ZARA & H&M

The above VRIO framework for both companies indicates that there are different useful resources that are enabling the Zara to get competitive edge over rival brands. The supply chain system of Zara is quite unique and the company is able to produce customized products for different regions of world (Zhou and Luo, 2013). It has the capability to meet the continuously changing demands of customers due to buyer-driven supply chain. Moreover, the products are offered at relatively low prices but the products are of high quality. The management of Zara is managing the resources as well as capabilities in an efficient manner and has got competitive edge over rival brands. However, the VRIO framework for H&M indicates that there are different resources that are not rare and can be copied easily. For example, the designs of H&M can be copied by different rival brands. Likewise, the supply chain of H&M along with financial resources is not rare and unique. On the other hand, the supply chain system of Zara is unique and it has the capacity to introduce new products in the market in less than one month time period. The resources and competencies of Zara have enabled it to get the competitive advantage. This competitive edge has enabled Zara to penetrate in the global market efficiently and meet the needs of customers by providing customized items.

Managerial implications and theoretical relevance

It was mentioned by Baker and Hart (2008) that there are different factors that play an important role in making the companies successful in international markets. In addition, the main factors are the resources as well as capabilities of companies. According to Cateora (2008) both internal and external business environments have an impact on the company’s operations and success, and if the internal environment is managed effectively then the impact of factors in external environment can also be minimized. In addition, with the help of internal strengths of companies, effective strategies can be made to cope with the external business environment. It was mentioned by Albaum et al., (2008) and Craig and Douglas (2005) that companies can perform better than their competitive rivals by taking maximum advantage out of available resources and core competencies. There are different resources available to Zara which lead towards competitive edge. The major resources of Zara include 3000 designers, excellent brand image in the international market, outstanding global presence, flexible as well as efficient value chain, adoption of dispersed production system, buyer-driven supply chain as well as more than 650 outlets in various countries around the globe (Caro et al., 2010; Ghemawat and Nueno, 2006). All of these resources are highly useful for Zara for excellent performance and high productivity. Zara has its own designers that design unique as well as excellent clothing for males, females as well as children. One of the main distinct resources of Zara is that it has efficient supply chain as well as made to order system. Moreover, the new designs of Zara are available to the customers in every 20 days because the company focuses on just in time (Parsad and Jha, 2012). Zara is able to produce quality products because it uses advanced technology. The designs and quality of products are unique and these cannot be copied by the competitors. It is highly important to understand that there are different resources available to H&M, on the basis of which, the company is operating successfully and is the major rival of Zara. The main resources of H&M include physical resources, human capital as well as financial and intangible resources. The company has strong brand recognition around the globe, efficient and huge number of workforce (132,000 employees), more than 3900 stores in 64 different countries, huge revenues, high brand worth as well as presence at prime locations around the world and its ethical concerns (Zhelyazkov, 2011). However, the designs of H&M are not unique as compared with that of Zara’s. It was mentioned by Khan et al., (2012) that the supply chain of H&M is not efficient along with the production systems and lead towards late delivery of products. In addition, the new designs are not frequently introduced by H&M as compared with Zara. Zara’s designers are highly skilled and large in number as compared with that of H&M’s. Other than resources, core competencies and capabilities of companies are helpful for them in getting competitive edge over rival brands (Bhardwaj and Fairhurst, 2010). The competencies of Zara include capability to deliver high fashioned clothing products at relatively low prices as compared with rivals brand including H&M.  In addition, Zara is capable to bring in new designs to market at very fast speed due to efficient production system and put emphasis on market preferences as well as continuously changing fashion trends and styles. The core competencies of H&M include high responsiveness to the market trends, centralized supply chains systems, innovative infrastructure for production and selling of products, collaboration with various designers, attractive advertisement campaigns, social media presence as well as purchasing flexibility (Bruce and Daly, 2006). This indicates that there is no personal designers’ team for H&M like Zara but it collaborates with different big designers. On the other hand, the designers’ team of Zara is highly efficient and able to produce highly innovative clothing designs but collaboration of H&M with designers is for short time period, thus, dedication and devotion is low. Zara has gained competitive edge over rival brands because of minimal production and delivery time. It was mentioned by Tokatli (2008) that the resources and competencies were not present to Zara at the initial stages and these were created by the management. In addition, Zara is highly customer oriented and focuses on fulfilling the needs of customers, continuously focuses on the market changes, has built integrated global information system and is focusing on continuous improvement in products and operations. According to Cortez et al., (2014) the technology used by Zara is highly advanced that enables the company to produce high quality products to meet the changing needs of customers. In addition, there is strong network of Zara’s suppliers in various countries around the globe that help the company to produce high quality products.

Conclusion

It can be concluded that different resources as well as capabilities and competencies of business concerns are highly useful in getting success and competitive edge over rival brands. The resources and competencies of Zara are unique, difficult to be copied, rare as well as valuable and organized in an efficient manner. This has enabled the company to get edge over rival brands. It is also concluded that the resources and capabilities were not available to Zara at the initial stages and these were created by the management. In addition, Zara is highly customer oriented and focuses on fulfilling the needs of customers, continuously focuses on the market changes, has built integrated global information system and is focusing on continuous improvement in products and operations. On the other hand, the resources and capabilities of H&M are also useful but are not quite rare and valuable as compared with that of Zara’s. The resources of H&M can be easily copied but that of Zara are highly costly and impossible to be copied. Thus, it is concluded that useful resources and capabilities enable the companies to get competitive edge.

References

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