Zara Strategy - Essay Example

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Political Environment Analysis
There has been a 22% budget cut in culture and sports department, 23% in media department (Westfield, 2012). Apart from this, the government is also planning to reduce corporate tax to 23% in the coming years, which will result in decreased cost of overall operations in this industry (Marketline, 2012a)…
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Zara Strategy
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Download file to see previous pages Economic
In spite of the eurozone crisis and economic recession, UK’s GDP has reduced to a mere 0.2 % compared to the overall industry growth, which has dropped by 0.6%.N
According to eminent economists, the unemployment rate will increase to 9% in the coming two years. Around two million people will remain unemployed.
The retail clothing market of UK is constantly increasing. According to Key Note report (2012), the UK market showed a 3.3% increase in 2011, and sales reached 43.1 billion pounds. Women’s garments were the largest sector in terms of sales revenue followed by men and children’s sector (Chakrabarti, Subramanian, Meka, & Sudershan, 2012).
There has been a 7% rise in age group which represents the working population. Because of this, more people are now including formal clothing as their daily wear. This means that in future, Zara may also be required to change its portfolio, in order to match the growing needs of this ageing population.
Due to the current economic crisis and budget deficit, the purchasing capacity of the consumers has reduced. Now, sustainable and normal living standard has become a challenge for the local people. To get rid of the difficult financial condition, the UK government has taken the policy of managed migration....
Technology Latest technological advances such as RFID, electronic data exchange and ERP, are used by most of the retailers in UK to decrease operation costs and enhance the value chain process (Pettigrew, 2006). According to the Science and Innovation Investment Framework (2013), there has been only 2% increase in investment in technological advances. This has made the investment condition in UK very inflexible Environment In order to meet the environmental norms, set by Kyoto Protocol, the industries need to reduce the percentage of carbon emission to a minimum of 9% from the present rate. According to the government protocol, the foreign countries in UK need to decrease their Carbon footprint to a minimum of 20% in the coming two years (Unfccc, 2013). Thus, in order to sustain in the market, Zara will have to follow the protocol in its value chain. Legal According to the economic freedom journal’s index, UK has been ranked seventh in terms of free economy (Index of Economic Freedom, 2013). It has also been praised by Wall street Journal for its business and economic sustainability. To solve any labour related issues, the country strictly follows the rules and regulations of European Union Labour Law. This indicates a necessary change in the HR policies and regulations of Zara’s business process to comply the EU Guidelines. Porter Analysis The major categories of apparent industry in UK are men’s wear, children’s wear, and women’s wear. The industry value can be calculated by using Retail Selling Price (RSP). Total Revenue of the Industry CAGR Women’s wear Men’s wear Children swear $54,495 million (2011) 2.1% 59.2% 26.9% 13.9% (Source: Marketline, 2012b) Growth potential of ...Download file to see next pagesRead More
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