UNIVERSITY OF GHANA

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MBA/MPHIL FIRST SEMESTER EXAMINATIONS: 2021/2022

DEPARTMENT OF OPERATIONS & MANAGEMENT INFORMATION SYSTEMS

OMIS 609: ELECTRONIC BUSINESS (3 CREDITS)

THIS PAPER IS DIVIDED INTO TWO SECTIONS.

ANSWER ALL QUESTIONS IN SECTION A AND ANY ONE (1) QUESTION FROM
SECTION B

TIME ALLOWED: THREE (3) HOURS

SECTION A [70 MARKS]

ANSWER ALL QUESTIONS IN THIS SECTION

Case
CASE STUDY: Fast-fashion retailer Zara uses its supply chain to achieve competitive
advantage

Amancio Ortega founded Zara in Spain in 1975 and since then the fast-fashion chain has grown to
1,770 stores in 86 countries around the world. In 2012, Zara reported a sales income of $13.6 billion. It
is widely reported that the retailer’s success is down to its supply chain.
The company produces around 450 million items a year and regular, small-batch deliveries
happen twice a week to all of its stores around the world. The company adapts couture designs,
manufactures, distributes and retails clothes within just two weeks of the original design first
appearing on the catwalk.
It owns its supply chain and competes on its speed to market. The company operates a ‘just in
time’ production process – it keeps a significant amount of its production in-house and makes sure its
own factories reserve 85% of their capacity for in-season adjustments. Zara usually relies on fabric
sourcing, cutting and sewing facilities near to its design headquarters in Spain – i.e. in ‘proximity
markets’ such as Spain, Portugal, Turkey and Morocco.
Although the wage costs are higher than using the facilities of developing world counterparts,
the turnaround time is much faster. Interestingly, Zara only commits 15 to 25% of a season’s line six
months in advance. It locks in 50–60% of its line by the start of the season, which means that up to
50% of its clothes are designed and manufactured in the middle of the season. Therefore, if a certain

EXAMINER: Prof. John Effah Page 1 of 3

style or design becomes a new ‘must-have’, designers can produce new styles that are fast tracked to
stores while the trend is still going strong.
Internally, store managers provide customer feedback on what shoppers like, dislike and what
they are looking for. This information is then funnelled back to Zara’s designers who instantly begin
sketching. The company also has extra capacity to respond to demand; it typically operates 4.5 days a
week at full capacity, leaving some flexibility for extra shifts and temporary labour when needed. This
means that the company provides frequent shipments and a higher number of customer sales, allowing
the business to sell more items at full price.
Zara sells around 85% of its clothes at full price, compared to the industry average of 60–70%.
Unsold items account for less than 10% of its stock, when the industry average is 17–20%. When it
comes to supply chain management, the company operates a very lean system; there is very little
excess inventory/dead stock in Zara’s warehouse. Inventory optimisation models are used to determine
how much should be delivered to every one of its retail stores twice a week.
Rapid movement of new merchandise through the stores and knowledge that some of the items
may not be replenished is another incentive for customers to buy on the spot. This approach also
ensures there is no build-up of unpopular stock. Zara’s approach of quick in-season turnaround, from
production facilities close to its distribution headquarters in Spain, means that if it chases the latest
trend and it does not sell well, the company loses very little (i.e. it’s a failed experiment and there is
time to try a different style). This agile approach is very similar to the marketing concept of ‘growth
hacking’.
The centralisation of Zara’s logistics helps create an environment whereby decisions are made
in a very coordinated manner. The retailer also sticks to a predictable and fast order-fulfilment rhythm
– it sends out two orders a week on specific days and times. Clothes are also pre-labelled and priced,
based on their destination. This predictability also extends to Zara customers, who know when to visit
stores for fresh new garments. Zara’s strong distribution network means that the company can deliver
goods to its European stores within 24 hours and to American and Asian outlets in less than 40 hours.
According to Professor Nelsen Fraiman, Zara can get a product out from concept to store in just 15
days – to put this in context, the industry standard is six months! (Source: Chaffey, D., Edmundson-
Bird, D., & Hemphill, T. (2019). Digital business and e-commerce management. Pearson UK)

CASE STUDY QUESTIONS

1. Discuss the various digital technologies that can be used to support Zara’s e-supply chain during
a pandemic lockdown.
[35 marks]

2. What challenges will emerge if Zara were to operate from Ghana during the Covid-19 lockdown
and how such challenges can be addressed?
[35 marks]

EXAMINER: Prof. John Effah Page 2 of 3

 SECTION B [30 Marks]-revise

ANSWER ONLY ONE (1) QUESTION FROM THIS SECTION

3. Following the Covid-19 Pandemic, a local restaurant wants to digitalise its business. Advise the
owner on how to proceed, the potential challenges and how to address them.
[30 marks]

4. Koo Nimo has been a traditional entrepreneur in Ghana but now wants to set up an e-
marketplace for local products and services. Discuss any three e-services that the intended e-
marketplace can provide, the target beneficiary for each service and digital business values they
can derive.
[30 marks]

5. Identify any digital business in world and discuss how it can benefit from using each of the
following: HTML, FTP, RSS, WWW and HTTPS.
[30 marks]

6. Explain any four legal requirements that digital businesses in Ghana must comply with and the
implications of failing to comply.
[30 marks]

7. As the digital business coordinator of a global e-tail firm, outline and explain the process you
will follow to develop its digital business strategy.
[30 marks]

8. As a digital business consultant, identify a digital business and advise its management on how
to develop a digital marketing plan. `
[30 marks]

9. Using an organisation in Ghana as an example, discuss the benefits of using multi-channels for
e-CRM, the challenges with their use and how to address them.
30 marks]
`

EXAMINER: Prof. John Effah Page 3 of 3