In 2001, CNN euphorically described Zara as “a Spanish success story” (CNN, 2001). Thirteen years later, Tobias Buck of The Financial Times called the Spanish fashion brand “one of the most striking corporate success stories of recent years” (Buck, 2014). Having started as a small fashion store in A Coruña, Zara is now the flagship brand of Inditex, the biggest fashion retailer in the world.
However, Zara’s success is not cast in stone. Simon Irvin of Credit Suisse, criticising Inditex’s recently lacklustre financial performance, noted that business models were not likely to remain brilliant forever, and that Zara’s parent company were no exception to the rule (Buck, 2014). Having said that, numerous attempts have been made by competitors to copy Zara’s successful business model and thereby eliminate the firm’s competitive advantage. For instance, C&A purposefully hired away Inditex managers (The Economist, 2012), while Mango outpaced Zara in terms of sales in Spain, Zara’s home market, by copying Zara’s approach to manufacture the majority of its garments in nearby countries, as well as its product offering (Baigorri, 2013).
In light of these developments, it is essential for Zara to measure its performance timely and carefully, and identify ways in which the firm’s future performance, against the background of its business model, may be improved. The Balanced Scorecard (BSC) is the right tool to achieve this, as it translates a firm’s strategic objectives and competitive demands into a coherent set of performance measures (Kaplan & Norton, 1993a). In particular, the BSC complements financial performance measures, usually reflecting past performance, with operational measures in the areas of customer satisfaction, internal processes, and a firm’s innovation and improvement activities, all of which can be said to be drivers of future performance (Kaplan & Norton, 1992).
Table of Contents
- 1. Introduction
- 2. Analysis of Zara's stakeholders
- 2.1 Stakeholder identification and role descriptions
- 2.2 Stakeholder interests and implications for draft BSC
- 2.3 Assessment of stakeholders' power/interest levels and implications for draft BSC
- 3. Analysis of Zara's strategy
- 3.1 Introduction of strategy map
- 3.2 Explanation and justification of strategy map
- 4. Development of a suitable BSC framework
- 4.1 Identification of KPIs
- 4.2 Explanation and justification of KPIs
- 4.2.1 Financial perspective
- 4.2.2 Customer perspective
- 4.2.3 Internal business perspective
- 4.2.4 Innovation and learning perspective
- 5. Analysis of potential practical issues
- 5.1 Likely practical issues
- 5.2 Potential ways to overcome practical issues
Objectives and Key Themes
The objective of this report is to develop a draft Balanced Scorecard (BSC) for Zara, a leading global fashion retailer. The BSC will translate Zara's strategic objectives into a set of performance measures, encompassing financial, customer, internal processes, and innovation and learning perspectives. This will provide a comprehensive framework for measuring and improving Zara's future performance.
- Analysis of Zara's stakeholders and their influence on strategic objectives.
- Development of a strategy map illustrating the cause-and-effect relationships between Zara's strategic objectives.
- Identification and justification of Key Performance Indicators (KPIs) for each perspective of the BSC.
- Assessment of potential practical challenges in implementing the BSC for Zara.
- Proposing solutions to overcome the identified practical challenges.
Chapter Summaries
1. Introduction: This chapter introduces Zara, highlighting its remarkable success story and impressive market position within the Inditex group. It emphasizes Zara's innovative business model and its vulnerability to competitive pressures, particularly from imitators like Mango, H&M, and Uniqlo. The chapter establishes the need for a Balanced Scorecard (BSC) as a tool to measure Zara's performance and identify areas for improvement, particularly in forecasting future performance beyond the limitations of traditional financial metrics. The introduction lays the groundwork for the report by emphasizing the strategic importance of the project and introducing the methodology.
2. Analysis of Zara's stakeholders: This chapter identifies key stakeholder groups for Zara, analyzing their roles, interests, and influence on the company's performance. It explores the implications of these stakeholder interests for the development of a balanced scorecard, acknowledging the need for a balanced approach in considering diverse perspectives. The chapter likely involves assessing the power and interest levels of different stakeholder groups using established frameworks, informing the prioritization of specific key performance indicators within the BSC framework.
3. Analysis of Zara's strategy: This chapter focuses on developing a strategy map for Zara. A strategy map visually represents the cause-and-effect relationships between strategic objectives across different perspectives, providing a holistic view of Zara’s strategic goals. The explanation and justification section details the rationale behind the connections depicted within the strategy map, demonstrating how actions taken in one area affect other aspects of the business. This chapter’s detailed analysis of Zara's strategy serves as the foundation for selecting appropriate key performance indicators in the subsequent chapter.
4. Development of a suitable BSC framework: This chapter details the development of the Balanced Scorecard framework for Zara by identifying and justifying key performance indicators (KPIs) aligned with the four perspectives: financial, customer, internal processes, and learning & growth. Each KPI is meticulously selected to reflect the strategy map and measure Zara’s progress toward its strategic goals. The rationale behind each KPI choice is articulated, connecting it directly to specific aspects of Zara’s strategic objectives. This rigorous selection process forms the core of the BSC, providing a balanced set of metrics for comprehensive performance evaluation.
5. Analysis of potential practical issues: This chapter explores the practical challenges Zara might encounter while implementing the proposed BSC. It anticipates obstacles and proposes potential solutions to mitigate risks, ensuring a realistic and effective implementation of the framework. The discussion would include difficulties in data collection, KPI measurement, and organizational resistance to change, offering practical strategies for overcoming these hurdles and making the BSC a valuable tool for Zara's long-term success.
Keywords
Zara, Balanced Scorecard, KPI, Stakeholder Analysis, Strategy Map, Fashion Retail, Competitive Advantage, Business Model, Performance Measurement, Strategic Objectives.
Zara Balanced Scorecard: Frequently Asked Questions
What is the main objective of this report?
The report's primary goal is to create a draft Balanced Scorecard (BSC) for Zara, a leading global fashion retailer. This BSC will translate Zara's strategic objectives into measurable performance indicators across financial, customer, internal processes, and innovation/learning perspectives, offering a comprehensive framework for improving future performance.
What are the key themes explored in this report?
The report analyzes Zara's stakeholders and their influence on strategic objectives; develops a strategy map showing cause-and-effect relationships between objectives; identifies and justifies Key Performance Indicators (KPIs) for each BSC perspective; assesses potential practical implementation challenges; and proposes solutions to overcome these challenges.
What is included in the Table of Contents?
The Table of Contents covers an introduction, analysis of Zara's stakeholders (including stakeholder identification, interests, and power/interest assessment), analysis of Zara's strategy (including strategy map explanation), development of a BSC framework (including KPI identification and justification across four perspectives), and analysis of potential practical issues and solutions.
How are Zara's stakeholders analyzed in the report?
The stakeholder analysis identifies key stakeholder groups, examines their roles and interests, and assesses their influence on Zara's performance. It explores how these interests impact the development of the BSC, highlighting the need for a balanced approach considering diverse perspectives. Power and interest levels are likely assessed to inform KPI prioritization.
What is the purpose of the strategy map in the report?
The strategy map visually represents the cause-and-effect relationships between Zara's strategic objectives across different perspectives. It provides a holistic view of Zara's strategic goals and the rationale behind the connections, demonstrating how actions in one area affect other business aspects. It serves as a foundation for selecting appropriate KPIs.
How is the Balanced Scorecard framework developed?
The BSC framework is developed by identifying and justifying KPIs aligned with four perspectives: financial, customer, internal processes, and learning & growth. Each KPI is carefully selected to reflect the strategy map and measure progress toward strategic goals. The rationale for each KPI choice is explained, connecting it directly to Zara's strategic objectives.
What practical issues are considered in the report?
The report explores potential practical challenges in implementing the BSC, such as difficulties in data collection, KPI measurement, and organizational resistance to change. It proposes solutions to mitigate risks and ensure effective implementation, making the BSC a valuable tool for Zara's long-term success.
What are the key chapters and their summaries?
The report includes chapters on the introduction (contextualizing Zara and the need for a BSC); stakeholder analysis (identifying and analyzing key stakeholders and their influence); strategy analysis (developing and explaining the strategy map); BSC framework development (identifying and justifying KPIs); and potential practical implementation issues and solutions.
What are the keywords associated with this report?
The keywords include Zara, Balanced Scorecard, KPI, Stakeholder Analysis, Strategy Map, Fashion Retail, Competitive Advantage, Business Model, Performance Measurement, and Strategic Objectives.
- Citation du texte
- Marvin Mertens (Auteur), 2015, Development of a Draft Balanced Scorecard for Zara, Munich, GRIN Verlag, https://www.grin.com/document/301172
