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What should Zara do to address the challenges it faces?

            These are the challenges Zara will be facing namely:

Language, Culture and Educational Background: Language and culture are vital in the success of a company but in the case of Zara it will be a barrier because there is a tendency that the language of the people of Morocco will not be the same with the people of Portugal. These two countries (Morocco and Portugal) are major outsourcing countries, so it will surely affect the company’s production. Educational background is key to success. Morocco is a country in Africa- a developing country while Portugal is a developed or advanced country will surely affect both quality and productivity.

            High-Level Management: High-level management is the brain behind the success of major companies because the management or the manager(s) is into planning, organizing, coordinating, directing and controlling, etc. In Morocco which is a developing country professional or high-level management may be a problem to the company. In this case instead, to reduce cost it will increase cost in the sense that the company needs to ship in expatriate to the so-called company.

            High International Delivery Costs: Since Zara has expanded its market across the globe or the world. The cost of production will surely rise, base on products coming from different outsourcing countries such as Morocco and Portugal, etc. The cost of transporting the products from different countries then being shipped into Spain the headquarters before screening the products and then select the best for the market for final consumers. The extra cost will surely fall on the cost of production and this cost of production will surely be bored by the final consumers. In essence, the consumers may shift their loyalty and trust to other competitive products of similar quality.

Keeping up with growth and demand of customers: This is a great challenge to Zara as a company because before the product is being completed in each outsourcing center or country and being shipped to headquarters in Spain will surely be time-consuming and this may lead to scarcity of the product in the market. The reason being the time the product will be screened and then be distributed to different countries and Zara is operating a centralized system in which all the products must first get to headquarters in Spain to be screened because Zara needs to maintain quality and brand name of the company to protect.

Brand of the company: In a situation where products are being outsourced by the company there is a tendency that the brand will be tampered with. The brand and logo of the company is the selling point and customers value both the brand and the logo with high esteem. This intangible asset is priceless to both the customers and company at large and if not handled carefully it may lead to loss of market value.

 According to Lu, the biggest concern of outsourcing is perhaps the risk that it brings about.  

·         Negative impact on the company’s personnel

·         Risk of severe business disruption due to failed supply from single-source suppliers

·         Loss of control over key strategic design task, sub-system or component, resulting in a negative impact on the company’s competitiveness

·         Intellectual property right risks

·         Foreign currency exchange risk if involves overseas suppliers.

            Strategy can be viewed as a process whereby managers establish on organizations’ long-term direction and set specific performance objectives in the light of all the relevant internal and external circumstances, and undertake to execute the chosen plans (Akintayo, 2003).

·         The first strategy is to change the outsourcing strategy.

·         Minimize or reduce cost with a current supplier

·         Recruitment or employment of managers and other staff at the headquarters and branch offices

·         In-service training of untrained employees

·         Talent search (i.e people who can design with natural instinct)

·         Attracting foreign investors

·         Project to be outsourced to a single company or country will be easier to be maintained.

REFERENCES

Akintayo and Oghenekowo (2003). Corporate Strategies for policy formulation. Yemi Modern Printers, Ibadan, Nigeria.

            James, T. (2011). Operations Strategy. Bookboon.com

            Lu, D. (2011). Fundamentals of Supply Chain Management. Bookboon

Berfield, S. & Baigorri, M. (2013). Zara's Fashion Edge. Retrieved from: https://bambooinnovator.com/2013/11/20/zaras-fast-fashion-edge/#more-33581

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