Zara: an example in Just-in-time business
Before you Read
What do you think these phrasal verbs/words means? When you read try to guess the meaning.
Pre-discussion questions
Have you heard of Zara the fashion-clothing retailer?
What do you know about Zara?
What do you think makes Zara successful?
Which of the underlined words below do you know already?
Zara is a fashion retail-clothing outlet that uses a vertical integration system to fulfill demand for its product. This business model covers all phases of the fashion process: design; manufacture; logistics; and distribution to its own managed stores.
The key is the ability to adapt product to customer demand in the shortest time possible, offering a significant advantage over competitors. This is a business model, famously known as just-in-time production, which is used by some companies in the world. Toyota is probably the most famous for developing and using this system successfully.
In fact, the turnaround time for bringing a design concept to the
shelves at Zara can be as short as 15 days.
All Zara stores receive new product twice a week. This compares favorably with many of the chain's competitors, which usually receive new styles just once or twice each season. The fact that new stock arrives so frequently has several benefits. Most importantly, it encourages customers to come back regularly and, because styles are only available for a limited period, it promotes a sense of exclusivity. Small batch production creates a scarcity premium and
encourages impulse purchase.
Guessing Meaning From Context
Now, match the letters of the phrasal verbs/words with the closest numbered meaning in the right column. The answers are at the bottom.
|
vertical integration system |
A |
1 |
The one important thing that makes something successful |
|
business model |
B |
2 |
How quickly a company can finish something after it receives an order/sale |
|
The key |
C |
3 |
A new idea, development, innovation |
|
adapt |
D |
4 |
Something that few other people can have |
|
turnaround time |
E |
5 |
They system a business uses. How a business does things to be successful. |
|
design concept |
F |
6 |
Something that makes something very rare and increases its value |
|
sense of exclusivity. |
G |
7 |
Buying something quickly without thinking usually because the price is low and doesn’t need much thinking about |
|
scarcity premium |
H |
8 |
Ability to change to a new situation |
|
impulse purchase |
I |
9 |
Ability of a manufacturer to make something as needed and so not need to have stock/product sitting waiting to be sold |
|
Just-in-time production |
J |
10 |
Controlling a product from manufacture until final sale in stores |
A=10, B=5, C=1, D=8, E=2, F=3, G=4, H=6, I=7, J=9
Some Questions to help you use the new words/phrases
1. Why is just-in time-production successful for Zara? Is this the same system as Toyota’s system?
2. In what kind of industry would you expect to see a vertical integration system used?
3. In your own words; describe what Zara’s business model is?
4. What is the key to Zara’s success? Use adapt in your answer.
5. How does Zara get a sense of exclusivity?
6. Do you make impulse purchases? What do you purchase?
7. In what other industries would turn around time be critical/important? Why?
8. What product design concept has impressed you? Think of a product that you know or like.
9. Describe a band that has, “brand exclusivity”? Why do you think so?
10. Do you think that Gucci’s scarcity premium is value of money? Why or why not?
11. Do you think this system can be successful for every company/your company? Why or why not?
Some example sentences using the new words/phrases.
1. Some coffee retail stores now vertically integrate by owning both the coffee bean farms and the production and the coffee shops.
2. In the 1970s Korean companies business models were based on low price, but they have had to adapt to higher costs and now their business model has changed to quality and service. This has been the key to their success.
3. After an order is made with Hyundai Shipbuilding you should expect a turn-around-time of about 2 years until you can receive your order.
4. Last week I went to the ILsan motor show and saw some exciting new design concepts for hybrid and electric cars.
5. BMW tries to create a feeling of exclusivity, so that you know that not anybody can buy or own one of their cars.
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