Question 1

What was considered the source of Mickey Drexler's inventory problems at Gap?

Accepted Answer

According to the article, Gap's inventory problems were caused by the company guessing wrong about fashion and placing big bets on trends that consumers didn't want. There is no mention of Mickey Drexler personally approving sweatshop-affiliated contract manufacturers, writing the code for Gap's inventory system or leading a botched merger with Disney.

Question 2

Most fashion retailers place orders for a seasonal collection a few days before these lines make an appearance in stores.

Accepted Answer

Most fashion retailers place orders for a seasonal collection six months to a year before these lines make an appearance in stores. This allows time for manufacturing, marketing, and distribution.

Question 3

In retail in general and fashion in particular, having _____ is considered the kiss of death.

Accepted Answer

Excess inventory is considered the kiss of death in retail because it ties up capital, takes up valuable space, and leads to deep discounting and lower profit margins.

Question 4

What is contract manufacturing? What advantages can a firm expect to gain from contract manufacturing? What are the downsides associated with this practice?

Accepted Answer

The answer of What is contract manufacturing? What advantages can...

Question 5

The U.S. Justice Department initially reviewed the Fair Factories Clearinghouse but eventually approved the effort as described in readings and class. What was the government initially concerned about?

Accepted Answer

The answer of The U.S. Justice Department initially reviewed the...

Question 6

In an industry where nearly every major player outsources manufacturing to low-cost countries, Zara is highly _____, keeping huge swaths of its production process in-house.

Accepted Answer

"Vertically integrated" means that a company controls multiple stages of the production process, from raw materials to finished products. This is exactly what Zara does, which sets them apart from their competitors who outsource manufacturing to other countries.

Question 7

_____ is a non-profit organization that shares audit information on contract manufacturers among members of the apparel industry and other industries.

Accepted Answer

Fair Factories Clearinghouse is specifically designed to share audit information on contract manufacturers in the apparel industry and other related industries. The other options either do not match the criteria or have different objectives.

Question 8

_____ involves outsourcing production to third-party firms.

Accepted Answer

Contract manufacturing involves outsourcing production to third-party firms. Vertical integration involves owning and controlling all aspects of the supply chain, long tailing is a strategy to sell low-volume products to a large number of customers, peer production involves collaborative efforts to create a product, and viral production refers to the spread of production processes and techniques through online platforms.

Question 9

Outsourcing production to third-party firms is called _____.

Accepted Answer

The answer of Outsourcing production to third-party firms is called...

Question 10

Maintaining large inventories is highly essential for the viability of the fashion industry.

Accepted Answer

Maintaining large inventories can lead to excessive production and waste, which can be detrimental to the environment and the profitability of fashion brands. A focus on smaller, more targeted inventory can improve efficiency and sustainability.

Question 11

Zara holds a competitive advantage over its rivals in spite of:

Accepted Answer

Zara's in-house production capabilities allow them to respond quickly to changing fashion trends and deliver new designs to stores within a matter of weeks, giving them a competitive advantage in the fast-paced fashion industry.

Question 12

The U.S. Department of Justice needed to provide a special exemption to the Fair Factories Clearinghouse, and before doing so, had to be convinced that the effort wouldn't be used by buyers to collude and further squeeze prices from competitors.

Accepted Answer

This statement is true. The U.S. Department of Justice did need to provide a special exemption to the Fair Factories Clearinghouse, and they needed to ensure that it wouldn't be used to collude and manipulate prices.

Question 13

Zara's clothing look like high fashion, but are comparatively inexpensive.

Accepted Answer

Zara is known for offering trendy and stylish clothing that looks high-end, but at a much more affordable price point compared to other luxury fashion brands.

Question 14

Zara's high fashion styles are inspired by customer tastes, with technology used to gather data on preferences at given store locations.

Accepted Answer

This statement is true. Zara uses technology to collect customer preferences and uses this data to inform their fashion designs.

Question 15

Making seasonal apparel decisions is a challenge because it often involves making predictions on what customers will be interested in, months in advance of clothing appearing on store shelves.

Accepted Answer

Seasonal apparel decisions are typically made months in advance to allow for production, shipping, and stocking on store shelves before the start of the season. Predicting customer preferences and anticipating trends is a crucial part of this process, but it can be challenging due to the constantly changing nature of the fashion industry.

Question 16

What were the problems encountered by Gap in the early part of the decade following the 1990s? What were the measures taken to overcome these problems?

Accepted Answer

The answer of What were the problems encountered by Gap...

Question 17

Elaborate customer surveys help Zara designers predict fashion trends months into the future and design products accordingly.

Accepted Answer

Zara's business model relies more on rapidly responding to fashion trends as they emerge, rather than predicting future trends months in advance. They focus on quick turnaround from design to production, allowing them to adapt to trends quickly rather than relying heavily on customer surveys for future predictions.

Question 18

The Fair Factories Clearinghouse is subject to network effects.

Accepted Answer

The Fair Factories Clearinghouse is subject to network effects, since the value of the platform depends on having a large number of participating factories and buyers. As more users join the platform, it becomes more valuable to existing users, creating a positive feedback loop that encourages growth and adoption.

Question 19

Zara's dominance in the fashion industry is due to its horizontally integrated structure accompanied by a globally dispersed production model.

Accepted Answer

Zara's success is largely attributed to its vertically integrated structure, which allows for quick response to fashion trends and control over production processes, rather than a horizontally integrated or globally dispersed production model.

Question 20

Contract manufacturers used by the apparel industry are often criticized because:

Accepted Answer

Contract manufacturers used by the apparel industry are often criticized for poor working conditions, including long hours, low wages, and lack of safety standards. This can lead to negative publicity and a damaged brand reputation for companies that use these manufacturers.

Quiz 3: Zara: Fast Fashion From Savvy Systems