Saturday, September 21, 2019
Strategic Decision Making Case Study: Zara
Strategic Decision Making Case Study: Zara Introduction ZARA is the brand of the Spanish retail group, INDITEX SA. Its one of the well known performers in a retail market in recent years its stores can now be found in the most important shopping districts of more than 400 cities in Europe, the Americas, Asia and Africa. With year-on-year sales increasing at around 25% over the last 5 years, it has become one of the worlds fastest growing retailers (Lopez, 2009). Task 2 Strategic decision A strategic decision is what is thought to be a long-term investment and which is helpful in changing the direction of business undergoing in any organization. Such a decision can be a lot risky as the market changes very rapidly but if it turns out to be successful it give a competitive advantage over its competitors. The decision will be made by the top level management in a company and the shareholders will be consulted for that (Harris,ÃâÃ 1998). Example For taking an example of a strategic decision we can take a look at their working with a design driven strategy, they produce about 11000 styles per year which means that they produce about 1000 new styles every month which is managed by a team consist of experts in design and development fields of over 200 people. This means that every member of the team on average is producing around 60 styles a year. As a result of that in zara stores a customer can always find a customer can always find new and latest products. This comes out to be a successful strategic decision in order to gain the competitive edge and higher profits in the market (Machuca, 2005). Tactical decision The second type of decision is called tactical decision making. Such a decision may be made by a group of managers but the shareholders are not involved in it as it is a medium term decision and have a lesser effect then a strategic decision. The result of such a decision can be seen within a period of less than a year or so and it has no contribution in changing the direction of the business. (McKinne) Example An example of such a decision is Zaras unique approach to advertising and marketing. It an additional factor within their business model which adds a lot to their success. They spend 0.3% of total revenues on advertising and marketing. This percentage is very less as compared to the competitors in their markets as on average companies like GAP and HM spend about 3-4 % of their total revenue for the similar expense this shows that Zara is successfully maintain a cost advantage to their competitors in marketing activities. For completing with its peers successfully Zara uses different useful locations, store layouts and the life cycle of its products as an effective marketing tool. they open their stores in primes markets to get the maximum visibility. And as mentioned earlier their product are in stores for a very small period of time which provokes the customer to visit time and again and make a rapid decision about purchasing as they might not get that product again when they visit the store even next day. Zara also spend heavily to the layout of their stores each store is remolded after every five years to keep up with the current trends (Gallaugher, 2008) Operational decisions Operational decisions are those which are made on regular basis the effects of such decisions are often minimal and usually do not last for more than a week of so these decisions are mostly done by staff and do not require much of an attention by the top level management (Harris, 1998). Example The example of such a decisions at Zara is its Centralized Logistics and Distribution they have maintain a control and have optimized their supply chain very effectively at many different levels. Within a week there are two orders or prescribes specific days and hours with usually prepared overnight shipments in La Coruna. (Felipe et al., 2010) There are specific times for trucks to leave and shipments to arrive at stores, the garments are pre-hung, already labeled and priced even those which are set by air.ÃâÃ As a result of this clearly defined rhythm, not on the supply chain works smoothly but also the customers know the time and days to visit the stores to get the fresh arrivals and new designs. It is very interesting to know that where in industry a standard time of 6 months has to get the product from sketch to store Zara does this in a remarkable short time of just 2 weeks (Vitzthum, 2001) Task 3:Ã Information needed for decision making Following is the explanation of the type of information required for strategic and tactical decision making. Human intelligence such as information from store managers and market research and information technology such as PDA devices are being used in order to form a hybrid model for flow of information from where houses to stores. Manager present at Zara stores use hand handheld device to send the standardized information about the feedback by customers and ordering needs directly to in house designers. This not only support and helps in making strategic decisions along with the rapidly changing trends and customers demand but also make the company be aware about the merchandise which is less desirable. The competitors of Zara completely rely on information technology which the unique approach being used by Zara makes them manage their inventories well helps them create a link between demand and supply and also helps in controls the problems occurring due to obsolete merchandise. For supporting the operational decisions Information from the distribution centers and from the production facilities, gives a better view to the manager of a certain store about the availability of garments at the stores this also helps in adjusting their orders and passing on information needed by the customer. (123HelpMe.com, 2010) Task 4:Ã Competitors intelligence The competitive intelligence is a process of monitoring the activities of rivals in market. It helps to know about competitors plans and review the own strategies for taking successful decisions (Arik, 2010). Main competitors of Zara are HM and Gap. HM OPENS its distribution centers in the region it has its stores in order to cut down the lead time and transportation cost. It also heavily investing in advertisement which helps them cater large market size and capture attention of a lot of customers worldwide. Another risk which is reported to the Inditex group it works by reinvesting all its profits in opening new stores HM is Sweden based retailer that spent heavily in advertising and is a close competitor of Zara. HM opens its distribution center in the country of its operations so as to cut down on lead time and transportation cost. (Pankaj and Jose, 2006) The process which id adopted by Zara of obtaining the market information is very different from its competitors. Many of them majorly rely on small elite design teams that plan all the needs of the business. Their stores have a very little autonomy in deciding which products they should out in display or which to go for sale because the quantities and planned and shipped according to the forecasts. Where the speed of Zara in product development is far better than anyone in the market (123HelpMe.com, 2010). When it comes to Strategic Partnerships and Cost of Production Most of Zaras competitors have 100% outsourcing to cheap Asian countries. Zara does not use Asian outsourcing unlike its competitors such as Gap, Benetton, and HM and 80% of Zaras materials are manufactured in Europe with 50% made in Zara controlled facilities in the Galicia region of Spain . The cost of production in Spain is 17-20% more expensive than Asia this gives a cost advantage to it competitors in regard to labor and expands their market worldwide (123HelpMe.com, 2010). The information and communication technologies being used by the competitors of Zara are quite different the cost spent by Zara in this regard is less than 0.5% of its total revenue and the it employees account for about 0.5% of Zaras total workforce. And if we take a look at its competitors they spend on average 2% of their total revenue on it expenditures and have 2.5% of their total workforce devoted to it. Which certainly makes their working far better in these areas? This is the global age and these gimmicks are demand of the time so Zara should pay some more attention to it both financially and strategically (123HelpMe.com, 2010). Task 5:Ã Importance of Business-To-Business for Zara Business to business commerce is a form of E-commerce involving business to business transactions, servicing customers, working with other businesses and the exchanging of products or services. B2B opens up a global market at little cost, reduces the costs of sales and promotions and can increase demand. This term specifically defines the electronic collaboration among different enterprisers. The B2B is a lot more important for Zara to promote its business activities at a bigger level and to cater a bigger market. It makes sure the world about the about the presence of variety of products available in its stores. Zara is even new to e-commerce as it launched it website in 2009 (Alisa, 2009). As compared to its competitors Zara is offering cheaper rates and a good quality product that is why many dealers would want to make a purchase to save their expenditure on high prices designers clothes of same quality. This will also give the benefit of saving time and money because after taking the order the product may be delivered to the door step of the customer. And other e-commerce retailers who are involved with fashion will be looking carefully to what Zaras online store can bring to online shoppers. The pace of which your ordinary high street stores are moving online and developing e-commerce solutions is set to lead to a more intensified competition for online sales, and more focused e-commerce marketing strategies. (DeltaQuest, 2010) Canada and China: Cybercrime and Cryptocurrency Canada and China: Cybercrime and Cryptocurrency Bitcoin, Cyber-crime, Cryptocurrency, Canada, China. Cyber-crime is a byproduct of the information age and is growing very fast worldwide (FBI, 2017). As technology has advanced so have the criminals methods to exploit the internet. Cyber-crime can be described as the use of a computer, a network or other electronic device to facilitate a crime, Interpol makes a distinction between two types of cyber-crime (INTERPOL, 2017): Advanced cyber-crime attacks on computer software or hardware; Cyber-enabled crime financial crimes, crimes against children and terrorism are more prevalent since the introduction of the internet. These types of crime in the past would have been likely to be conducted by small groups or even individuals, but new trends according to Interpol show organized criminal gangs worldwide have embraced technology to further their profits be it from illegal gambling, sale of fake goods, theft, fraud etc. Since 2009 the criminals now have a new virtual currency also labelled as a cryptocurrency called Bitcoin which is used by many to conduct transactions on what has become known as the dark web. The dark web can only be accessed through encryption software and this area of the internet is largely un-policed and users can remain anonymous. The anonymity is an ideal scenario for the criminal to work in. This paper will discuss firstly the give a brief overview of cyber-crime and the origins of bitcoin in more detail. Secondly how this electronic currency technology is being used for legal and illegal purposes. And lastly how governments around the globe are trying to regulate this electronic currency, with a major focus on the Canadian government and Bill C-31. Criminality is nothing new it has been part of lives for centuries, crime as such has not changed over the years only the tools used to carry them out have developed. Criminals have learned to use technology to hide themselves in the shadows and use technology to further profit. The biggest technological advancement in the last thirty years has been the internet. The internet has revolutionized our lives in so many ways from ease of communications, e-commerce to the large wealth of knowledge on line. Cyber-crime comes in many forms but it is primarily aimed at computers, computer infrastructure and other connected devices. With the large spread of the internet and smartphones, now nearly 3.2 billion people on the planet have access to the internet (ITU, 2015). It increases the pool of people that criminals have access to. When this is compared to decades ago when computers were only used by government agencies, research and financial institutes, crime in this area was limited to those who had the expertise and access to these devices (Clough, 2015). Now a small group can conduct crimes on a global scale without the restrictions of physical location to perform the crime. Bitcoin is an electronic virtual currency that allows users to conduct transactions between themselves (peer to peer) over an electronic network without the need for a third party namely a financial institution (Nakamoto 2008). Bitcoin was released in January 2009 by Satoshi Nakamoto which there is little known about as this was an alias used by the inventor (Powers 2014). The Bitcoin software is open source and in order to use the currency a user must obtain a wallet, there are two common types of wallets. Firstly the software wallet and the secondly the mobile wallet (Bitcoin 2017). The software wallet is mostly stored on a users hard drive, with the mobile wallet being stored on mobile devices such as android phones, IOS phones and tablets, giving the user the flexibility of have a currency attached to a mobile device. These wallets contain both a public and private key, the public key is what a user will share with other Bitcoin users in order to have them send bitcoins over the internet, whereas the private key is used by the owner of the bitcoins to make payments from the wallet (Miller 2015). The back bone of this cryptocurrency is the public ledger called the blockchain, this ledger records who owns what bitcoins and records transactions that take place. No one controls or owns the blockchain its all in the public domain. Transactions on the blockchain cant be reversed, the blockchain is only written too and are confirmed by the peer to peer network. Nakamoto has placed a limit of just under 21 million bitcoins, once that limit is reached, no more bitcoins can be made. Bitcoin is viewed as being the electronic equivalent of cash, as no financial institutes are involved no personal information is required when creating a personal wallet or purchasing Bitcoins. This anonymity has drawn scrutiny from some sectors to Bitcoin because some criminals have adopted the currency instead of conducting business in more traditional financial ways (Miller 2015). Just like any currency, Bitcoin can be used to purchase many of the everyday things in life the same way that we use traditional cash or credit cards. You can transfer Bitcoin to relatives, donate to charity, and this was what Bitcoin was created for to be a replacement for current systems. The first Bitcoin ATM was opened in Vancouver, Canada in 2013. In its first week of operation, the ATM performed over 10,000 independent transactions with a third of users being first time Bitcoin buyers (Wagner 2013). Across the world, entire city areas are accepting this cryptocurrency Bitcoin as payment for a range of goods and services. In the Germany City of Berlin, the borough of Kreuzberg, has the highest number of businesses accepting Bitcoin on the planet. This is expanding across the globe because every day more and more businesses are authorizing Bitcoin as a means of payment (Small 2015). Kirkpatrick (2017) refers to an interview with David Decary-Hetu, an adjunct professor of criminology at the University of Montreal, There are many helpful and legal reasons for having bitcoin, Decary-Hetu says, noting that large established companies such as Dell Computer, Expedia, Microsoft, and PayPal, each accept bitcoin, and are clearly not dealing in illegal goods. Small (2015) stated the total market value of the Bitcoin currency is currently estimated at slightly below $7.6 billion. The main argument for the regulation of virtual currencies and Bitcoin is that because of the anonymity offered to the buyer of such currencies, criminals have advantage over law makers and law enforcement. This anonymity helps obscure the identities of those purchasing drugs, money laundering, illegal paraphernalia and terrorist financing with the use of Bitcoin. Kirkpatrick (2017) again in his interview with Decary-Hetu says There is no way to tie your identity to your online bitcoin wallet address, if you do it properly, noting that when users try to convert cryptocurrencies to traditional money they may lose that anonymity. Thats where sloppy people are going to get arrested. China In China, the government banned Bitcoin in December 2013. The Peoples Bank of China does not give Bitcoin any legal status, refuses to recognize it as a currency, and has misgivings about Bitcoin as a central authority does not regulate it (Ponsford 2015). This was not always the case as in May 2013, the Chinese government unofficially gave its blessing to the currency when the government sponsored a documentary that was shown on state television to inform the public about Bitcoin (Small 2015). Because of the interest that came from the documentary, a surge of Chinese clients downloaded Bitcoin software, more than any other country for the last seven months of 2013. Before the ban, China accounted for the most Bitcoin exchanges and as a result Bitcoins value plummeted nearly twenty percent in a single day after the announcement (Small 2015). Canada In Canada, the government in 2014 stated that Bitcoin was not legal tender. The government however did state that it was a payment system (George-Cosh 2014) and as such should be taxed as a commodity when Bitcoin is exchanged for Canadian currency. Canada was the first jurisdiction in the world to pass concrete legislative measures to deal with Bitcoin and other virtual currencies. Bill C-31 was passed into law in June 2014, which made reporting requirements on the use of virtual currencies like Bitcoin. These measures are similar in nature to regulations on other financial transactions in the country. Bill C-31 made it law that Bitcoin be regulated as a money services business, requiring users to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). These Bitcoin regulations would apply to both domestic and international Bitcoin operators (Ponsford 2015). The summary of Bill C-31 stated (in part): Division 19 of Part 6 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things, enhance the client identification, record keeping and registration requirements for financial institutions and intermediaries, refer to online casinos, and extend the application of the Act to persons and entities that deal in virtual currencies and foreign money services businesses [emphasis added]. Legislation that specifically altered the definition of money services business stated: (4) If subsection 256(2) comes into force, then on the latter of January 1, 2015 and the day on which that subsection comes into force, money services business means an entity (a)(iv) dealing in virtual currencies, as defined by regulation Other legislative provisions incorporated virtual currency language, including foreign businesses directing services at a Canadian person or entity. This legislation has had effects on Bitcoin use in Canada, because firstly it regulates virtual currency as a money service business; secondly imposes registration with FINTRAC to combat money laundering and terrorist financing; thirdly extends to both users inside and outside of the jurisdiction, or services within Canada; fourthly prevents banks from dealing with unregistered users (Ponsford 2015). References bitcoin.org (2017). Available: https://bitcoin.org/en/choose-your-wallet. Last accessed 18/03/2017. Calumn Jeffrey and Tobias Feakin. (2015). Ungerground web. ASPI Special Report. March 2015. Daniel Miller. (2015). Bitcoin explained: the digital currency making millionaires. Available: http://www.abc.net.au/news/2013-12-02/bitcoins-the-digital-currency-explained/5119034. Last accessed 19/03/2017. David George-Cosh. (2014). Canada Says Bitcoin Isnt Legal Tender. Available: http://blogs.wsj.com/canadarealtime/2014/01/16/canada-says-bitcoin-isnt-legal-tender/. 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