Value Chain Essay

9593 words - 39 pages



Zara: IT for Fast Fashion

On a beautiful August night in 2003, Xan Salgado Badás and Bruno Sánchez Ocampo settled into
seats at their favorite tapas bar in the Spanish city of La Coruña, ordered pulpo gallego (octopus
Galician style), and resumed their argument.
Salgado was the head of IT for Inditex, a multinational clothing retailer and manufacturer
headquartered in La Coruña (see Exhibit 1 for a map). He was Sánchez’s boss, although the two men
had worked together for so long that their formal reporting relationship mattered little. It certainly
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e., the
screen, keyboard, disk drive, processor, etc.) and the software (also called “applications” or “programs”) that users want to run
on the computer. Microsoft’s MS-DOS (Microsoft Disk Operating System), or DOS, was a widely installed operating system in
early personal computers. In 1985, Microsoft launched the Windows OS to replace DOS.
Professor Andrew McAfee, Executive Director of the HBS Europe Research Center Vincent Dessain, and Research Associate Anders Sjöman
prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of
primary data, or illustrations of effective or ineffective management.
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604-081 ZARA: IT for Fast Fashion

“Of course not. So let’s buy a bunch of the current terminals so if that happens we’ll have plenty
of breathing room while we port the POS application to a new OS.2 But I don’t even think we need to
do that. The terminal vendor has assured us they’re not going to make any drastic changes, and
we’re a big customer.
“And let me remind you why we shouldn’t tamper with POS unless we absolutely have to,”
Sanchez continued. “Everything about it works! Sales get recorded in stores around the world and
transmitted to us here every day like clockwork. I wrote most of the POS application, and I’m the
one a store manager calls when there’s a problem they can’t fix. Do you know how many of those
calls I got last week?”
“I know that the application is stable, but that doesn’t . . .”
Sánchez didn’t let him finish: “None! That’s how many! Let me ask you another question—do
you know how many stores we opened last week?”
“No, but what’s that got to . . .”
“Exactly! That’s because opening a store requires no IT involvement! You don’t have to send
someone to Dubai, or Argentina, or Russia, or wherever. The store manager just unpacks the POS
terminals, inserts a couple disks in each, plugs a modem into a phone line, and starts selling clothes.
Why on Earth would you want to mess with that?”
“Because I’m worried about DOS,” Salgado said. “And because I think it might be time to

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