This paper presents a brief report on the business strategy of Zara. In order to analyze the business environments, various business analysis tools such as Value Chain, PESTEL, Competitive Forces Model, Financial Analysis, Markets analysis etc will be included in the paper…
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This research will begin with the statement that Zara is one of the prestigious and fast growing fashion clothes retail shop in the world. Starting from a small shipbuilding in Northern Spain, it has grown itself to staggering 68 countries throughout the world with numerous stores opened up in all of the specific countries. Being head by the richest fashion executive of the world Mr. Amanico Ortega, Zara has become a major player amongst the big names in the fashion industry. With its latest design and styles coming into the market almost every week, they tend to keep their customers and competitors constantly on their toes. This is the main reason why they have been able to sustain their demand for so long. However, it is not like Zara is hundred percent accurate in its dealing and is flawless nature when it comes to issues. Some of the issues Zara might face in the future or is facing currently are necessary to be highlighted. Due to their manufacturing and delivery did from a single source in Spain throughout the world, Zara faces an issue of the lack of a fall back in case of an emergency. As they pride on constantly changing the shelves of the shops with new clothes every four weeks, they have to constantly transport new clothing. With the rise in oil prices all over, their transportation costs are rising as well. With the economic downturn throughout the globe, people have started to switch to cheap clothing from other manufacturers such as Wall....
Zara generally focuses on producing a homogeneous product which caters for the global customer base. However, they make slight adjustments to different countries catering to their respective needs and culture. With the opening of their sister shops, they have been able to specialize according to different demographics across the globe (Lopez et al, 2009). The following graph illustrates the different sublets Inditex has opened up and their relevant percentage of inditex. This graph shows the importance Zara holds to the success of Inditex over the years. Source: Adapted from Lopez and Fin (2009). The major competitors for Zara amongst many others have always been Gap and H&M. Both these companies follow a very similar pattern as Zara when dealing with internationalization of their retail outlets. Environmental Analysis For conducting an environmental analysis of Zara, PESTLE Analysis was found appropriate. The reason a PESTLE analyses was deemed appropriate for a huge company like Zara, was because it is one of the largest fashion company in the world and it has globalized to such an extent that you can find Zara across the globe with stores reaching up to 1,723 worldwide including their extended stores (Gallaugher, 2011). Political Internationalization: During 1986 when Spain entered into the European Union, it opened up the entire trading barriers of which Zara took the most advantage. Through the concept of homogeneous products to every country, they continued to expand. They followed a single concept “national frontiers are no impediments to sharing a single fashion culture.” (Lopez et al, 2009). They have had to adhere to various government laws applied in various countries outside Europe for opening up
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(Zara: Fast Fashion from Savvy Systems Essay Example | Topics and Well Written Essays - 3000 Words)
“Zara: Fast Fashion from Savvy Systems Essay Example | Topics and Well Written Essays - 3000 Words”, n.d. https://studentshare.org/business/1394182-zara-fast-fashion-from-savvy-systems.
Over the years, the company has attained significant growth. Its strategies have enabled the company to gain substantial competitive advantages over its competitors. Nonetheless, the company is significantly influenced by few prominent external factors as well as few internal factors.
Zara maintains many retail competitors, ranging from H&M to Benetton, each providing products with similar characteristics and moderately-similar pricing structures. It is a highly saturated market in which Zara maintains its international operations. Because of this, the business must be aware of the competitive forces that drive strategic needs.
Zara Company is known as one of the biggest companies in the fashion industry in the world based in Spain. It is in association with the largest distribution group in the world, the Inditex. The primary focus of the company lies with its customers and the company focuses on its innovative designs targeted towards its customers, its manufacturing processes, its distribution and sales as well as the widespread network that is in association with the company (Company, 2010).
Zara: Fast Fashion from Savvy Systems. The development of this strategic plan comes in the backdrop of numerous external of the company Inditex, and specifically the Zara brand, as a wild success. Numerous analysts have related the success achieved by the company in recent years.
In keeping with the rapidly increasing business practices within the fast fashion retail industry, Zara can be considered as one of the leading fast fashion retail companies. Zara is widely recognised as the leading fashion retail organisation especially for offering extensive number of quality based high-street fashion products to the global customers.
The macro level analysis describes those external issues which are beyond the control of the company. PESTEL analysis indicates certain risks which may impact on the growth and operational activities of Zara in current and near future. Porter’s five forces analysis indicates several external risks and challenges of moderate to high intensity especially it indicates that a fierce competition will continue in future as well.
Zara is one of the six retailers that Inditex own. Inditex is a worldwide company that specializes in fashions; it designs, manufacture, and sells accessories for children, men, and women, footwear, and apparel through its various retailers located in most parts of the world. Zara is the most and largest internationalized of Inditex’s six retailers (Pahl & Mohring, 2009, p.23).
This essay analyzes Zara brand. It believes in just-in-time production and is able to respond to the changes in customer demand at the shortest possible time-frame in the industry. However, economic downturn has threatened sales, which has been a cause of worry for the investors. Competition has become rampant after the removal of quota.