In a brief essay, discuss the strategy used by Zara, the firm described in the opening case. Also discuss the features of Zara's value chain
What will be an ideal response?
Zara realized that offering standardized fashion styles at reasonable prices neutralized stubborn local preferences. Its global network, supported by state-of-the-art logistics, gave customers worldwide real-time access to the newest, coolest fashion trends. Global markets let Zara leverage its global scale investment in design, manufacturing, distribution, and retail activities. The resulting efficiencies, in turn, supported making high-quality, low-cost products that, by offering compelling value, re-powered the cycle. Zara does not adapt products to a particular country's preferences. The convergence of fashion and taste across national boundaries endorses management's bias toward standardization. However, some product designs cater to physical, cultural, or climate differences—smaller sizes in Japan, special women's clothing in Arab countries, and different seasonal weights in South America. Still, Zara standardized about 85 percent of its designs for the global market. The firm has a concentrated value chain with its product design, manufacturing, and logistics activities located in Spain at the firm's headquarters.
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External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise
Indicate whether the statement is true or false.
Which of the following is not a reason firms innovate and develop new products?
A) To obey government mandates B) To achieve a competitive advantage C) To gain market share D) To take advantage of higher profitability on a new product E) To enhance a brand name