Case study on Zara | Assignment

Case study on Zara.

Table of Contents
INTRODUCTION......................................................................................................................................... 3
MAIN BODY................................................................................................................................................. 3
Q1: External analysis.............................................................................................................................. 3
Q 2: internal analysis.............................................................................................................................. 6
Q 3: Strategy evaluation......................................................................................................................... 9
CONCLUSION........................................................................................................................................... 10
REFERENCES.......................................................................................................................................... 10

INTRODUCTION
Every organisation wants to succeed in the market for that it has to build some strategies and
analysis of their internal and external factors should be very obligatory. Micro and macro environment is
one of the important element to know about strength and capabilities so that an organisation can each
and every opportunity that present in market place. This report is based on Zara which is a Spanish fast
fashion retailer that is based on Arteixo in Galicia. This company was found in 1975 and its main brand is
Inditex group that is one of the largest apparel in retail sector. This report is based on internal strength
and capabilities of the organisation and external factors in which political, social and other factors also
consist in it that impacts in both positive and negative manner on organisation. It also elaborates about
the strategy which is use by Zara to lead in market and rationale for organisation.
External analysis of Zara
External factors or outside influences that influences business and its proceedings. It is one of the
factor that influence to achieve strategic goals and objectives (Abplanalp, 2012.). In external factors
includes competition, social, legal and technological changes that are important part of economic and
political environment to grab large attention of consumers.
Industry analysis:
To attain success and desirable goals organisation have to access macro factors that directly
impacts on organisation works and proceedings. In macro factors consist of Political, Economic, Social,
Technological, Environmental and Legal with economic factors that directly impacts the business.
PESTEL Analysis
Political factors:
The most important political factor is the financial regulations that impacts on economic condition
of business (García-Álvarez, 2015.). Zara is operating in few countries where political condition is stable
and their relationship with government is fine. It is assisting them in expanding their business swiftly. In
few developed economies, labour laws are very strict and breaching them can result in serious legal
trouble. This threat can directly impact profits of the organisation.
.
Economic factors:
It consists of interest rates, taxation and growth and exchange rates that directly impacts on
profitability of an organisation. While deal in different nations organisation have to face many problems or
concerns that impacts on their profitability ratio. In case of Zara there are different duties and tariffs that
change according to changes in nation that is major concern of Zara and it brings diversity in prices while
deal in different nations. Zara is aggressively expanding their business in emerging markets like India and
other Asian countries. These countries are going to drive growth of complete industry. The biggest threat

for Zara is that aggregate demand in many developed countries is continuously decreasing. These
nations are prime source of their revenue, poor lower demand and low growth rate of these countries is
serious concern of the management.
Social factors:
It consists of changes in social trends that is rapidly change in fashion industry that impacts on
profitability ratio of organisation. In case of Zara they focus on huge market and deals in different types of
products in which consumer segment is also different. That concern hinders self-interest of an individual
to shift in taste and interest of consumers and it forces to organisation to mould their products accordingly
to consumer demand (Yip and Huang, 2016.). Zara changes their collection of the clothing swiftly and
they are known for making trendy cloths. Company's business model is allowing them to provide more
choices to the buyers. It is creating new opportunities for them as no other organisation changes their
collection in every one or two weeks.
Technological factors:
It consists of producing goods and services that serve in better manner consumers’ needs and
demand in better way. Zara majorly focus on mould in their products and services that give better living
conditions to people. It enhances the quality of products so that they invest huge in technology that helps
in improves their serving ability and beat their competitors (Hughes and Bruce, 2013.). Selling cloths
through online mode can be considered as the key opportunity for Zara as they can earn huge amount
of revenue through this channel of selling.
Environmental factors:
Environmental factors concern with health of the planet and its residents as one. Green side of
environment is one of the important factor that helps to make consumers loyal. Zara to grab large
attention of consumers have to invest to maintain sustainability to remain competitive for long period in
market. It focuses on consuming less energy and water to remain always competitive in market place.
Zara created ''green clothing'' collection and its initial success depicts that scope of growth in this type of
collection is enormous. Zara is facing heat for polluting environment as they are manufacturing cloths
which are made by ''viscose''. The main threat for Zara is that their factories in Asian countries may get
shut down because they are posing real threats to health of public and environment also.
Legal factors: Zara is running their business in many countries and frequent changes in few economies
can be considered as a big threat on their revenue. It stops them from making long term plans and
restrict them in achieving set targets. But sometime change is law works in favour of company. Some
developing nations changed their rule of ''not allowing foreign investment'' and it ultimately created huge
opportunity for Zara as they can now grab market share in emerging economies.