Applied Corporate Strategy

APPLIED CORPORATE
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
External environment Analysis....................................................................................................3
Internal Environment Analysis....................................................................................................6
Strategy Evaluation......................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Corporate strategy signifies the different mechanisms that are adopted by the companies in
order to increase their market share and their profitability in the market (Magalhães and et.al.,
2020). Zara is a leading fashion retailer having its stores spread all over the world. In the current
report, an external and internal analysis will be conducted over the company and the
environment in which it operates. This will help in ascertaining that whether the current
environment is profitable for it or not. The strategies used by Zara will be evaluated using the
SAF evaluation model and then appropriate conclusion will be presented in the end of the report.
MAIN BODY
External environment Analysis
The analysis of the external environment helps in identifying the existing scenario in which
the company is operating (Wood and Jobber, 2016). This can help in developing strategies
according to the business environment and Pestle Analysis is the best tool for it. For Zara, Pestle
Analysis can be conducted in following manner:
Political Factors: The political factors surrounding the company often impacts its overall
decision making and operational functions. In the current scenario, it can be evidently said that
the clothing industry of UK is an extensive industry that is regulated in a stable manner. For EU,
the entire industry accounts for an approximate 74% of the total percentage of exports to EU and
this has led to the boost in the overall performance of the entire market. However, the overall
political disruption might affect the overall operation of the entire supply chain of the company
and therefore this can act as a problem (da Silva and Las Casas, 2017). But, in the overall
context, it can be said that the political environment of UK is stable thus offering an opportunity
for the company Zara to work extensively on the company’s expansion.
Economic Factors: The purchasing power of UK’s population, especially in context of the
shopping of clothes is an extremely lucrative aspect where they do not hesitate to spend a huge
amount of money for fashionable clothes. Additionally, the pricing of Zara is comparatively
lower than the brands of UK and this presents an extensive opportunity for the company where
they can easily attract the customers with their unique and comfortable fashion. However, after
Brexit, the stability of the company has declined and this has led to people having lower
disposable incomes and this might pose as a risk factor for the company. Their sales can decline
considerably and therefore this is a threat for Zara.

Social Factors: There are a variety of society related factors that affect the overall decision
making of every company (Kingsnorth, 2019). The cultural preferences, traditions and choices
also affect the revenue generation and other strategies that are adopted by the companies. If a
certain type or quality of product is found unacceptable by the public, then automatically the
product cannot be promoted or sold in the market. Zara, can ensure that their products are in
sync with the taste and preferences of the people of UK and then this can act as a major
opportunity for Zara. Additionally, Zara can also adopt certain extra measures so that they can
conserve the nature and society thus improving the goodwill of the company.
Technological Factors: Currently, technological advancement is an extremely essential aspect in
the expansion of the company and for better revenue generation sources. Adopting modern
production mechanisms, using better consumer interface software’s, application of well-
developed operation techniques is some of the critical aspects in the advancement of the entire
country. Zara, is well ahead in the field of technological advancement and they have
implemented a variety of tactics in order to enhance the overall customer experience of their
targeted segment by implementation of technologies such as RFID etc. (Olson and et.al., 2018).
Therefore, this acts as a major opportunity for the company.
Legal Factors: The legislation of every economy is different and the aspects of ethicality and
sustainability have been given major priority in almost all the legislations. Every organisation
needs to comply with the legal regulations, doctrines etc. and therefor, this can act as quite an
exhaustive task when companies are consecutively operating in two or more countries. Also,
companies need to maintain the ethical aspect while operating because allegations on the stealing
of intellectual property can be quite extensive. The repercussions in case of any legal
involvement can be a risky situation where the company might lose its brand reputation and
goodwill as well. Since Zara operates in the clothing industry where it is very easy to copy the
different designs of the clothes with a little or no modification, the threat of getting involved in
legal matters is very high.
Environmental Factors: In the present context, waste of any resources or negative impact on the
ecological systems is not considered a good aspect from the organisation’s point of view (Zhang
and Wang, 2019). Using of energy efficient technologies, developing sustainable manufacturing
processes, involving in the animal welfare work, removing use hazardous wastage generation
activities or products in the company are some of the critical activities that all the organisations