Zara's Competitive Advantage

This assignment examines the competitive landscape of Zara, focusing on both internal strengths and weaknesses as well as external opportunities and threats. It highlights how effective management can leverage these factors to enhance profitability, productivity, and customer satisfaction. The report emphasizes the importance of continuous analysis of both internal and external environments for achieving sustainable competitive advantage.

Business Essentials

Table of Contents
INTRODUCTION...........................................................................................................................1
OVERVIEW OF ZARA..................................................................................................................1
Macro environment..........................................................................................................................1
PEST Analysis of ZARA........................................................................................................1
Micro environment...........................................................................................................................4
SWOT Analysis of ZARA......................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In modern era, competitive advantages can be gained at marketplace by doing proper
analysis of both macro and micro environment and their impacts on organisation. It is must for a
company to take initiatives so that rivalry can be given to its competitors. Proper utilisation of
technology, political and understanding of business ethics can help a firm in hitting their targets
in much more effective and efficient way. Under this report, company which has been taken i.e.
ZARA that is famous for its trendy clothes in all over world (Cieśliński and et. al., 2017).
Assignment is going to include both PEST & SWOT analysis along with aspects that are related
to make company different from other firms that are dealing in same sector.
OVERVIEW OF ZARA
ZARA was found in the year of 1975 by Amancio Ortega and Rosalia Mera. Firm deals
in clothing sector and offers trendy fashionable clothes to its consumers. It is famous for its
trendiness and an individual as a customers selects this brand because of this only that they
deliver products and services right on time. With the help of this, users are fulfilling their
requirements by paying minimum amount. $9 million was the amount that was generated by
Zara in 2016 year and has outlets in all over world in thousands of numbers. In order to gain
competitive advantages it is must for ZARA to consider and analyse both micro and macro
environment of business so that benefits can be gained right on time through which firm can
attain its goals and objectives in an appropriate manner and right on time (Drucker, 2017). With
the help of this, ZARA can enhance its profitability and productivity at the same moment.
Macro environment
Marco environment is wider in nature and can put impact on organisation's overall
business structure. This consist of external factors that affects company's operations in both
direct and indirect manner. Therefore, it is must for enterprises to consider its elements so that
business can get run at marketplace in an appropriate manner. With the help of this, organisation
can take effective decisions so that benefits can be gained like enhancement in profit margins,
rivalry to competitors and so on (Flanagan and Alfonso, 2017). To understand this PEST analysis
of ZARA is being mentioned below:
PEST Analysis of ZARA
Political: Financial modulation of a country can help an organisation to hit their targets in
much more effective ways. It is must for a company to consider this element so that benefits can
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be gained right on time. As ZARA has a big brand name and is doing business in almost every
single country. It has been located that, countries and their government's viewpoint stays
different from each other most of the time. Governmental agencies develops policies according
to their needs therefore, it is must for ZARA to consider all changes which has been made by
them so that to survive at marketplace for a longer period of time. Initiatives can be taken by
ZARA to give competition to rivals at international level to tie ups with local brands. For an
example: External bureaucracy in India can be stated as the barrier which may delay the process
of entering at marketplace of Republic of India. ZARA can create favourable conditions for it If
the political factors of nation are much safer and peaceful, the brands operational there may
become blissful.
Economical conditions of a country can put impact on both profitability and productivity
of ZARA. Therefore, it is must for them to consider all the rules and regulations which has been
created by government of nation. Political factor can interrupt overall supply chain of ZARA
which can be a reason of raise in difficulties in order to achieve goals and objectives in an
appropriate manner. To give good competition to rivals ZARA fixed the supply chain for every
single country in which they are dealing. Modifications in rules may pull up the threats which
will directly put impact on hitting their targets of organisation (Moreno Marchal, 2017).
Economical: This is another factor of external environment that can put impact on
business of firms that are dealing in both domestic and at international level. In other words, this
factor can be stated as the critical element that affects condition of an organisation in both
positive and negative impact. ZARA has already introduced its products and services in order to
hit their targets in much more effective ways. They mostly target consumers that have age
around 14 to 40. when it comes to gender than they directly try to grab the attention of women
and of teenagers. In the year of 2007, when recession took place it has been analysed that most of
companies reduced prices of products and services to half of cost that they were selling before.
Here, as ZARA already charges nominal rates for its products and services. It has been analysed
that, pricing strategy has helped them in getting saved from huge losses. Stronger dollar amount
that means reduction in profit margins of firms US from foreign markets (Patten and Newhart,
2017).
Along with this, it has been located that rise in labour charges and in production costs or
that of raw material leaded firms in creating financial instabilities. In the end of recession, ZARA
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has created products and services. The importance of economic components can also be
understood by the fact that any news of decline in economic activity affects customer sentiments
deeply.
Social: It has been analysed that business firms cannot get rid of this factor as it is much
more effective at same moment to understand products and services in an appropriate manner. It
is important for organisations like ZARA to keep on making alterations in their products and
services according to possibilities that needs to be considered with the help of perspectives of
consumers and of employees as well (Schumpeter, 2017). It is mandatory for firms like ZARA to
keep their image clean in front of consumers so that to grab good competitive advantages. CSR
activities are there which is being done by companies in order to bring up positive image in front
of the society. Along with this, it has been analysed that firms do handles and carries good
reputation at marketplace if they keeps on making strategies in order to hit their targets that are
related gaining good profitability and productivity level. Few authors have stated that in order to
run business in successful manner it is must for an organisation to understand the culture in most
effective and efficient way.
BOD of ZARA are much talented therefore, they do proper research of marketplace
before entering a whole new area. Along with this, it is must for them to hit their targets in much
more effective ways and this can be done through doing proper investigation in an appropriate
manner. Away from this, manufacturing of clothes are being done by ZARA by taking under all
the view points of consumers and by using updated technology so that to deliver quality products
to them. It has been examined that, customers mostly likes to buy trendy clothes and keeping this
factor in mind ZARA makes products according to their perspectives. On the other hand, it has
been located that this firm do not try to make much alterations in their products and do not offer
clothes with some alien content which is not coming into their culture. With the help of this,
ZARA had already grabbed a good position at marketplace.
Technological: This factor has made so many changes in past few years which is related
to communication, transport, or other aspects of doing business in an appropriate manner so that
firms can hit their targets in much more effective ways (Shiu and et. al., 2017). Along with this,
it has been examined that companies have made ample number of products and basically they
have considered them in an befitting mode. Under this 21st century, technology has putted
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impact on equations of consumers behaviour similar to nothing before. In the year of 2014,
ZARA did partnership with while keeping the application of JIT and Lean facilities in order to
manufacture products.
This has helped in improvising ZARA’s entire stock list administrating procedures in
much more effective and efficient ways. RFID has putted good impact on operations of
customers. That has aid ZARA in getting competitive advantages at marketplace of both
domestic and international level (Souleles and Scroggins, 2017).
Micro environment
This is a type of environment that should be analysed in an appropriate manner so that
better advantages can be gained at marketplace. It has became vital for firms to understand this
environment in befitting mode as it consists of internal factors of an organisation that can put
impact on doing of business at both international and domestic level. ZARA has already have
gathered good information of needs and wants of consumers. In order to understand this SWOT
analysis of ZARA has been done below:
SWOT Analysis of ZARA
Strength
 Unique designs: Its one of an first benefits for Zara is its abilities of design. Organisation
provide clothes of fantastic finishing, high quality and elegant. They give various
varieties contains casuals, for women and men, party wear, office wear and many more.
 Strong presence: Company keep on expanding its presence all over the globe. It keep on
enhancing their presence as well as its its brand quality exactly.
 Brand value: Their brands always stay humble when it came near and they stay away
from controversies. Such kind of health culture has outcome that customers are loving
their brands.
 Superb supply chain: Firms is known by its designs and quality. It provides the latest
fashion and it is an trendiest store. It naturally push customers for visiting their stores and
check out the latest designs.
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 Advanced design: It is launching a reputed new designs all over the globe. Certain
consumers dedicate their accomplished Wardrobe to the clothing of Zara. All designs of
organisation are trendy and latest which is loved by buyers. Low cost and higher profits: because of having a benefits of design as well as their
physical evidence are fantastic within their stores as due to that they can keep their cost
higher and can able to earn higher profits (Werner and Tang, 2017).
Weaknesses: Zara is global brand those are sell their product at different nations as well as
customers. Some important weaknesses of Zara are explain as follows:
 Generalised collection: Zara have general collection in their store, so that firm
performance has increase. They are not specialise in anything and produce product to
everything for everyone. Because competitors has focus on single things that is why it
create lot competition at market place.
 Lack of advertisements: Management of Zara can not spend large amount in
advertisement and promotion. But their competitor do the same can receive advantages of
this marketing strategies. Low safety stock: A regret which Zara retail store have want to safety for their fast
moving product. Low inventory has create problem for customers which are walk - in in
their store.
Opportunities
 Online: Online selling provide high profitability as well as save store operations cost.
Thus help to run business activities in an effective manner. Flagship designs: They sell top brand produce which are exclusive in nature are build
higher brand value of the firm at market place (Yin, Ansari and Akhtar, 2017).
Threat
 Low advertisement: New competitors are enter into retail industry and highly invest in
advertisement and promotional activities in order to attracting large numbers customers
toward of product and services of the firm. But Zara can not do the same which create
issues for them to retain existing clients as well as attract clients.
 Competition: Due to low entry barriers most of the international retail organisation
expand their operations at global level. That create lot of competition at domestic as well
as in other firm (Souleles and Scroggins, 2017). Management of Zara can not focus of
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their core competencies effectively that create negative impact on company performance
as well as market share.
CONCLUSION
From above mentioned report, it has been concluded that management of a firm should
keep on analysing both internal and external factors so that to gain competitive advantages at
marketplace. With the help of this, organisation can enhance both profitability and productivity
in much effective and efficient way and along with, requirements of customers can be fulfilled.
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REFERENCES
Books and Journals
Cieśliński, W. and et. al., 2017. The Organizational Cyberspace: E-trainerism. The Model of
Advanced ICT and Augmented Reality in Sports Enterprises. In Empirical Studies on
Economics of Innovation, Public Economics and Management. pp. 167-177. Springer,
Cham.
Drucker, P. F., 2017. What Makes an Effective Executive (Harvard Business Review Classics).
Harvard Business Review Press.
Flanagan, D. P. and Alfonso, V. C., 2017. Essentials of WISC-V assessment. John Wiley & Sons.
Moreno Marchal, J., 2017. Creative Process in Engineering: Methods, Tools and the
Management Implications. In HANDBOOK OF THE MANAGEMENT OF
CREATIVITY AND INNOVATION: Theory and Practice. pp. 237-255.
Patten, M. L. and Newhart, M., 2017. Understanding research methods: An overview of the
essentials. Taylor & Francis.
Schumpeter, J. A., 2017. Essays: on entrepreneurs, innovations, business cycles and the
evolution of capitalism. Routledge.
Shiu, E. and et. al., 2017. Innovation Management for Products and Processes in the Automobile
Industry: Example of BMW. In HANDBOOK OF THE MANAGEMENT OF
CREATIVITY AND INNOVATION: Theory and Practice. pp. 191-216.
Souleles, D. and Scroggins, M., 2017. The meanings of production (s): showbiz and deep plays
in finance and DIYbiology. Economy and Society. pp.1-21.
Werner, C. H. and Tang, M., 2017. Essentials of the Management of Creativity and Innovation in
Education, Business, and Engineering. In HANDBOOK OF THE MANAGEMENT OF
CREATIVITY AND INNOVATION: Theory and Practice. pp. 347-364.
Yin, E., Ansari, S. and Akhtar, N., 2017. Radical Innovation, Paradigm Shift and Incumbent’s
Dilemma The Case of the Auto Industry. Future Studies Research Journal: Trends and
Strategies. 9(1). pp.138-148.
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