Vertical Integration and Outsourcing
Created by: Brenda Dyck
1> As Mr. Salgado, what will you do concerning the issue of upgrading the POS terminal? Will you upgrade to a modern operating system? Should the POS applications be rewritten to include any additional functionality? If so, what functionality?
Yes, I would upgrade both the POS terminal and modernize the operating system. With Dos being outdated and no longer being supported by the IT industry Zara has an unnecessary business risk. Zara supports the IT requirements with an in-house team, they are supporting an archaic system which limits their ability to be proactive. Should the system go down and the in-house team determines that either …show more content…
If the retail stores were franchised or if the store managers had more control over ordering inventory employees in charge of inventory might “stock-up” on the “hot” sellers. Any of the noted approaches to business would change the fact that Zara relies on customers to visit the retail stores frequently. This philosophy feeds a unique “just in time” way of thinking. Price, out of stock, and product consistency are not important to Zara and they do not require IT systems to support the way other companies would. The more sophisticated the IT needs (forecasting, tending) the more difficult it becomes for any business to support technology in-house.
3> What benefits does Inditex/Zara get from its IT infrastructure? How difficult would it be for a competitor to acquire the same benefits?
Zara runs their IT infrastructure as they run the majority of their business functions. They have an in-house operation which requires little effort to support. Their current system allows their retail stores to open with little support from their head office. Supporting an in-house IT department would take a significant amount of time and energy. To obtain the same benefits Zara does a competitor would have to have a similar “just in time” strategy. If the competitor outsourced their IT department and was to bring it in-house it may be difficult to