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Zara

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Week 1 - Information Systems Strategy Triangle

|Business Strategy Elements |Organizational Strategy Elements |Information Strategy Elements |
|Short merchandise production cycle |Vertical integration |Strategic i.t investments, minimum i.t use with |
| | |guaranteed profit |
|Short display lifespan of products in stores |Ordering merchandise every two weeks |the customer opinions influence information |
| | |gathering done by simple PDAs and POS systems |
|Identifying fashion trends through consumer |Heavily relying on systematic managers |There is no fixed inventory of merchandise |
|interactions | | |
|No advertising |Chain of decision made by locals, information |Relatively minimal online marketing |
| |gathered by stores from customers | |
|In house and near-by local manufacture |Large distribution facilities | |
|Production and dyeing of their own fabric |Very fast fulfillments by the design team | |
|Always expanding | | |

Impacts between the elements:

There is a balance between two of the sides which will resemble something in form of an isosceles triangle because of the minimal use of IT on one side and could also lead to conflict later. An impact would be the working dynamics between the short life time of products in stores and the quick buys would not work if they decided to put more effort into online marketing. Another impact is that because the high customer demands are directly connected to the production, manufacture and logistics rates, there is a low risk of repetition. The decision making policies made in all chains of command make it easier to correct mistakes, make quick changes and take into account the varying consumer preferences. Another impact is how much power and burdens the store managers have, in a situation when the managers have to be replaced or are dishonest it, replacing them becomes a serious problem.

|Industry Strategy Elements |Industry Organizational Strategy Elements |Industry Strategy Elements |
|Constant growth and profit |Affordable merchandise pricing |Use of the POS system |
|New design every season |Layout and location of distribution centers |Market expenditure |
|Store arrangements | | |

Similarities and differences:

Similarities

They all have stores in different locations around the world mostly in Europe

They all implement the use of IT one way or another in their businesses like e-commerce

There is a particular way of running businesses in the retail fashion business including the change of products during new seasons, store displays, colours.

Differences

Not so sure about the use of POS in the current times because POS systems are rarely in use, which makes it difficult to fix when problems arise. Although the system works well for now, there is always the danger that it could be easily hacked, mishandled and they are being obtuse by not using current technology and the risk of having compatibility issues in the future with systems.

:

Step 4:

I would evaluate the options using the following

The new system should have a communication mode to get back to the cube

Be able to record sales and information gathered

Inventory transfers between stores

Sales gathering for all daily sales in all stores

Dial up systems to make order

No private exchange in the supply chain

The new system would have to be in line with the different sides of the triangle and not contradict the triangle.

I will choose the 2nd criteria.

Step 5:

Recommended actions and decisions:

I would say the way they have used the technology for themselves but it is worrying when I think of how long they will be able to sustain this model. It has been so successful for them that there is a tendency to become too comfortable and not be ready in cases of emergencies and major technology advances. My recommendation would be to remain relevant and grow with the times Zara needs to still maintain its identity while upgrading its core methodology to meet the demands of its consumers and be able to conquer new market. The system should still be kept simple as it makes it easy for workers to understand, hire IT trainers to come into the stores, design and distribution centers to slowly train staff while not pausing operations.

Develop their online store to be a major sales point, increase their online sales, as a frequent online shopper I find Zara’s website content old fashion and uninteresting for a website in 2013.

The company should take my advice because as much as their chain of doing their method is difficult to duplicate they might be getting too comfortable and it may be time to do a little tweaking in their use of technology to be protected from their competitiors.one day you are up and another day you are out, the fashion industry is very competitive and they do not want to become the next gap.

References

• A. McAfee, ''Do we have too much IT’’, Mit Sloan Management Review ,volume 45,no 3(spring 2004)

J. Gallaugher,'' Information Systems: A Manager's Guide to Harnessing Technology”, Flat World Knowledge, 2013

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Step 1: Create lists of case details that fit each side of the triangle.

Step 2: Then look at each item and think about how that item affects the other sides of the triangle.

Step 3: Take a look at the industry. Make a list of triangle attributes you find. Compare the industry items with the case company items.

Information Strategy

Organizational Strategy

Business Strategy

Zara Case Situation

You are a member of a Zara employee taskforce. The taskforce has been asked to make recommendations on selecting a new point-of-sale device for all of their retail locations. The team has narrowed the choices down to three products. The first product allows for access to the internet for both store use and sending sales transactions reporting, email, customer data collection and lookup, and full inventory functions (in-stock, location, reduction information). The second product has the same functions as the first but with limited in-store only inventory functions (search only). The third product has no inventory functions and access to the internet is limited to sales reporting to corporate. Based on your knowledge of Zara’s business and process management, explain which POS product you would recommend. Support your opinion with the case information.

Step 4: How would evaluate the options? What criteria would you use? How do the triangle sides impact the options?

Step 5: What decisions and actions would you recommend to the case company? What data supports your conclusions? Why should the case company take your advice?

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