Business Models Comparison
By Amina Šahinpašić, Miguel Rojo, Paulo Coelho
Two flows in opposite directions: • • The product flow; The flow of market information.
The competitive benefits distinguishes them from other competitors; They do thesame as competitors, but in a specific way; Different paths, but does not mean that some strategy is wrong.
Zara has created a new model in the fashion industry – “fast fashion”; H&M has a better performance in terms of their costs.
The big difference between the models is how they manage their supply chains and the dichotomy of the strategy to buy/sell.
Anotherissue that distinguishes the clothing chains is Stock management; Formulation of forecasts.
Changing the nature of supply chains, so that processes are able to respond flexibly and efficiently and instantly to customer needs, makes prediction unnecessary.
The main difference between the chains of Zara and H&M:
The decision to buy/do;
Is it better to internalize?
Is it more advantageous to do outsource?
Focusing resources on core competencies.
• High degree of vertical integration (design, production, logistics and distribution in own stores); 60% of its products are produced internally; "Fast fashion", because they can create new models in 5 weeks and modify existing in 2 weeks; • • • • •
Do not have any factory;Materials are provided for about 700 suppliers (Asia and Europe); Production shifted to places where labour is cheaper; Outsourcing is the strategic option; Central to its strategy(reduction of production costs); Agile and flexible; The stores, the Internet and catalogues;
Make or buy
Very agile and quick; Locates its stores in areas with more traffic and prestige; Thelayout is the same for all stores;
• The location of factories and suppliers take into account the geographical proximity; Most by truck and the remaining by air; Centralization allows to satisfy the orders but increases the time to distant markets; • • •
Products placed in stores through various distribution centers; Get closer to the various marketswhich may allow savings of time and costs; Purchase more than 60% of its clothing in Asia and the transport is done by boat, and may take 24 days;
PDA is connected to the central • reporting sales volume, colour, size, media payment discounts and price adjustments;
Platform, which delivers weekly, a list with information about sales,stocks, purchasing plans and production;
• • Work is based on forecasts; Store managers determine the amount of requests based on information from vendors, collected from customers and checking on each shelf which was sold; Inventories at the store remain low. •
Focuses on optimizing time and costs. For that, they have two supply chains, "efficient" in the production of basic parts,minimizing cost, "fast" in Europe to produce the most sensitive fashion products, in order to respond more quickly to market;
• • • • Different brands (men, women and children); Home textile; Various assortment; Constant introduction of new products; • • • •
Different brands (men, women, teenagers and children); Home textile; Cosmetics; Two collections per year;Product
• • •
5.044 stores around the world; Stores in prestigious locations and high traffic; The stores offer generally assortment for all segments;
2.300 stores around the world; Stores in high-traffic sites that can be directed to a segment or several;
Price low / medium; Good relation quality / price;
Price low / medium; Good relation...