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Assess the extent to which Zara’s use of just in time (JIT) may have contributed to its success. - Edexcel - A-Level Business - Question 2 - 2019 - Paper 2
Question 2
Assess the extent to which Zara’s use of just in time (JIT) may have contributed to its success.
Worked Solution & Example Answer:Assess the extent to which Zara’s use of just in time (JIT) may have contributed to its success. - Edexcel - A-Level Business - Question 2 - 2019 - Paper 2
Step 1
Just in Time (JIT) contributes to Zara's success
Answer
Zara utilizes a Just in Time (JIT) inventory system, which streamlines operations by ensuring that items of stock arrive immediately before they are needed for production or sale. This flexibility helps Zara to keep inventory costs low and reduces the risk of overstocking, allowing them to respond rapidly to changing fashion trends.
Moreover, limited stock encourages Zara customers to purchase every time they visit the store. Since Zara customers visit more frequently than those of its competitors—17 times a year on average—this JIT approach likely leads to increased sales as customers are motivated to buy items before they sell out.
In summary, JIT not only enhances operational efficiency but also creates a sense of urgency among customers, driving them to visit Zara stores more often.
Step 2
Counterarguments regarding JIT
Answer
However, there are potential drawbacks to Zara’s JIT system. The danger of running out of stock can frustrate customers and damage Zara’s reputation. If customers cannot find the items they seek, they may turn to competitors, thus resulting in lost sales opportunities. Additionally, selling small amounts of different styles may increase average costs, including distribution costs, as it may become less economically advantageous compared to bulk purchasing.
Furthermore, the success of Zara may not solely be attributed to JIT. Other factors, such as product design and effective marketing strategies, also play crucial roles in enhancing Zara's brand appeal and market presence.
Step 3
Concluding judgement
Answer
In conclusion, while JIT has undoubtedly contributed to Zara's success by enabling responsiveness to customer demand and fostering shopping frequency, it is essential to recognize that Zara's effectiveness in the fashion industry relies on a combination of strategies. Ultimately, the balance between JIT utilization and effective inventory management is key to sustaining Zara’s competitive edge.