Applied Corporate Strategy

This document provides an in-depth analysis of corporate strategy, focusing on Zara's online strategy. It explores the external factors affecting Zara, such as political and economic conditions, and evaluates the company's resources and unique capabilities. The document also discusses market development strategies and conducts an internal analysis using SWOT and VRIO models. Suitable and adaptable strategies are evaluated, providing valuable insights for businesses in the fashion retail industry.

APPLIED CORPORATE
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1.External analysis ......................................................................................................................3
2. Internal analysis ......................................................................................................................6
3. Evaluation ...............................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Corporate strategy can be defined as that series of action which is been adopted by various
organizations so that they are able to manage their resources well, and these strategies also
assists them in achieving their goals and objectives (Rugman. and Verbeke, 2017). This also help
them in gaining competitive advantage. It mainly encompasses those activities that can support
organization in their development. It is necessary to adopt different strategies with change in
market situation so that business can sustain for long time. Report will lay emphasis on Zara and
evaluate their online strategy. Zara SA is a Spanish apparel retailer based in Arteixo in Galicia.
Main purpose the report is to analyze the business environment of Zara in order to gain
effectiveness of their corporate strategy. It will also identify and discuss organizations resources
and unique capabilities. It will also evaluate market development strategy that has recently been
adopted by company.
MAIN BODY
1.External analysis
There are various external factors that can affect working of organization, these factors can
act as an opportunity or threat for them.
Political factor: Political disruption has affected Zara and also the economy of nation. It has
been analysed that political turmoil has severely affected supply chain of company and has given
rise to several problems for the brand. In order to overcome from this threat Zara has limited
their supply chain operations to UK and neighbouring nations. In this way they have minimised
the impact of disruption. It has also been analysed that government policies and procedures can
also affect operations of business internationally. So Zara needs to work on this phase (Zerfass.
and Viertmann, 2017).
Economic factor: Economic condition of any country can affect the business of
organization.v the factors are related to GDP, inflation rate, economic growth, etc. It has always
been a critical factor in terms of business, Zara has taken it as an opportunity and adopted a great
strategy which is known as affordable pricing. So even if in UK inflation is high, and people are
engaged in doing cost cutting, they can switch over to affordable brands like Zara. This will help
in retaining of customers and generating sales and profits (Slack. and Brandon-Jones, 2018).
Social factor: Zara is focuses on its affordability as Zara is considered as Zara is one of
the fashionable brand for most of the shoppers. According to Zara good quality product doesn't

need lots of money as it has the positive strong presence that enables Zara to collect the profit
margin regarding its stakeholders as buyers feels that are getting the best deal (Zerfass. and
Viertmann, 2017).
Online shopping
Nowadays online shopping is known as one of the major trend as all the clothes might not be
best fit as costumers now wanted more clothes by switching one button and get the clothes
within the comfort at their own homes,so Zara has to pay more attention regarding the online
stores' performance (Rugman. and Verbeke, 2017).
Technological- Zara is a well known brand as it is the most popular brand in terms of
affordability and high quality. Zara has both the large amount of audience and money require to
get the most data. Firm is looking out for big data as It implements the RFID technology which
automatically count the products without stand in a queue and customers feel more relaxed.
Technological advancement of Zara also find the better ways to reach as well as appeals to the
costumers.
Legal
Zara is one of the recognizable brand as it has to operate in bounds regarding law as Zara is the
one that loves to capture the trends of hot clothes every week and also make them more
affordable to the Costumers so Zara is bound to run some issues regarding the copyright. As
various retailer also accused that Zara stealed the design as well as clothing concepts from the
firm like Balenciaga and Adidas. Within the past Zara had faced the uncomfortable situations
like these but the firm has already continued to have such a good luck.
Environmental-
Fashion industry is fast up growing days by day as simultaneously related with wastefulness. As
several fashion products are not long-lasting as Zara needs to supposed to be more garments that
are looks goods within the changing rooms of Zara. To focus on the matters of the
environment , parent brand of Zara I.e Inditex has published a pledge of sustainability.
Opportunity
there lies vast number of opportunities for Zara in e commerce sector. It can focus on online
selling of goods as well to attract more customers and earn revenue.
They can expand in those target market where people buying power is rising. For example,
market like India. it will enable in increasing customers base and capitalizing market potential.

Threats
the main threat that company may face in rise in competition which due to emerging new
businesses. So, this can result in high competitive rivalry in fashion retail industry.
Another threat frequent change in customer taste and preference in fashion industry in future
may impact on Zara growth (Puranam. and Vanneste, 2016).
Porter five force
Competion within Industry
Benton,GAP ,H&M are the biggest competitors of Zara. They are recognises as a most
fashionable as well as affordable beats of GAP and Zara as all of them have the equal standards
but Zara's supply chain is more responsive as various other retailers takes take months to
change their old fashion clothes but Zara changes its old clothes within the weeks thus Zara is
well known aware regarding the latest trends,fashion as well as needs of the people (Eccles. and
Youmans, 2016). The competition within retail sector is high
Potential of new entrants
With the rise of the fashion day by day people focused on more for the latest products and if the
products are more economical than customers are attracted towards the brand. There are many
new companies who are entering into retail market. It has resulted in rise in competition. Thus,
with this there is high potential of more new entrant due to lack of entry amd exist barriers. So,
there is high power of new entrant in it.
Power of suppliers
Zara has strong bargaining power of the suppliers as it offers their suppliers the contracts
which are licensed based. The cost of switching from Zara to another firm is very high and firm
establishes relationship that can be more loyal to the suppliers and also have the full knowledge
regarding safety as well as quality thus suppliers also enjoys the cost regarding the price setting
regarded needed material. Therefore, the power of the supplier within Zara is high (Parawansa,
2015).
Power of Customers
The consumers of Zara are from middle class and Upper class both as they have the potential as
per the buying power of the costumers. Other competitors of Zara are also supplies the same
product line of Zara. Therefore, it focuses that Zara have the low costumer loyalty in term of
their products . In addition to this Zara also focused on the new trends faster as compare to the

other brands and also offered low prices that makes its stronger when its comes about the other
brands (Zerfass. and Viertmann, 2017). So, power of customer is high
Threats regarding the substitute products
Zara are also offers more reasonable products when its comes about other firms as they copy the
style of Zara and also gives the same quality to the goods. Various new online shopping sites are
also one of the threat of the Zara. Therefore, threat of substitute is high
2. Internal analysis
The internal analysis of business environment is useful in identifying company position,
cost, competitive rivalry within industry. For conducting analysis there are different models and
frameworks available which is applied in it (SWOT of Zara, 2017). Similarly, VRIO and SWOT
models are used for Zara company. They are evaluated below :
SWOT – this is a strategic planning technique that enable firm to identify their current position
in the market. So, Zara SWOT is as below :
Strengths
Its unique and attractive design clothes provide them a distinct image within fashion retail. The
clothes are of elegant quality, superior finishing, etc. Also, accessories of company is of high
quality.
Another strength of organization is its strong presence in many countries. there are total 2100
stores of company till 2015.
Its brand value is also high as compared to other firms in fashion retail. This is because of high
performance of firm in recent years and positive culture.
Supply chain of Zara is strong and quick. In stores of company the latest design products are
available within 6 weeks (Parawansa, 2015).
Zara low cost and high profit has developed a strong brand image on mind of people. Moreover,
its low cost in operations and high revenue in generating high returns on products.
Weakness
Zara weakness is lack of advertising due to which people are not able to get aware about the
latest design clothes and trendy fashion. so, due to it, profit earned by them is not more as
compared to competitors.
There is low stock kept in stores of Zara so customers are not able to find items of their choice.
this results in quick check outs (Eccles. and Youmans, 2016).

Zara do not produce a variety of products for everyone. they only have limited trendy wear for
customers.
VRIO analysis
VRIO analysis is an analytical technique that can be used for evaluating an organization’s
resources and thus the competitive advantage. VRIO analysis of Zara will help in analysis of
their internal resources in order to access whether these resources provide sustained competitive
advantage. This analysis will also help in understanding whether there is a requirement to
improve these resources for competitive advantage or not. VRIO analysis of Zara is as follows:
Valuable:
 Financial resources of Zara are highly valuable as it helps them in investing into arising
opportunities that can be beneficial for their organization. It also helps them it takes
required actions for all kinds of external threats.
 Their patents are another valuable resource as it helps them to gain long tern competitive
advantage as it allows them to sell their products.
 Other than this employees of Zara are another valuable resources of for the organization
as they are, highly skills and trained employees helps them to product more productive
output for the organization (Grinblatt, and Titman, 2016).
Rare:
 Financial resources of Zara are rare as these strong financial resources are only possessed
by few organizations.
 Their patients are another rare resource as these patents are not easily available and are
not possessed by its competitors.
 Other than this employees of Zara are another rare resources of for the organization.
Because of highly skills and trained employees they can ensure that they have better
working environment, they can provide better compensation to their workers so that
employees do not leave them for other firms (Eccles. and Youmans, 2016). .
Imitable:
 Financial resources of Zara are quite costly to imitate as these resources have been
acquired by the organization with the help of profit they earned over years.
 Patents of Zara difficult to imitate as it is illegal to imitate a patent product and in order to
develop similar resources and getting patent is a costly process.

 Employees of Zara are not costly to imitate as other firms can also train their employees
to become highly skilled. Other companies can hire Zara employees by paying them
better compensation, better package, growth opportunities and many more that can
provide them temporary competitive advantage (Parawansa, 2015).
Organization:
 Financial resources of Zara are quite organized. These resources are invested at right time
at right place to make use of available opportunities and take action against identified
threats.
 Patents of Zara are not organized in a well format i.e. organization is not using their
patents in a proper manner and completely. An unused competitive advantage can be
changed into a sustainable competitive advantage if Zara sell their patents before it
expires (Andersen. and Sax, 2019)..
Resources Valuable Rare Imitable Organization
Financial
resources
Yes Yes No Yes
Patent Yes Yes No No
Employees Yes Yes Yes No

3. Evaluation
It is necessary for Zara to analyse its strategies so that an effective strategy is developed.
The strategic evaluation is process of forming effective goals and objectives. Here, strategy is
evaluated on basis of certain factors and elements that provide a direction to company. Besides
that, it assists in proceeding forward and achieving goals. The method is defined as:
Suitability- it is referred as evaluating strategy that whether it is suitable or not for firm.
Moreover, it also covers many aspects that is opportunity and threats. So, for Zara market
development is suitable strategy as it will allow to enter in new market. this is because as their
brand image is high and strong so this strategy will be suitable for them. Furthermore, they can
increase presence at global level. also, the strategy will help firm to compete with rivals and gain
competitive advantage (Eccles. and Youmans, 2016).
Adaptability – This element refers to whether strategy is accepted by everyone in firm or not.
However, it includes stakeholder as well that provide support in strategy implementation. Within
strategy entire plan is included that how goals and objectives will be attained. It provides an
overview of role of suppliers, managers, employees, etc. Along with it, the strategy has to be
communicated to customers, suppliers, etc. Thus, as Zara is known for its unique products so
stakeholder will easily adapt strategy of market development (Andersen. and Sax, 2019).
Feasibility – this refer to adequacy of having sufficient resources in order to implement strategy.
the resources are in terms of finance, HR, tools and equipment’s, etc. thus, strategy goals are
compared with resources. as Zara is having skilled staff and huge funds so they do not require
any additional resources for market development strategy. Alongside, firm is having a strong
back up of cash that can be utilised. In this way Zara will be able to increase their global
presence and increasing sales and revenue (Puranam. and Vanneste, 2016).

CONCLUSION
From report, it is summarized that Political disruption severely affected supply chain of Zara
as it faced a rise to several problems and to overcome these problems firm needs a positive
strong presence of the customers that enables to collect profit margin. It also focused on
online shopping as one of the major trends and Zara has more attention towards it. Zara
implements the RFID technology now the customers feel more relaxed and Zara is bound
to run some issues regarding the copyright such Indite published a pledge of sustainability.
GAP ,H&M have the equal standards as Zara's supply chain is more responsive and hence
Zara Changes its old stock within ever week makes firm different from other brands. Firm
has strong brand reputation and its affordability and new trends makes the high profit and
puts a positive brand image over the customers .One of the weakness of Firm is its various
other online shopping sites and Firm are highly valuable in investing helps it to takes the
required actions regarding external threats. Patients are another rare resource that Zara have
as well as also its employees are another rare resources.

REFERENCES
Books and journals
online
SWOT of Zara, 2017. [Online] available through : <https://www.marketing91.com/swot-
analysis-zara/>

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