CSR in ZARA India

This article discusses the importance of corporate social responsibility (CSR) in the garment industry, with a focus on ZARA India. It explores the challenges and benefits of implementing CSR in ZARA, and how it influences consumer behavior and profitability. The article also compares ZARA's CSR initiatives with other brands in the industry. It provides insights into ZARA's CSR strategies and their impact on the company's brand value and employee retention.

Running head: CSR IN ZARA INDIA
CSR in Garment Production in India
Name of the Student
Name of the University
Author Note

1CSR IN ZARA INDIA
Table of Contents
Introduction:...................................................................................................................2
Corporate Social Responsibility:....................................................................................2
Research Rationale:........................................................................................................4
Research Aim:............................................................................................................4
Research Question:.....................................................................................................4
Objective of the Study:...............................................................................................4
Methodology used for the Research:..........................................................................4
Limitation regarding the Research:............................................................................5
Corporate Social Responsibility initiatives in ZARA India:..........................................5
Comparison of ZARA with other brands regarding the CSR policies:..........................9
H&M:.........................................................................................................................9
Primark:....................................................................................................................10
ZARA Financial Statement and Normalised Data:......................................................11
Income Statement:....................................................................................................11
Balance Sheet:..........................................................................................................11
Cash Flow Statement:..............................................................................................12
Conclusion:..................................................................................................................12
Reference:....................................................................................................................14

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Introduction:
In the current situation, sustainable development has become very much important for
all the organization and the industries. Here, to achieve the sustainable development the CSR
or the Corporate Social Responsibility plays a huge role. In the present globalised economy,
Corporate Social Responsibility is considered as an important business premise for sustaining
and gaining a competitive advantage (Schwartz 2017). In the present environment, it has
become very much important for the industries to execute their business model in a
responsible way. Thus in this context the corporate social responsibility has gain a huge
importance of the industries as most of the stakeholder of those industries expect that the
industries will not go behind the economic results only, with the industries need to take care
of the social issues, community issues, and the environmental issues which are completely
relevant for them. To response in the environmental, social and economic pressures the
organisations are now promoting their strategies of corporate social responsibility.
In this context, a brief discussion will be done on the corporate social responsibility of
ZARA. Following the discussion of the corporate social responsibility, a brief study will be
done here which will describe the corporate social responsibility and the activities of ZARA
to maintain their brand popularity. In this particular section, the objective of the research,
methods, and tools used for the research and various limitation of the research will be
described briefly.
Corporate Social Responsibility:
The CSR or corporate social responsibility is considered as the internal policy of an
organisation. It is also considered as the ethical strategy of a particular organisation. In the
level of organisation, the CSR mainly understood as the private firm policy. The CSR always
need to be aligned with the integrated business model of the organisation to become

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successful (Cheng, Ioannou and Serafeim 2014). The businesses or the organisation mainly
engages with the corporate social responsibility for ethical purposes or for some strategic
proposes. In the context of the strategic implementation of the CSR the organisations mainly
aim to increase the shareholder's trust and the long-term profits by implementing high ethical
standards and by positive public relations which will significantly reduce the legal risk and
the business risks buy some improved corporate actions. The strategies of the CSR
encourages the organisation to reflect a positive impact on the stakeholders and on the
environment (Crane, Matten and Spence 2013). In this context mainly the stakeholders
include employees, consumers, communities, investors, and others. From the ethical
implementation perspective businesses or the organisations aims to implement CSR practices
and policies to create an ethical belief on the senior management of the organization.
The CSR is currently facing the issue of a proper definition and lack of a classified
concept. There are various types of definitions are available for the CSR which can create
confusion among the readers (Servaes and Tamayo 2013). Actually, the definition of the CSR
varies from very practical statements to a highly conceptual statement. As there is a very high
amount of heterogeneity in the approaches and the theories of the CSR, this research on
corporate social responsibility becomes a very hard task.
In this paper, research will be done on the corporate social responsibility within the
ZARA India. A proper corporate social responsibility is required within the ZARA as this
type of industry includes a high number of labours, and this organization is looking to
maintain a high brand value to ensure its sustainability within the Indian garment industry.
Thus proper CSR strategy needs to be developed to manage both the higher management and
the labours of the garment industry.

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Research Rationale:
In this context of the study, vast research will be done on the corporate social
responsibility in garment production. In this study purpose of the research, the objective of
the study and the methodology used for the research be described.
Research Aim:
The main aim of this research is assessing the CSR influence on the consumer
purchasing behaviour and the impact of it on the profitability of ZARA.
Research Question:
 Is CSR providing value to the organizations?
 Does CSR enhance profitability of organization?
 Does the customers assesses the CSR of the organization before purchasing products?
Objective of the Study:
 To identify several concepts regarding Corporate Social Responsibility.
 To identify several ways of organising and planning activities regarding the CSR.
 To determine connection between the CSR and portability of ZARA.
 To assess whether profit can be increased through modifying CSR activities.
Methodology used for the Research:
In this scope to research on corporate social responsibility within the garment industry
in India methodology for the particular brand ZARA, an exhaustive literature survey is used.
Also, industry reports, non-industry sources and qualitative sources have been used in this
case. For this literature review, several peer-reviewed journal articles have been used from
online and offline sources.

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Limitation regarding the Research:
The main limitation regarding research is that no primary research data is present
within the study such as personal interviews and surveys which was able to give the research
a strong point of view. The research is totally based on the secondary types of data which
includes a literature review of the journal articles.
Corporate Social Responsibility initiatives in ZARA India:
According to Gandhi (2017), ZARA India has seen several benefits due to corporate
social responsibility. Though the corporate social responsibility has provided several benefits
to the ZARA in India, there are several challenges in the implementation of the CSR. From
the research, the author has observed that the challenges regarding the CSR implementation
tend to outweigh the benefits provided by the corporate social responsibility. In this case
various short term expenses, additional burdens, and the financial benefit misperception have
limited the long term benefit provided by the CSR in the ZARA India. The author has
observed that the CSR activities are currently active in the ZARA India are mainly focused
on the peoples and on environment or society (Gandhi 2017). With that there are other CSR
activities are present in this industry which is focused on the general education of employees,
safety and health awareness and welfare of the employees. In the garment industry of India,
the corporate social responsibility also plays a crucial role in the aspect of employee retention
as the CSR has a huge role in the satisfaction of the employees. The author also described
that employee retention is not only the benefits provided by the CSR, but also it helps to
enhance the image of the organisation to society. Although this is not a long-term benefit
which is gained by the organisation still it is crucial for gaining the market trust and building
a reputation.

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As per the author De Neve (2014), trade Network and global production have
significantly transformed the production regimes and the product production site workplace.
The author stated that corporate social responsibility is also seeking to renovate the process of
production to improve the condition of the labours and to protect the rights of the workers. In
practical situations, the voices of the workers and their choices are rarely considered in the
workplace. In this article, the author has given attention to Tiruppur garment cluster which is
located in South India. By presenting this data on the given garment cluster, the author
elaborated ethical codes followed by the labour practices which is produced under neoliberal
governance and further ethnographic evidence on what workers do with the work regimes
(De Neve 2014). Also, the author explored how the workers of the ZARA involve
themselves with other types of labour regimes and tries to avoid the organisations which
prevail the implemented CSR within the organisation. Thus the author tried to give an idea of
how important the CSR is for the organisations.
The authors Gupta and Hodges (2012), has explored the perception of Indian
consumers aspect of corporate social responsibility within ZARA. In this article also the
author investigated the importance of the corporate social responsibility in the decision
making the process of apparel. In this context to perform the research, the authors have used a
qualitative research approach. In this research, a deep interview has been taken of the total 26
peoples related with ZARA in India. The average time for the interview was around one to
two hours, and the interview was taken until satisfied answers were not achieved. The
answers of the interviews were analysed in a thematic approach and also from the research
total six themes have been developed that are used for organizing the response of the
participants regarding the corporate social responsibility within the ZARA India (Gupta and
Hodges 2012). In this article, the authors have also identified that the Indian consumers do
not hesitate to buy a product from the organizations which are responsible socially and thus a

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key factor, in this case, is making the consumer awareness about the importance regarding the
CSR practices. When the consumers are more aware of the CSR importance, they are surely
going to consider the CSR during a purchase regarding the decision. Also, at the retailer point
of view CSR is also very much important as it helps the retailer to drive the supply chain.
As per the Bode and Ontwikkelingssociologie (2014), this research mainly explores
the implication of the corporate social responsibility employees on the employees of the
garment factories of ZARA India. Due to the research question, a question has been raised
regarding the corporate social responsibility and to answer this question the author has firstly
described the concepts of the CSR. The author has successfully identified that CSR consists
of various practical outcomes which includes codes of conduct, corporate certificates, and the
standards. The practices regarding the CSR mainly produces ambivalent outcomes. Also, the
different organizations have different types of business aims due to that corporate social
responsibilities varies for different organizations. In this article, the author has also described
the CSR and how the CSR is being developed for the organizations. In the context of the
ZARA India the authors have also described how the CSR has emerged and the practical
outcomes that have been raised in the aspects of the codes of standard and conduct (Bode and
Ontwikkelingssociologie 2014). The authors have also argued that it is very much important
to view the CSR from different types of perspective. Here the author aims to investigate the
labour rights and how the workers of various organizations critique the CSR practices within
the international firms by analysing the CSR intervention case within the South Indian
garment cluster. The main findings in this context are focused on the employees and the
experience of them within work floor regimes due to the social-economic implication of the
CSR practices.
According to Stotz and Kane (2015), peoples who prepare the merchandise of ZARA
are mainly are basically form the developing countries which include India also. From the

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statistics of them it has been assessed that overall worldwide three quarters of the garment
workers are women and in most of the cases these women workers are uneducated as they
need to join the work as young as possible due to the poverty and due to that they do not get
sufficient time to complete their education (Stotz and Kane 2015). To overcome this ZARA
has implemented a CSR program to educate their workers who have given them a
competitive advantage in the market. The main mission of this CSR program is empowering
its garment workers within the developing countries. ZARA has implemented this CSR
strategy considering the workers who are working in the underprivileged companies which
are operated by ZARA itself. This CSR program of them is known as the ZARA University,
and the main focus of this CSR program is merging the work and the education which is both
beneficial for the workers and the ZARA itself as the workers will be able to prepare more
quality products by applying their knowledge. To successfully execute this CSR ZARA has
partnered with the organization She’s The First which aims to give education to the girls who
are facing high poverty. This organization has provided tuition food and education to support
the literacy network. The partnership between the She’s The First and ZARA has aligned
perfectly as the shared value of them is providing an opportunity to the women work in the
developing countries and while ZARA is providing an opportunity for women working it is
also providing a medium for the education. Thus ZARA is able to improve the life of their
employees through mentorship, education and by supplying basic needs. Through this ZARA
is motivating its employees toward the workforce and also it is beneficial for employee
retention.
In the current situation the ZARA is having more sales compared with the other
fashion industries like the H&M and the Primark fashion. Actually there is a reason behind
the more sales of the ZARA compared with the H&M and the Primark. From a consumer
point of view the main reason behind the more sales of the ZARA is its better CSR polices to

9CSR IN ZARA INDIA
the consumers and the society. It is also a noticeable thing that the prices of the Primark and
the H&M is comparatively low compared to the ZARA but still the consumers prefers the
ZARA brand over them. It has been identified that one of the prior reason that is the
sustainable CSR polices of the ZARA. The products that are manufactured by the ZARA are
mostly sustainable in nature for the future societies and thing attracts the consumers most.
Though the prices of the H&M and the Primark products are comparatively low, they failed
to attract the customers as their products were not sustainable in nature. The low price
strategy might be useful for specific market but most of the market is demanding the
sustainable products in the current situation. Also another main reason behind the success of
the ZARA is the CSR policy of educating their workers. This is one of the CSR policy which
is taken for the improvements of the community. As this CSR policy is promoting the
education of young workers of them many peoples will prefer the ZARA over the H&M and
the Primark fashion. The main reason behind that they will be happy as one part of their
expenses will go for the education of the poor peoples. Another reason behind that is higher
quality of education will help the workers to produce more quality products. Thus peoples
will prefer the ZARA over the H&M and the Primark fashion.
Comparison of ZARA with other brands regarding the CSR policies:
Like ZARA there are other brands also present in the market which also influences
their customers with their corporate social responsibilities. This type of two brands is H&M
and Primark.
H&M:
H&M is one of the biggest multinational cloth retailing company based in Sweden.
H&M is the second largest global cloth retailer in the world behind the Inditex which is the
parent organization of the ZARA. Thus it is normal that the ZARA will face tough

10CSR IN ZARA INDIA
competition from H&M in the market (Shen 2014). A case study was accompanied by the
Karlstad University targeting the CSR policies which were implemented by the H&M. From
the case study it has been assessed that the CSR tactics implemented by the H&M were not
proactive, rather than it was reactive. To support this statement example of the 1997 case has
been presented here in which a Swedish TV documentary accused that the subcontractor of
the H&M production was using child labours in the Philippines (Hindman and Hindman
2014). After the broadcast of this documentary Sweden’s Ministry of Labour and a member
of the Cabinet officially announced that they are going to boycott the products of the H&M
and many of the Swedish peoples followed the cabinet decision. As Sweden was the home
county of the H&M, this created brand reputation issue in the international market for H&M.
In this case it has been seen that due to the improper corporate social responsibility the H&M
faced a huge issue in the market sustainability. Though other good CSR implementation was
done by the H&M they failed to address the ethical concern of the labour mistreatment.
Primark:
The Primark fashion is an Irish fashion retailer based on Dublin. This organization is
the subsidiary of the organization ABF. As this is also a big organization again ZARA is
going to face a huge competition in the market. Though the Primark has the ability of
competing with the ZARA but in some recent cases the Primark fashion was faced some
problem due to their CSR polices which decreased their sales ratio. Thus in this case the
ZARA got a competitive advantage due to the fault of Primark fashion. It has been seen that
the CSR policies of the Primark faction was also supporting the child labour concept. The
case of the child labour is discovered through an investigation against the Primark fashion.
From the investigation it has been assessed that the Primark fashion was using the Indian
refugee camps for production of their some cheapest garment. The main reason behind that
they were using some unethical CSR policies is that the Primark fashion was totally focused

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on the reactive social corporate responsibility campaign. This report from the investigation
created a huge disturbance in the supply chain of the Primark fashion and it also surprised the
both high-street shopper of UK and the die-hard fans of the Primark fashion. Due to this
report sales percentage of the Primark fashion dropped heavily. Some peoples avoided the
Primark fashion as it was using concept of the child labour while some peoples of avoided the
products of the Primark fashion as it was using some cheap production line.
From the above two cases of the H&M and the Primark fashion it has been seen that
the improper CSR initiatives of the two organization have created a problem for them. In this
context both the H&M and the Primark fashion has focused on the reactive corporate social
responsibility campaign which has to lead them to the issues regarding the unethical labour
practices. Due to that, in the consumer market, these two organization has gone behind
ZARA in the market competition. In the other case ZARA has become beneficial by the
implementation of the proactive CSR campaigns which has helped them to capitalize their
brands within the fast fashion industry (Dias 2013). Better brand capitalization means more
customers will be attracted towards the brand thus normally peoples will buy ZARA
compared with the Primark fashion and the H&M due to the proactive CSR policies of the
ZARA.
ZARA Financial Statement and Normalised Data:
Income Statement:
2016 2017
Total Revenue 69.84 67.73
Operating Income 4.25 5.9
Gross Profit 19.3 18.1
Net Income 1.69 5.17
Gross Margin 25.02%
Net Profit Margin 8.62%

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Operating Margin 8.97%
Return on Investment 3.46%
Balance Sheet:
2016 2017
Total Assets 214.43 219.58
Total Equity 161.59 166.84
Total Liabilities 52.84 46.74
Current Ratio 1.32
Quick Ratio 1.23
LT Debt to Equity 0.13%
Total Debt to Equity 4.92%
Cash Flow Statement:
2016 2017
Cash from Investing Activities -4.05 -4.88
Cash from Operating Activities 18.19 16.01
Cash from Financing Activities -13.8 -11.65
Total change in cash 0.34 -0.53
Revenue Share 0.45
Cash Share 0.09
Operating Cash Flow 66.29%
Conclusion:
From the above discussion it can be concluded that CSR policies are very much
important for the organizations as it ensures sustainability. This research has approach
towards the qualitative type of analysis as the implementation of the qualitative analysis can
form an inquiry that is able to analyse the information that are convoyed through the
language and the behaviour. Also in this approach some technical methods has been used for
significance of findings on research. In this research, the corporate social responsibility

13CSR IN ZARA INDIA
policies of a garment industry ZARA has been evaluated briefly. In this context research on
the CSR policies of the ZARA has been done by following the qualitative approach. As the
research strategy follows the qualitative approach in this case, a vast literature review has
been performed on the topic of CSR policies of ZARA. From the literature review, it has
been assessed that ZARA has various benefits due to the implementation of the CSR, but
ZARA is also facing various challenges regarding the implementation of this CSR policies.
ZARA has successfully overcome these challenges, and by the implementation, these CSR
policies have employed a crucial role for employee retention and in employee satisfaction.
This type of CSR policies is able to long term benefit to the ZARA. From the literature
review, it is also assessed that corporate social responsibility can also renovate the garment
production process in ZARA. By renovating the production process, the ZARA will be able
to protect the rights of the employees which is essential for the market success of ZARA. The
further literature review on the CSR activities of ZARA has presented that consumers are
willing to buy products from an organization which is responsible socially. Thus CSR is an
important concept in this case to improve the market capitalization of ZARA. It is also
assessed that the CSR of ZARA is helping in the women empowerment. Most of the workers
of ZARA are from a developing country such as India and are women. When these workers
joined ZARA, they were uneducated due to the fact that they did not getting time to complete
their education. Considering this fact, ZARA has implemented a CSR program to provide
education to the worker who has become beneficial for ZARA as the retention of the
employees has been increased.
In this research also the CSR policies of two big brand H&M and Primark fashion is
compared with the CSR policy of ZARA and it has been assessed that the proactive CSR
policy of the ZARA is more beneficial than the reactive CSR policy of those brands due to

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which consumers prefer the ZARA more than the Primark fashion and the H&M. Also, better
brand capitalization has been gained through the CSR policies of ZARA.

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