will get a good

response from the market and from the very first year company will start making its

profit.
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The Marketing Mix is the combination of marketing strategies emplo yed to achieve the goals of the
Marketing Plan (Kalb, 1995)

Product:
Zara products takes into consideration all of these factors that all come together to increase
the appeal of fashion products to its target market.

Quality: The quality of Zara products are high that are constantly managed, the raw
material used in the product are of good quality.

PRICING
Zara offers affordable prices for all its products which can easily be afford by all its
customers as they all can easily be afforded. Besides the average income of people in
Australia is normally high, as result majority of the people can afford to spend $40 to
$300 on its products. Zara use the cost plus margin method of calculating the price of t heir products.
This means calculating the total cost of production and adding a percent age (margin) for profit. This
includes taking into account rent, wages and prices of supplies.

PLACE
Places plays a significant role in the marketing of any product or service either locally or
internationally. Before opening any outlet it is very important that Zara should and must
take into consideration the aspect of the location that they are willing to open in the near
future. Some important aspect about location can be termed as:

The visibility of the location, Is the location is easily accessible? Is it in some mall or
main road?
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PROMOTIONAL STRATEGY
Promotional strategies are normally viewed as the way one communicates with their target market
(Stephen, 2003) Zara will use a number of promotional strategies in order to inform non-existing
customers about their new products, to keep the loyalty of their regular customers and to highlight
how great affordable their products are.

They aim to:

- Build positive relationships in the community with other businesses.
- Increase sales
- Drive traffic into store
- Tailor an offer to local community

Loyalty Program
Objectives:
 Encourage and reward customer loyalty
 To increase traffic in stores
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IMPLEMENTATION PLAN

Media Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

Print Y Y Y

Radio Y Y Y Y

TV Y Y Y Y

Outdoors Y Y Y Y Y

Events Y Y Y Y Y Y Y Y

PR --------------------------------------------------------------------------------------------------

Online -----------------------------------------------------------------------------------------------
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Supply chain and Logistic management

In order to increase its capital base, the company needs to have an IPO after a specific

period of operation. An IPO is an equity stocks issue that is offered when a company

first initiates public trading of its shares. The valuation process for new private

companies occurs in two phases. The first phase is the pricing evaluation. The objective

of this phase is to determine the initial offering price for shares in the newly public

company. The second phase is the market evaluation. The results of this phase reflect

the actual worth of the new company based on the market’s response to the company’s

IPO (Lodato, 2008).

Supply chain is one of the key strengths at Zara, which must be managed well in order

to avoid the bullwhip effect in the supply chain process which occurs as the demand

order variability in the supply chain process is magnified as the company moves up the

supply chain. This bullwhip effect could cause inefficiencies in the operation process

which could create graver consequences to the company. However, this could easily be

remedied once its cause/s is/are identified which includes any of the following: demand

forecast updating, order batching, price fluctuation, or rationing and shortage gaming.

The supply chain management process encounters different problems and issues in its

operation. These issues cover the whole process from the strategic to the operational

level. Among the issues in the supply chain management process include network

planning, inventory control, supply contracts, distribution strategies, supply chain

integration, strategic partnering, outsourcing, procurement strategies, and product

design (Kotler & Fernando, 2003).

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Other issues concerning the process include network planning, supply chain

integration, strategic partnering, IT, Decision Support System, and training. Aside from

the internal issues surrounding the SCM process, there are also issues connected to

the different practices of SCM in different countries. For examples, the supply chain

management practice in Asia is considered to be more fragmented and less competitive

than its practice in United States and in Europe.

Using value stream mapping, it will study on the challenges and problems encountered

by SCM in a global context. This value stream uses all the necessary steps involved in

the supply chain process with the use of two streams or flow. These streams are the

flow of products and the flow of information. In that study, the three key elements in a

supply chain (process, people, and technology) are hig hlighted. Aside from that, the

concepts of logistics, inventory, and the customer’s needs must be given focus in the

creation of their corporate goals and programs. The main challenge of supply chain

management, is to keep up with the global demands of their customers, competitors,

and vendors. They are essential forces now as they gain power to dictate and take

control of the operation of a business in contrast to the trend before their suppliers have

the ability to dictate the process of shipping and accepting orders.

In terms of the demand and supply trends within the industry, Schwarz has listed some

of the issues and challenges that companies face pertain to supply chain management.

On the demand side, there are the issues of uneven growth, fragmentation, accelerated

volatility, and the importance of aftermarket (reference required). These are the issues

deal with the customers and the industry in general. This affects their ability and

capacity to purchase materials and products. On the supply side, t he challenges that
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they are faced with differentiated outsourcing, low-cost country outsourcing, risk

management, and transparency/accountability. These issues must be monitored well

and solved so that firms would be able to avoid further problems and graver issues in

the future.

Conclusion
Zara is an international retail company that deals in clothing and accessories. The

company is based in Spain and was founded in 1975. Currently it has several stores in

different parts of the world especially Europe and the Middle East where the bulk of i ts

stores are located. Zara being a successful company within the area of clothing and

accessories, it can easily develop a new product and make impressive sales in short

time. There a number of brands and the company sales in its stores including the

famous pull and bear, and Massimo Dutti. Each year, the company launches new

designs of cloths to keep up with the trend in the fashion industry. The designs are

based on both local and worldwide fashion trends.

It is essential for the company to make accurate forecasts of the demand and

supply figures in order to maximize the process. Thus, a company must regularly

monitor the supply and demand for their products and make the most out of those

products. An automobile company could not possibly manufacture products more than

the demand in the market since this could cause some problems in warehousing. Thus,

the logistical distribution process of a company must be closely monitored.

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Because the company has built itself a brand well known within the worldwide

market, begin a store in a local market that it has not explored would be appropriate. It

is for this reason that the company should open a store in New York to expand its

production and sales. Currently, the customers within this particular target market are

not offered a variety of attire to choose from. Considering the fact that New York is such

a diverse place, it would be nice to give the dwellers a taste of indigenous fashion and

clothing material from other parts of the world.

The total amount of money that shall be needed to start the new store for its first year

will be $ 300,000. This amount includes $200,000 for startup capital and $100,000 for

operations reserves. In order to locate the target market, the store will be sited in

upstate New York which is also close to one of the up market residential areas. This will

ensure a 24/7 work flow during working days, weekends and holidays. To be more

specific, the store will be located near a business mall in New York with a continuous

streaming of shoppers and people in general (Clow and Baack, 2007). This is the

clothing store of this kind in this location as most of the clothing stores in New York do

sell exotic clothing (Cook, 2000).

Appendix
The role played by SCM in decreasing the inventories, gaining better services,

diminishing costs with inventory turns. Thus, keeping a good SCM must be observed at

all times by the firms (reference required). This is considered as one of the biggest

advantages of SCM as short term objectives in terms of increasing the firm’s

productivity and decreasing inventory and reducing the process’ lead time occur usually.
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Distribution management or transportation management is a decisive part of

international logistics and supply chain management. Based on the National Council of

Physical Distribution Management (NCPDM), physical distribution is a broad range of

activities which pertains to the efficient movement of the finished goods and products

from the end of the production line to the consumer. These activities include freight

transportation, warehousing, material handling, protective packaging, inventory control,

plant and warehouse site selection, order processing, market forecasting, and customer

service.

Strategic distribution is a competitive advantage that accrues ge nerally from the

configuration of a distribution network (who, what, where, when) and, more specifically,

from the selection of partners (i.e. middlemen) who intermediate between the company

and the customer by performing necessary fulfilment and service activities.

Distribution also plays a major role in marketing and selling products to the end

customers. This is a major activity which affects the mode in which the consumers

receive the products that are manufactured and produced by a firm. The medium in

which products are delivered to the consumers are called distribution or marketing

channels (reference required). This is a set of interdependent organizations which are

involved in the process of making a product or service available for use or consumpti on

by the consumer or business user. The marketing channels are important for a

company for two reasons: (1) it affects every other marketing decisions, (2) it often

involves long-term commitments to other firms involving business-to-business relations

and are not as easy or as flexible to change as other marketing mix decisions

(reference required).
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Logistics has been defined in several ways. It may also pertain to different

things and can be associated with different aspects such as the military, civil

organizations, among others. This process includes the planning and control of

material flows and related information in organizations, both public and in private

sectors.

In simpler terms, it pertains to the process of delivering the right materials at the

right time in order to complete the production process. It is the supply chain process that

plans, implements, and controls the flow of goods or can also pertain to the

management of inventory, in rest or in motion.

Among these definitions given to logistics, the most popular is the one

which describes logistics as a process consisting of the seven R's: having the (1)

right product, in the (2) right quantity and the (3) right condition, at the (4) right

place, at the (5) right time, for the (6) right customer, at the (7) right price. The

most formal definition given for logistics was provided by the Council of Logistics

Management defining logistics as the process of planning, implementing, and

controlling the efficient, cost-effective flow, and storage of raw materials, in-

process inventory, finished goods, and related information from point of origin to

point of consumption for the purpose of conforming to customer requirements.

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