Critical Analysis of Zara's Organizational Strategy

7/20/2019
Running Head: MANAGEMENT 0
ORGANISATIO
N STRATEGY

MANAGEMENT 1
Executive Summary
Zara is one of the leading global fashion businesses in the world and it belongs to
Inditex. This study explores critical analysis of company internal and external analysis to
provide necessary recommendations for improving its competitive position.
The external analysis of the company includes competitive profile matrix and industry
five forces whereas the internal analysis of Zara includes its value chain and financial ratios
in relation between two years.
Based on the analysis and market situation, significant recommendations are
suggested for future sustainability. For instance, the company needs to increase its
distribution centers to various locations if planning to expand into Asian countries.

MANAGEMENT 2
Contents
Introduction................................................................................................................................3
About Zara.............................................................................................................................3
Analysis of Mission and Vision.................................................................................................4
External Analysis.......................................................................................................................6
The Competitive Profile.........................................................................................................6
Porter 5 Forces.......................................................................................................................7
Internal Analysis........................................................................................................................9
Value Chain............................................................................................................................9
Financial Ratios....................................................................................................................10
Development of organizational strategy..................................................................................11
Porter Generic Strategy........................................................................................................11
Existing business strategy of Zara........................................................................................12
Strategic Plan for Zara.........................................................................................................12
Suggestions..............................................................................................................................13
References................................................................................................................................14
Appendix 1...............................................................................................................................16

MANAGEMENT 3
Introduction
Increase in business competition and globalization have forced the management to
undertake and develop effective strategies to enhance the performance of business enterprise
(Singh, Garg & Deshmukh, 2008). In addition, business expansion in relation with product or
market development also comes out with various challenges. Hence, organisation needs to
focus on various factors in the business environment to build significant strategies for the
long-term objectives of the company.
This report aims to identify strategic changes associated with development of business
and implementing necessary changes in the competitive market landscape. With regards to
this, critical analysis is also being made considering internal and external environment of
Zara, a Spanish company founded in 1975.
About Zara
Zara is known as one of the
leading apparel brands of clothing that employ a direct channel mode of supply and
adequately invests in consumer knowledge. The brand is a subsidiary of biggest fashion
retailer “INDITEX” and it is present in more than 96 countries with having 2000 plus stores
but still 50% of its products are still factory-made in Spain (Crofton & Dopico, 2012). Zara
grew at a high pace and targeted men, women and children. The company works in close
relations with its client and customers and thus constantly work towards developing new and
trendy products. The team of designers in Zara always ensures altering and editing designs
grounded on feedback of the consumer. In addition, the organisation is vertically integrated
and each element of its products is controlled by the company itself, i.e. from design to
distribution. One of the unique strategies of Zara is that the company spends less on
promotion and concentrating its spending on setting up new stores near high-end retailers