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Strategic Analysis Of Fast Fashion Company: Zara - Essay Example

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Zara is a leader in the fashion retailing industry, maintaining many business strategies that are difficult to imitate by the company’s main competitors, H&M, Benetton and Gap, Inc…
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Download file to see previous pages Other competitive advantages include a strong, centralised business culture that is devoted to compliance, productivity and efficiency throughout the whole value chain in a business model that requires dependency between all different business units. Outside of the advantages, research has identified that Zara has weaknesses in areas of avoiding negative public relations, protecting the firm from economic conditions in the European Union, and responding to competent marketing strategies of main competitors (namely H&M) that is extremely proficient in using advertising and collaborations with famous personalities and designers to achieve a strong brand with the ability to take market share from Zara. Because of these weaknesses, it is recommended that Zara consider using the Euro as it trading currency instead of the American dollar, replicate the collaborative marketing strategies of H&M, launch a large-scale public relations campaign using expert assistance in this field to reduce risks of brand damage for unethical behaviour allegations, and make instant use of its current brand equity to improve profitability. Table of Contents Executive Summary 1.0 Introduction................................................................................................ 2.0 Strategic issues and competitive forces.................................................... 2.1 Porter’s Five Forces analysis.......................................................... 2.2 Economic considerations................................................................ 3.0 Internal strategic audit................................................................................ 4.0 Crises in public relations............................................................................. 5.0 Strategic recommendations for Zara........................................................... 5.1 Public relations strategy.................................................................... 5.2 Currency reconsideration.................................................................. 5.3 Design collaborations........................................................................ 5.4 Capitalising on brand equity.............................................................. 6.0 Conclusion................................................................................................... References 1.0 Introduction Zara is a leader in the fashion retailing industry, maintaining many business strategies that are difficult to imitate by the company’s main competitors, H&M, Benetton and Gap, Inc. Zara is able to operate using a low cost product provider strategy, as described by Michael Porter (1998), a strategy that allows a firm to provide customers with lower-priced merchandise by controlling costs across the entire value chain (Grant 2002). Zara accomplishes these cost advantages through its ability to operate under a lean manufacturing philosophy, an operational strategy that allows for reduction of waste in the production process and just-in-time procurement to avoid inventory holding costs as well as raw materials waste (Cua, McKone and Schroeder 2001). In the retail industry, this competency in cost controls give Zara a competitive advantage that is, in the current industry environment, invulnerable to competitive replication. Zara is also a leader in providing germane products to many profitable customer segments that have the ability to satisfy markets’ cultural, social and even psychological needs. This is because Zara sustains a design team that is constantly scrutinising the external market environment to determine which fashion products would be most valued and demanded based on known consumer characteristics. What further ...Download file to see next pagesRead More
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