Introduction

Under the perspective of resource based view, a firm competency and resources are what enable a firm to gain competitive advantage. This perspective is particularly useful in analysing Zara, a fashion retailer – on how the firm achieve competitive advantage in the fashion industry. To perform the analysis, the VRIO framework will be used. To structure this discussion, the resources available to Zara will be analysed, and what are the actions taken by Zara to gain these resources or competency. Then, the VRIO framework will be used to analyse how the resources available to Zara enable the firm to gain sustainable competitive advantage (or not). Conclusion will be drawn to discuss about the usefulness of resource based perspective in guiding how a firm may choose to gain competitive advantage.

Resources or Competency of Zara

Both resources available to a firm and the competency of a firm can contribute to the competitive advantage of a firm. In the following paragraphs, resources available to Zara and competency of Zara will be outlined.

Resources available to Zara include the following: (i) Zara has a total of 3000 designers (Zhelyazkov, 2011); (ii) Good brand image (Parsad & Jha, 2012), and excellent global presence (Medina, 2011; Diderich & Barker, 2010); (iii) Very agile, flexible and efficient value chain (Parsad & Jha, 2012; Lopez & Fan, 2009; Ghemawat & Nueno, 2006); (iv) Zara adopted dispersed manufacturing system (of excellent information system) to cope with the different needs from different countries in its global supply chain (Ferdows, 2003; Caro, Gallien, Díaz, García, Corredoira, Montes & Correa, 2010); (v) Zara has a buyer-driven supply chain (Parsad & Jha, 2012; Ghemawat & Nueno, 2006), which is characterised by made-to-order system (Folpe, 2000), as well as (vi) Zara has 650 stores around the world (Ferdows, 2003).

Competency of Zara include the following: (i) Ability to deliver nice fast fashion products of good quality at relatively low price (Parsad & Jha, 2012; Ghemawat & Nueno, 2006); (ii) Zara able to introduce new design to marketplace at very fast pace (Ghemawat & Nueno, 2006; Zhelyazkov, 2011; Dutta, 2003); and (iii) Have great insight on market preferences, changes and trends.

The resources available to Zara are not something available to the firm initially, as Zara had actually spent large efforts to build such resources (as well as competency). Some of these efforts include the following: (i) Being highly customer oriented and attending to customers’ needs (Parsad & Jha, 2012; Dutta, 2003; Jacob & Mamgain, 2011); (ii) Managers are delegated to track market changes and make certain marketing and selling decision (Ghemawat & Nueno, 2006); (iii) Focus on building integrated global information system (Overby & Min, 2001); (iv) Zara continuously improve its products and operational flows (Ghemawat & Nueno, 2006); (v) Zara will manufacture those products that demand higher technology and quality, while outsource those simpler products to manufacturers from developing countries (Zhelyazkov, 2011); (vi) Zara will proactively manage and share information with suppliers (Zhelyazkov, 2011); as well as (vii) Leverage on online sales (Bjork, 2010).

VRIO Framework

VRIO framework can be used to analyse the resources or competency of Zara – if they able to contribute to sustainable competitive advantage. To conduct the analysis, the resources available to Zara will be analysed one by one (and shown in Table 1 below).

Table 1: VRIO Analysis

How Zara Attain Competitive Advantage

It can be seen that resources available to Zara and competency of Zara contributed to competitive advantage of Zara. For example, ability to leverage on flexible, made to order and agile global supply chain (Walker, Bovet & Joseph, 2000) is what enable Zara to penetrate the global market effectively, and yet able to customised its products to the consumers in different countries. Indeed, how Zara manage these resources is also how the competency of Zara is shaped. Through managing the resources available to the firm, Zara arrive at a successfully business model, that enable the firm to deliver fast fashion of relatively high quality at a price affordable to the critical mass. In other words, the effective leverage and management of the resources enabled Zara to shape the core competency that eventually enable the company to possess the competitive advantage that contribute to respectable success of Zara.

Conclusion

From the case of Zara, it can be argued that the resource based perspective or theory is indeed valuable in explaining about how Zara gain competitive advantage. Through the efforts to build valuable, hardly imitable and unique resources; as well as on effective and conscious efforts to shape competency, Zara able to emerge as one of the market leader in the fashion industry.

References

Bjork, C. (2010). Zara wakes up to online sales. Wall Street Journal.

Caro, F., Gallien, J., Díaz, M., García, J., Corredoira, J. M., Montes, M., & Correa, J. (2010). Zara uses operations research to reengineer its global distribution process. Interfaces, 40(1), 71-84, 92-97.

Diderich, J., & Barker, B. (2010). H&M and Zara enter new markets. WWD, 199(115), 4-8.

Dutta, D. (2003). Retail @ the speed of fashion part – II. Images, 107-109.

Ferdows, K. (2003). New world manufacturing order: supply chain management goes global in a dispersed manufacturing environment. Industrial Engineer, February, 28-33.

Folpe, J. M. (2000). Zara has a made-to-order plan for success. Fortune, 142, 80.

Ghemawat, P., & Nueno, J. L., (2006). Zara: Fast fashion. Harvard Business School, 1-35.

Jacob, S., & Mamgain, P. (2011). Spanish retail brand Zara favourite among Indian shoppers retailing. The Economic Times (Online).

Lopez, C., & Fan, Y. (2009). Internationalisation of the Spanish fashion brand Zara. Journal of Fashion Marketing and Management, 13(2), 279-296.

Medina, A. E. (2011). An international state of mind. Display & Design Ideas: DDI, 23(1), 8.

Overby, J. W., & Min, S. (2001). International supply chain management in an internet environment: A network-oriented approach to internationalization. International Marketing Review, 18(4), 392-419.

Parsad, C., & Jha, M. N. (2012). Growth trajectory of Zara. Tecnia Journal of Management Studies, 7(1), n/a.

Walker, B., Bovet, D., & Joseph, M. (2000). Unlocking the supply chain to build competitive advantage. International Journal of Logistics Management, 11(2), 1-8.

Zhelyazkov, G. (2011). Agile supply chain: Zara’s case study analysis. Design, Manufacture and Engineering Management, 11-22.