Zara's Information System

Can Zara Keep Up with Speed Chic? Zara is one of the largest international fashion companies. It was originally belongs to Inditex, which is one of the global largest retail groups (Zara, 2010). The first Zara store was opened at A Coruña, Galicia, Spain in the year of 1975 (Wikipedia n.d, Zara) Zara comprised many different styles, from daily clothes, to casuals up to formals clothing, thus providing a complete collection of one stop fashion solution for people of all ages doesn’t matter women, men or children. Zara’s Business model is exemplified by a high level of Vertical integration compared to the models created by their competitors around the world. It covers all stage of the fashion activity which is the design, manufacture, logistics and distribution even to its own supervised stores. It has an adaptable structure which helps focus more customers in all of its business areas. The secret to this model is the capability to alter the offer to customer wants in the shortest time as the fashion season changed rapidly. For Zara, time is the main factor to be considered, aside from the factor of production costs. Zara usually produced a model and have it for sale in its stores internationally approximately two weeks. Zara has the ability to manufacture models in a short time as it has a wide range of professional experienced external suppliers who have a solid business-related relationship with the organization plan. With it, clothes are able to be dispatched and restock its stores twice a week (Fashion Gear, n.d). Besides, Inditex group, which is the headquarter of Zara also owns brands such as Massimo Dutti, Oysho, Pull and Bear, Stradivarius, Bershka and Uterqüe (Wikipedia n.d, Zara)

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Can Zara Keep Up with Speed Chic? Question 1 Information systems (IS) is the review of complementary systems of hardware and software that helps people and organizations to collect, process, store and distribute data (Wikipedia n.d, Information System) which support facilitate planning, control, coordination, and decision making in an organization (Business Dictionary, 2012). Hence, with information system, Zara is able to understand the demands of its own market and with it, it’s easier for Zara to do its own management planning, controlling, coordination and decision making that will determine the satisfaction and next, to fulfill the needs or demand of its market. In each of the business firm, there is a few strategic business objectives of information system that need to be achieve in order to do well in a business. There are six main strategic objectives: 1. Operational Excellence 

Improving the efficiency of the business operational is certainly needed in a business in order to reach a higher profitability (Lecturer’s Note, 2012)

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Zara have to keep giving training to the management so that they can improve their efficiency in many ways that able to contribute to the company.

2. New products, services and Business models 

Products, services, and business models can be newly created with Systems and information technologies. A business model shows how a business firm produced, sells and distribute goods to create profit (JoshStuff.net, 2009-2010)

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Business model is a must for Zara to create, so that the management easily knows where the profit or loss occurred from. If the business model stated was loss, Zara can do some innovation or improve the service on the specific product.

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Can Zara Keep Up with Speed Chic? 3. Customer and Supplier Intimacy 

In a business, when customers like to come back to purchase more products, it will eventually increase the revenues and the profit of a business. Same goes to supplier (Joshstuff.net, 2009-2010)

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Zara have to have a good relationship with the customer by giving a good and warm services and fixing an affordable price to attract customer to buy at their shop instead of the competitors shop.

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Besides that, Zara must also have a good relationship with supplier by paying debts on time. When Zara engages better with suppliers, they might give discount on purchases and provide vital marketing information. Thus, it will help lower the cost.

4. Improved decision making 

When making decision, Systems and information technology managers must use the current market data to make a more appropriate decision (Joshstuff.net, 2009-2010)

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To improved decision making, Zara must use the current market data instead of relying on the forecast or rumors as this often gave a wrong result. The wrong decision made might cause the raise of manufacturing cost and result of customer loss as company gave a poor response.

5. Competitive advantages 

Information System and Technology can offer competitive advantages to a firm as it help to analysis the operation excellence, new products, services and Business models, Customer/ Supplier intimacy and improved decision making (Lecturer’s Note, 2012)

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With information system and technology, Zara can do things better than its competitors, such as charge lesser on certain products to gain more customer and profits or to always up to date on certain fashion style.

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Can Zara Keep Up with Speed Chic?

6. Survival 

Systems and information technology are important and needed in a business. It helps provide the competence to respond to the requirement of industry or government regulation (Joshstuff.net, 2009-2010)

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Zara needs the system and information technology as there are federal regulations that require companies to keep records.

There are four main types of information systems. A business has to have systems to support different levels of management. Example of information systems are: -

Transaction Processing Systems (TPS)

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Management Information Systems (MIS)

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Decision-Support Systems (DSS)

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Executive Information Systems (EIS) or Executive Support Systems (ESS)

These four types of information system which is TPS, MIS, DSS and EIS/ESS are important for Zara’s current environment to survive in this particular market field. Transaction Processing Systems (TPS) is a computer database system that carry out and records the regular routine transactions that was needed to conduct a business, such as sales order entry, payroll, employee record keeping or shipping (Lecturer’s note, 2012). For any other company included Zara, TPS is treated as a major procedures of information for the other types of information systems such as MIS, DSS and EIS/ESS. TPS is usually conducted by the lower management with operational planning in a business. TPS is needed as it records the daily activities. It is highly needed as every day, different customer will order different products online, and it is best if the orders are viewed and was accomplished as soon as payment has been made. With this, it will give a good image to the Zara’s customers. As Zara is a big company, Zara must have a feature of rapid response in order to keep a good relationship with the customer. With TPS, this requirement can be fulfilled. A big company like Zara cannot afford to 4

Can Zara Keep Up with Speed Chic? have customers waiting for a TPS to respond as most of the customer is from around the world. The turnaround time from the input of the transaction to the production for the output must be fast to satisfy the customer’s need (Wikipedia n.d, features) Besides, TPS have the features of reliability. As Zara is a big company, it relies heavily on TPS. Breakdowns might occur, but TPS has a well-designed backup program which will recover the procedures quick enough before any problem occur. (Wikipedia n.d, features) Management Information Systems (MIS) is a computerized database of financial information organized and programmed to produce daily reports on operations for every level of management in a company (Inc.com) MIS is usually conducted by the middle level management with tactical planning. With MIS, it gives Zara’s managers feedback about the company operation that directly let the top management to monitor the company overall. The feedbacks are gathered from the data received of the company units and functions. Some of the data are collected automatically from computer-linked check-out counters (Inc.com) With MIS, Zara are able to specify their strengths and weaknesses with the presence of revenue reports, employees' performance record etc. The identification of these aspects can help Zara to enhance the business operation (Wikipedia n.d, advantages) With MIS, Zara can have an overall picture of the company.. The accessibility of the customer data and feedback can help the company to support their business processes according to the needs of the customers. Indirectly, it helps the company to perform direct marketing and promotion activities which Zara need it as it can improve their sales. The consumer buying trends and behaviors can be predicted by the analysis of sales and revenue reports with MIS from each operating region in Zara management (Wikipedia n.d, advantages) Decision Support Systems (DSS) are a specific class of computerized information system that supports business and organizational decision-making activities. It is a non-routine activity that is conducted by the middle management of a company. Zara need DSS as it helps identify and solve problems and make decisions (Information Builders, 1996-2012). DSS can speed up the process of decision making, which save time in a management. It helps enhance effectiveness as usually decision making usually slow down the management as it takes time. (DSSsystem blogspot, 2010 January). Especially when Zara is a big company. Besides, with DSS, it is able to gain competitive advantages. In today’s competitive business environment, we have to achieve 5

Can Zara Keep Up with Speed Chic? competitive advantage to get a maximize performance. Without competitive advantage, Zara will not be able to operate and will eventually cease to exist (Targit.com, n.d). One of Zara’s tightest competitors is Hennes & Mauritz (H&M). With DSS, it helps to certify the differences between Zara and the competitor’s. With the data and information given, Zara is able to make a better decision making which help to gain more profits in order to compete with the competitors. Executive Support System (ESS) is software that allows users to alter the management data quickly into executive-level reports. ESS enhances decision making for management like Zara and is also known as Executive Information System (EIS) (Techopedia, 2010) ESS is usually conducted by the top level management which provides a strategic and long-term planning. Executive Support System also provides analysis tools that predict the performance outcomes by using the input data (Webopedia, 2012) Zara need ESS because it provides timely delivery of information. Management is able to make a more promptly decision without delaying it (Wikipedia 2012). ESS provides competitive advantages. As Zara is a big company, it is best to be able to make a better decision in a short duration, to compete with the competitors. Zara must have a planning between 3-5years ahead to survive in this specific field. With ESS, Zara is able to improve its tracking information which indirectly offers a better efficiency to the decision makers.

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Can Zara Keep Up with Speed Chic? Question 2 Zara’s information system provides value to the company as they get a fast response or feedback from a certain organization. Customer is the most important assets to Zara as they are the one who determined Zara’s profit and loss. Customer is a party that receives or consumes products or service and has the ability to choose between different products and suppliers (Business Dictionary, 2012). Zara must have the intention to have a long-term or loyal customer that will always return to buy more. With this, it is advisable for Zara to provide a correct system to apply in the management which able satisfies the needs of the customers. Customers will always compare between businesses which gave them more benefits, have better quality and able to give satisfaction. For an example, the tightest competitor of Zara is H&M. Customer will often compare between the prices and qualify of products and service between these two companies. If Zara is able to tether the heart of the customer, customer will usually give a feedback to improve the field that H&M has and Zara doesn’t have. The feedback was one the information system. Indirectly, it provides a value to Zara to improve better in this field. With it, Zara can gain new customers and encourage repeated customers (Articlesbase, 2005-2012) Besides that, suppliers play an important role too. Supplier is a party that supplies goods or services. They can be known as a vendor also (Business Dictionary, 2012). Zara must create a good relationship with suppliers. Product has to have innovation all the time, and is newly created with Systems and information technologies. By buying more and paying debts on time, intimacy between suppliers will be created. When Zara engages better with suppliers, they might give discount on purchases. Thus, it will help lower the cost and innovation can be done from time to time. Hence, supplier will often contribute information and provide vital marketing information. With the information given, Zara information system can help identify the popularity of certain products in the market. With the data collected, Zara can create a new or better product. Data will be collected by the information system. This will bring a better value to the company.

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Can Zara Keep Up with Speed Chic? Employee is the other important assets in the company. Employee is someone who works for another in return for financial or other compensation (Free Dictionary, 2012). Employee is needed because they are the one who will help to run the business day to day operation. Zara’s employee must have the full knowledge of the company system. Zara must have a good relationship with the employee because a company must have employees to run a business better, especially when Zara is a big company. When Zara recruit new employees, it is better sure that the old management or employees had a proper training for the newbie. This is to ensure that the new employees had a better review and understand the company information system. Besides, it is to make sure that the company won’t be in chaos when the old employees leave the company, and has been overtake by the new one. Thus, by this, it will provide a better value to a company.

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Can Zara Keep Up with Speed Chic? Question 3 1. Management: Management’s usual job is usually to solve out the situation faced by the organization of a company. It was said that the manager of Zara store will continually report the customer preferences and behavior to a central planning office using a personal digital assistant. This means that the management usually decides from the conclusion or result of the report given. With this method of decision method, there are advantages and disadvantage. The good one is, Zara can update their product up-to-date based on the society demand. Where else the bad one is, Zara might face chaos in the company for producing the product in time before the trend had ended, and they might find difficulty finding the raw material to create the new products. But wise say, Zara have to use this method as this will ensure them to catch up with the current trend, and to attract more customer to buy product from them.

2. Organization: Zara operates with a lean organizational structure. It emphasizes high performance which helps to reduce the number of managerial hierarchy levels and regionalize decision-making. This model limits the business’s focus on the administrative procedures. From design to delivery it takes the company five weeks for a new design and two weeks for an existing model. This shortens the product life cycle, and is able to fulfill the consumer needs in a short time (Tortora Word Press, 2010) By this organization structure, Zara can survive continuously on the market since the production level is actually quick enough to compete with the competitors.

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Can Zara Keep Up with Speed Chic?

3. Technology : Zara and its lean organization thrive on the use of information technology. Zara shops use this technology to report directly to their production centers and designers in Spain. Zara uses PDAs to check on the latest clothing that’s been designed and place their orders based on the demand they see in their store. Moreover, Zara is also a vertically integrated company. Zara owns it’s on textile dye house and has set up a well-oiled machine based on customer demand and fast turnaround (Tortora Word Press, 2010). By this technology, Zara can improve the company efficiency and are up to date to the customer needs and current trend.

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Can Zara Keep Up with Speed Chic? Conclusion:

From this assignment, I had learned the importance of Information System and Technology to a company. It is a base to run a company better. Besides that, I had also learned the four basic type of Information System. These four systems are related to the company management level and each of it was divided to the specific management level. Each information system will provide value to a company if was used wisely, and will affect the future of a company. Hence, choosing a suitable Information system is very important to a company.

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Can Zara Keep Up with Speed Chic? References List Customer. (2012). In Business Dictionary. Retrieved from http://www.businessdictionary.com/definition/customer.html Decision Support System. (2010, January). Advantages of Decision Support system. Retrieved from http://dsssystem.blogspot.com/2010/01/advantages-of-decision-support-system.html Decision support system. (n.d) Competitive Advantages. Retrieved from http://www.targit.com/decision-support-system-dss Employee. (n.d). In Free Dictionary. Retrieved from http://www.thefreedictionary.com/employee Fashion Gear. (n.d.). Zara Synopsis. Retrieved from http://fashiongear.fibre2fashion.com/brand-story/zara/ Fashion Gear. (n.d.) Zara Philosophy. Retrieved from http://fashiongear.fibre2fashion.com/brand-story/zara/philosophy.asp INC. (n.d.) Management Information Systems. Retrieved from http://www.inc.com/encyclopedia/management-information-systems-mis.html Information System. (October 19, 2012). Retrieved from the Wiki: http://en.wikipedia.org/wiki/Information_systems Information System. (2012). In Business Dictionary. Retrieved from http://www.businessdictionary.com/definition/information-system.html Information Builders. (1996-2012). Decision Support Systems Definition. Retrieved from (http://www.informationbuilders.com/decision-support-systems-dss 12

Can Zara Keep Up with Speed Chic? International Business Blog. (2009, November 18). Zara’s Organizational Structure. Retrieved from http://tortora.wordpress.com/2009/11/18/zara%E2%80%99s-organizational-structure/ JoshStuff.net. (2009-2010). How Strategic Objectives Of Business Information Systems. Retrieved from http://www.joshstuff.net/business-info/how-strategic-objectives-of-business-informationsystems/387.htm Lecturer’s Note. (2012). Strategic Business Objectives of information systems. Supplier. (2012). In Business Dictionary. Retrieved from http://www.businessdictionary.com/definition/supplier.html Technopedia. (2010-2012). Definition - What does Executive Support System (ESS) mean?. Retrieved from http://www.techopedia.com/definition/543/executive-support-system-ess Transaction Processing System. (October 17, 2012). Retrieved from Wiki: http://en.wikipedia.org/wiki/Transaction_processing_system Webopedia. (2012). Executive Support System. Retrieved from http://www.webopedia.com/TERM/E/Executive_Support_System.html Zara. (2010). Zara Company Info. Retrieved from http://www.zara.com/webapp/wcs/stores/servlet/category/my/en/zaraW2012/11112/Company Zara (Retailer). (October 15, 2012). Retrieved from the Wiki: http://en.wikipedia.org/wiki/Zara_(retailer)

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