Full Strategic Appraisal of Zara: External and Internal Analysis
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Added on 2019-09-30
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This report provides a comprehensive analysis of Zara's strategic appraisal, including external analysis through PESTEL and Porter's Five Forces, internal analysis through Value Chain and VRIO, and corporate and business strategy through the Strategy Clock model by Bowman. The report includes the company background, challenges and issues, strategic options for growth, and recommendations and conclusion. The subject is business study, and the course code and college/university are not mentioned.
Full Strategic Appraisal of Zara: External and Internal Analysis
Added on 2019-09-30
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Running Head: MANAGING STRATEGYBUSINESS STUDYCase Report - Full Strategic Appraisal of a real company (Zara)
MANAGING STRATEGY1ContentsIntroduction.................................................................................................................................................2Company background..................................................................................................................................2Part I: External Analysis...............................................................................................................................3PESTEL analysis...................................................................................................................................3Porter’s five forces of completion model..............................................................................................5Threats and opportunities.....................................................................................................................6Part II: Internal analysis...............................................................................................................................7Value chain model.................................................................................................................................7Core competencies.................................................................................................................................9VRIO framework.................................................................................................................................10Strengths and weaknesses...................................................................................................................11Part III: Company’s corporate and business strategy.................................................................................12Strategy clock model by Bowman......................................................................................................12Part IV: Challenges and issues...................................................................................................................13Part V: Strategic options for growth..........................................................................................................15Generic strategic options.....................................................................................................................15Ansoff matrix...................................................................................................................................15SFA framework...............................................................................................................................16Implementation....................................................................................................................................17Part VI: recommendations and conclusion................................................................................................18REFERENCES..............................................................................................................................................19
MANAGING STRATEGY2Introduction In this report, we will be discussing the strategic appraisal of the real company i.e. Zara. Further, the report will be discussing the operations and the activities of the company, and then the external analysis will be discussed through the PESTEL analysis and Porter's five forces analysisand the threats and the opportunities will be determined in relation to the company. Further, the internal analysis will be done by using the value chain model, and the VRIO framework and weakness and the strengths of the company will be determined accordingly. Further, the strategy of the business will be analyzed by using the strategy clock model. Then, the issues and the challenges will be identified along with the strategic options for the growth by using Ansoff matrix and the SFA framework.Company background Zara is the retailer of accessories and the Spanish clothing that are mainly relied on in Galicia. Further, the company operates in around 2160 locations. The company was established in 1975 by A. Ortega. Also, the company operates across the globe, and it is one of the largest division, and it offers to clothe for women, children and men's fashion along with the segment of accessories. Furthermore, the company is utilizing the strategy of differentiation to offer the unique and innovative style of the services and the products to the targeted audience. The company’s success in relied on offering the high and great quality of innovative and the unique products and the services to the targeted segment by using the strategy of differentiation. Moreover, the company had initiated its foreign growth and the expansion in the year 1990 whenthe index took place in various countries (Bhardwaj.V and Fairhurst. A. 2010). The vision of the company is that it is committed to satisfying the expectations of the customers. The operations
MANAGING STRATEGY3and the activities are being changed continuously in order to improve the customer’s experience. The products are made up of high quality and are also offered at affordable prices. The mission statement of the company is that they aim in order to contribute to the sustainable creation of the society along with the environment.Part I: External Analysis PESTEL analysis The PESTEL analysis will help in understanding that what is actually happening in the external environment and how it impacts the functioning and the operations of the country and also how the external environment is contributing to the company i.e. Zara in order to grow.Political factors-Zara is retailing from the Hong Kong and it further occupies one center of distribution in the country i.e. Europe and the support of the politics are being evaluated accordingly in a critical way (Doyle.M. 2012). The economic and the safe circumstances in the Europe would help the Zara in order to expand and grow the business.Economic factors-Not barrelling with the dollars and provide more preference to the safe currency as compared to the dollars.The predictable and the stable market of the country i.e. Hong Kong.Social factors-Operates in an individual country.
MANAGING STRATEGY4The country i.e. Hong Kong has the great contributions in the artistic and the designing domain.The social environment is calm and composes and further attracts the tourist on a great scale.Technological factorsThe company i.e. Zara has undergone many improvements in accordance to the technology.Innovation and the creativity in the sales further point the atmosphere and the process of production.Growth and expansion in the form of opening the stores which are environmentally friendly by using the new and innovative technology (Rachet, B., 2014).Environmental factorsIt has been observed that the more emphasis is being placed on the activities which are environmental friendly in order to ensure that the environment doesn't get impacted due to the harmful emission of the gasses.Legal factorsThe rules and the regulations of the Hong Kong government promote and supports the development of the industry in the country.The generic productive and the supportive rules are offered by the country’s logistics in order to promote the safe transactions of the business.
MANAGING STRATEGY5Porter’s five forces of completion model Threats of substitutes (high to moderate)-Initially, the company faced the high threat of the substitute products also it had a high competition from various other companies, for example, H&M, Armani, GAP, etc. Moreover, due to the internalization, the company has achieved substantial loyalty of the customers in comparison to the competitors. Further, the threat was being minimized by reducing the frame oftime in the supply chain. Now, the company is facing a moderate threat as the clothing and stylesare being copied and offered at low prices. Threats of the new entrants (High to low)-Initially, it was being observed that there was the great probability for the entrants along with thereduced number of the brands and due to the emergence of the fashion, the entrant’s threat is being reduced. Further, the procedure of distribution, marketing and the cost of production have further made it challenging for the small organization in order to attain the sustainable competitive edge for a longer period of time.Bargaining power of the buyers (low to moderate)-Because of the restricted market in the country, the customers were not able to have broad accessto the particular brand, and the power of bargaining of the buyers was restricted because the Zarawas not having enough competition in the country (Christodoulou.I.P and Pater, Z 2012). Further, due to the internationalization and the marketing through online of the Zara, the consumers are given broad access to many ranges and further resulted in a war of price enabling the customers to have a great impact on the market.
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