Business Management of Zara

RUNNING HEAD: Business Management 0
zara
Business Management

Business Management 1
Contents
Introduction................................................................................................................................2
External Analysis.......................................................................................................................2
Internal analysis.........................................................................................................................4
The strategy implemented by the company recently..................................................................7
Conclusion..................................................................................................................................8
References................................................................................................................................10

Business Management 2
Introduction
Business management is the activity of managing business operations. It is associated with a
running company like controlling, leading, planning and organizing. This report includes the
business management of Zara. Zara is the largest retailing clothing brand and is a part of the
Inditex group of companies. It is the fastest growing retail company throughout the world.
The company has expanded operations to become one of the leading fashion retailers
globally. Zara has attained a high level of global recognition due to its efforts of fulfilling
demands of a niche market. It is highly associated with current market trends. The mission of
the company is to achieve consistency in the operations by providing products in a timely
manner. Zara operates more than 2000 stores in more than 80 countries. The report comprises
the external analysis of Zara. The external analysis covers Pestle analysis along with Porter’s
five forces. The external analysis is also accompanied by internal analysis. The internal
analysis includes the resources and core competencies of Zara. 7s is used to demonstrate the
core competencies of the organization. The strategy evaluation is also made at the end of the
report. The strategy is evaluated by SAFe test.
External Analysis
The external analysis comprises Pestle and Porter’s five forces
Pestle Analysis
Political factors: The UK is one of the leading countries globally. Political stability is
considered great strength of UK which represents opportunities for Zara to expand functions
(Davies, 2017). The UK is also a popular destination when it comes to making a foreign
direct investment. The corporate tax to be paid by the companies in the UK is 19% which is
quite high and can be a threat for the company to pay on the regular basis (Boyd, 2018).
Economic factors: UK ranks fifth as the largest economy worldwide in terms of GDP. The
country came in trouble when the recession occurred in 2008 but the government took
appropriate steps in order to improve the economy. The recovery was made at a slow speed
which represents fear of recession for Zara. The large population of the country allows even
small companies to be profitable. Zara can make a profit out of it.

Business Management 3
Social factors: The UK has a big and strong consumer market. The populace of the country is
anticipated to stretch 74 million by 2039. 18% of the populace is aged 65 or more whereas
2.4% were aged 85 and more. It puts implication on the labor market along with the health
care system. The cost of living is on the rise along with the education which represents
opportunities for Zara.
Technological factors: the UK has established itself as technologically advanced. The
businesses here are rapidly emerging new technologies to propose best solution for the
customers. The innovative infrastructure compromises unlimited prospects to companies like
Zara to conduct operations in the UK (Caro and Sadr, 2019). Technology sector contributes
majorly to the UK economy so the company is required to make a huge investment which can
even represent a threat to the company.
Legal factors: The legal factors comprise the EU labor law and as per this law, the maximum
length of working is 48 hours in a week. The country even allows those who are likely to
work more than 48 hours. The laws like Employment Act 2002, Employment Right Act 1996
and more work in favor of the employees. Zara can make use of the opportunities in the UK.
Zara can face threat if it goes beyond the laws made by the country.
Environmental factors: The economic activities have influenced the environment and UK has
made substantial efforts in decreasing negative impacts. The economic activities of UK
represent opportunities for Zara. Environmental awareness has been initiated by the
government, locals, charities, and corporations. The country sometimes faces challenging
weather conditions which can be problematic for the company to conduct marketing activities
(Gutierrez, Boukrami and Lumsden, 2015).
Porter’s five forces
Competition in the industry: The major competitors of Zara are H &M, Gap and Benton. Zara
is the most reasonable and fashionable brand and beats the sale of Gap and Benton. H & M
stands on the same platform as Zara. The company has the most responsible supply chain
model. Whereas other retailers spend months for launching the latest collection. The
competitive rivalry is low due to the established image of the brand. The uniqueness of Zara
allows earning a profit without spending large amounts on the advertisement to gain a large
market share.