Development of a Draft Balanced Scorecard for Zara

Seminar paper from the year 2015 in the subject Business economics - Miscellaneous grade: 80.00/100.00 University of Strathclyde (Strathclyde Business School) course: Performance Measurement & Management language: English abstract: 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 i