Dynamic Business Environment - Document

Running head: DYNAMIC BUSINESS ENVIRONMENT
Dynamic Business Environment
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1DYNAMIC BUSINESS ENVIRONMENT
Topic 3 - PEST: The 4 external forces within the PEST framework help to identify the key
political, economic, social and technological themes and issues that countries and business
face within a global society. Choose ONE of these forces and discuss its implications for a
country or industry, or organisation of your choice.
Globalization can be defined as a unique phenomenon of the modern world which is
affecting more and more company each day (Wetherly and Otter 2018). The start of
globalization was since the time of industrialization and now, it has come to affect almost the
whole of the world. Globalization have had both positive and negative effects while most of
the positive effects can be seen in the developed countries whereas more of the negative
impacts are largely observed in the developing ones. Due to globalization, the organizations
are expanding overseas and the factors like politics, economy, society and technology is
affecting the businesses and their image all over the world (Ghemawat 2017). Among these
external issues society is one of the most impactful factors that affect businesses. ZARA is a
fast fashion brand and is located at various locations all around the world. This essay explores
the company ZARA and the social implications that it faces in the global world.
ZARA is a Spanish company who has taken a different approach to fashion retailing.
Unlike other premium fashion brands, they produce latest trends in a very short period of
time and sells them all over the world. The company is one of the companies working under
Inditex. Presently, they are the leaders in fashion industry and set trends all over the world.
Their business model is based on releasing the latest fashion lines within 3 weeks of its
release (Wang 2018). They provide these fashion apparels at much cheaper price and thus
they have a large base of loyal customers who prefer them over any other brands. Earlier the
company mainly operated in European countries and thus produced from their company
owned factories in Spain. In the last few years they have expanded over to the South East

2DYNAMIC BUSINESS ENVIRONMENT
Asian countries which has led to the expansion of their production units to these countries as
well.
Businesses are largely affected by the society that they are operating in. Different
countries have different social structure, beliefs and rituals. These differences sometimes are
extremely fundamental and has the potential for conflict (Ali and Garg 2017). The main
component on which a business grows is their brand image. Brand image can be tarnished
due to several issues that emerge. Due to the growing concern of the post millenials regarding
the social impacts and accountability of the businesses, companies need to ensure that they
are conforming to the social and ethical requirements of the country they are operating in.
societies also change continuously and along with it changes the needs and desires of the
people. As concern grows about the social responsibility of the companies, their actions
become largely affected by the social context and changes. Social factors like lifestyle,
buying behaviour, educational level, social class, culture, religion and beliefs, attitude
towards sustainability, family structure, attitude towards foreign goods, attitude toward work
and leisure affect the global companies largely.
ZARA fast fashion one of leading fashion manufacturers in the world has their
branches spread all over the world. Recently, it has expanded over the Asian territories.
Though the company is mainly based in Europe and half of their manufacturing units are
based in Spanish localities, the rest of the factories, the more cost effective ones are located in
developing countries like China. Due to the rapid expansion of ZARA the company is being
forced to produce more and more in their overseas factories (Wang 2018). While they use
their old factories in Europe for producing the most fashionable lines and mainly for the
distribution in Europe while for the mass market in the Asian countries the manufacturing is
dine in China. The Asian countries have huge population and thus they are producing mass
products to cater to the increasing demands of their products.

3DYNAMIC BUSINESS ENVIRONMENT
The culture of the country that a business operates in affects them intricately. The
company ZARA started in an individualistic European culture which depends on individual
achievements, freedom and flat organizational structure (Latif et al. 2019). When they started
operating in China, they were working in a collectivist culture and thus had to change many
of their approaches and organizational structure in order to better manage their workforce. As
the Asian market offers a large base of customers, too potent to overlook, the company also
had to change their marketing, sales and distribution strategies in order to appeal to the
people.
Lifestyle habits and choices of the people affects the business as it directly influences
the profit margin that they earn (Valaei and Nikhashemi 2017). Developed countries have a
higher lifestyle which indicates that people are willing to spend more money on commodities.
It also indicates that they will prefer better quality products and latest fashions. Similarly, the
developing countries have relatively lower lifestyle standards and thus have lesser spending
abilities. They are willing to compromise on quality and latest trends in exchange of
relatively lower price margin (Deephouse, Newburry and Soleimani 2016). Lifestyle choices
also influences the mind set of people which inadvertently influences people’s choice or habit
of buying products. The price range that ZARA has appeals the mass market in the developed
country while in the developing countries these products become premium products as mass
people have lower lifestyle and do not consider ZARA as their choice of fashion brand.
Buying behaviour of consumers have impact on businesses. Consumers have different
needs and desires and they buy products depending on that. For ZARA, while manufacturing
and distributing their products they need to consider consumer buying behaviour. As ZARA
is a large brand name, this affects the consumer decision making process for customers. This
vary according to the buying behaviour (Balabanis and Siamagka 2017). There are countries
where people are more brand conscious and have brand loyalty. In other countries, the