Table of Contents INTRODUCTION.....................................................................................................................3 MAIN BODY.............................................................................................................................3 Introduction to ZARA...........................................................................................................3 Strategies Chosen on Corporate Level..................................................................................4 Strategic Analysis of ZARA..................................................................................................5 Synthesis of the analysis......................................................................................................10 Conclusion...........................................................................................................................10 Recommendation to chosen organisation............................................................................10 REFERENCES.........................................................................................................................12
INTRODUCTION StrategicManagementistheprocessofongoingplanning,monitoring,analysisand assessment of all activities which are important for the achievement of goals and objectives of an organisation (Aluko and Knight, 2017). The assignment will make its focus on the use of PESTLE and SWOT Analysis to know about internal and external environment. In addition to this, discussion will also be made about Porter's Five Forces Model, Value Chain Analysis and discussion of some unidentified strategies of the company will also be provided. Lastly, it will focus on providing recommendation related to different strategies which have been provided and discussed above. Strategic positioning of ZARA in the fast fashion industry. MAIN BODY Introduction to ZARA The company chosen for the completion of this assignment is ZARA, which was founded in the year 1975 and is headquartered in Arteixo, Spain. The following organisation dealing in clothing industry. Due to high competition also, the company has become a successful organisation because of its good and ethical working that helped it in building good brand image in minds of customers (ANTREAS, 2017). Amancio Ortega, the owner of this organisation opened its first store in 1975 in Galicia, Spain. Initially, the name of ZARA was Zorba which was named after a movie Zorba but the issues related to two block ways made the owners to make changes in the name which was later on put as ZARA.Further improvements made by ZARA such as making use of information technologies and using group of designers also helped in taking the business to international level and after that the expansion of business is continuing. Themain goalof ZARA is to contribute to the sustainable development of and the environment as well with which it interacts. Themission and visionstatement is about to give the customers with a varied choice of fashion products and bringing more rapid changes in fashion than any other fashion retailers. ZARA is also planning to make implementation of 100% sustainable fabrics clothing products before 2025and which is also the main topic of discussion in the following assignment. It focuses on proper utilisation of shops in an active manner along with using the competitive advantages of geographical conditions.
Strategies Chosen on Corporate Level The Corporate Strategy that has been adopted by the company is related to providing their customer with 100% sustainable fabrics clothes to their customers considering the impact of environment and reduce the waste level globally. This will also provide their customers with competitive advantage over their competitors for the betterment and wellness of their society and customers. With the help of this strategy, it will be possible for the company to gain competitive edge over their competitors in the market and also to create good brand image in the minds of their customers(Zara clothes to be made from 100% sustainable fabrics by 2025,2019). Definition of Differentiation, Expansion and Competitive Advantage Strategy: Porter Generic Model:The following model refers to the model which is used in order to gain competitive advantage over the competitors in the market (Porter's Model of Generic Strategies for Competitive Advantage,2018). In order to achieve the situation of competitive edge, the organisation makes use of different strategies that could be adopted in order to gain the situation of competitive edge. The description of these strategies are provided as under: Differentiation: The following terms says about differentiation. In other words, it can be said that this term relates to providing the customers with some differentiated one from the products of their competitors in order to be special in the market. Expansion: It is the process in which an organisation increases the size of their organisation such as by increasing the operations of the business for increasing the reach of their products and services and also to increase their revenues and incomes(Porter's Model of Generic Strategies for Competitive Advantage,2018). Competitive Advantage Strategy: It refers to the situation in which an organisation due to its some special strategy or innovation, is able to gain special market share or attention of people which has impacted positively on the sales and profit of their customers.According to MALLORY SCHLOSSBERG, 2016, the company has gain good competitive advantage over their competitors because of their good operations of supply chain and with the help of proper management of their inventory and this has provided with the company with competitive advantage. ZARA is making use of differentiation strategy in order to provide to their customers. With the help of this strategy, it will be possible for the company to make improvements in the overall working of the company and also to make increment in the revenues and incomes of the company. With the help of differentiation strategy, the company will be able to provide their customers with differentiated products than their competitors so that it could become
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
possible for the company to gain competitive advantage over their competitors.Additionally, differentiationoftheirproduct will also match with vision and mission statement of this organisation and the customers will also be provided with high quality products along with focusing on environmental sustainability (Herrmann and Felfe, 2014). So the company will also be able to fulfil their objectives as well and will be able to establish a good brand image in society and the marketplace as well. This strategy will provide ZARA with competitive advantage as this strategy is differentiated and focused on society, customers and environment as well.In the core competenciesofZARA,itisincludedabouttheabilitytoapplytheJustinTime manufacturing by the company to fashion production.It is one among core competencies of this organisation as the achievement of long term competitive advantage is possible with this strategy. Strategic Analysis of ZARA SWOT Analysis INTRODUCTION The first strategic analysis will make its discussion about the SWOT Analysis. It will also discuss about different things here such as purpose of this analysis, models and discussion and about summary along with some recommendations. Purpose of Analysis The main purpose of this analysis is to know about the strengths and weaknesses along with opportunities and threats of their organisation. With the help of which, strengths could be made more and strong and policies and strategies could be taken in order to make improvements in the overall performance of their organisation (What Is a SWOT Analysis, and How to Do It Right (With Examples).2018). Models and Discussion It refers to the analysis with the help of which the internal strengths and weaknesses along with possible opportunities and threats of an organisation could be known (Chen and Jermias, 2014). The application of this analysis on the working of ZARA has been provided as under: StrengthsWeaknesses ThemainstrengthofZaraisits unique designs which are designed by Ineffective advertisement is identified as main weakness of Zara. Less safety stock is usedas its core
expertise designers. It has strong presence at global level whichisalsocountedunderits strength. Good performances of ZARA in the emerging markets has also provided thecompanywithstrengthas customers are captured by providing differentiatedandgoodquality products to their customers. strategy at Zara. There has been some issues in the operationsofbusinessbecauseof diversityincultureofindividuals whichimpactsnegativelyonthe performances of ZARA. OpportunitiesThreats Providing differentiatedproducts to their customers. Makingincrementinthereachof products to their customers. Opportunitytoprovidetheir customers with online sales of their products and services so as to reduce thedistancebetweenproductsand customers of ZARA. Increasingcompetitionisbecoming majorthreatforZARA(Davies, 2016). Reachofproductsofcompanyis threattoZARAthatcouldimpact negativelyonthegrowthand performances of the organisation. Shortageofskilledemployeesin certain areas of global market could impactnegativelyonthe performances and operations of the organisation. Summary and Recommendations From the above analysis, it has been made clear that there are different areas in which the company is lacking behind. Along with this, it has also been made clear that there are also some areas where the company is performing well. So it has been recommended to the company that make formulation of suitable strategies and policies to improve their reach to customers of their products and services, provide their employees incentives in order to make improvements in their dedication and performances.In addition to this, it has also been made clear that with the help of focusing on the unique designs of their products and services, it has been made possible to make improvement in the level of their competitiveness. However, there has been a need to make improvement in the level of advertisement of the company so
as to make more customers attracted towards the products and services of an organisation. Strategiesarealsoneededtobemadesoastomakeimprovementinthelevelof competitiveness as there are large number of competitors who are operating their business at international level. ZARAis also having the opportunity to avail opportunities available to them such as providing online delivery systems to their customers which will also increase their sales and some potential customers may not feel to buy the products of ZARA as they are not provided online or lack of faith in online delivery systems from other companies.It is also important to take into consideration their promotional tools as well because this has also been made clear in the analysis that the advertising work is not performed well which has impacted negatively on the performances of their organisation in the market. So in order to be competitive in the market and achieve their goals and objectives in an effective manner, it is important to consider upon the issues provided above. PESTLE Analysis Introduction In the next analysis, the discussion will be made about PESTLE Analysis along with the impact of different factors which it creates on the working of an organisation such as ZARA. In addition to this, an overview of overall situation will also be provided here and lastly, the discussion will be made about summary and recommendations provided to ZARA in order to make improvement in their organisation's working. Purpose of PESTLE Analysis The main reason behind conducting this analysis is to know about the issues which have been faced by the company in relation to different factors. So that with the help of knowing these issues and problems faced by ZARA, it could be made possible to remove these issues from the working of their organisations so as to enhance the performance and productivity of the organisation. Discussion So in order to know about the impact of external factors on the working of an organisation the use of PESTLE Analysis will be done (Habbash, 2017). This analysis is defined as tool used for knowing the impact of external factors on an organisation. The application on ZARA is being provided as under: FactorsDescription Political FactorsConsidering the impact of political situation of ASIA, it can be said that the situation of Brexit has impacted adversely on
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
political stability of this country. So it increases the chances of negative impact related to failure of making long term policies for the company and many more. situationofBrexithasimpactedadverselyonpolitical stability of this country increases the chances of negative impact related to failure of making long term policies Economical FactorsThe consideration related to economical factors has also been made because of decreased rates of ASIA's currency which impacts upon prices and revenues of the company in negative way (Brewster, 2017) decreased rates of ASIA's currency which impacts upon prices and revenues of the company Social FactorsThe policy related to 100% sustainable fabrics and looking onto past performance of the organisation, ZARA is able to attract customers. It has also made good brand image in minds of people and society impacting positively on growth and development of ZARA. Technological FactorsThe continuous use of updated technology by ZARA has also made it gain positive affect of this factor. With the help of having large number of market share and by attracting large number of customers towards the products and services of the company (FORT, 2019). Legal FactorsInsomecountries,therulesandregulationmadeby governmentarestrictbutZARAishavingcompetitive advantage here as well. The working of ZARA is focused towards environment, society and customers so there is an opportunity for the company to continue with this working and to get positive response from these factors as well (Gnan, Montemerlo and
Huse, 2015). Environmental FactorsHowever, the working ZARA is not impacting negatively on theenvironmentbutitscontributiontowardspreventing environmentwillhelpthecompanyinincreasingits awarenessandbrandimageinthemindsofcustomers (Charter and Polonsky, 2017). Summary From the above analysis it has been made clear that with ZARA is dealing good with the external environment. However, there are some specific areas where it needs to work and that could help in making improvement in making its position more strong in the marketplace (Kaul, 2017).ZARA is required to make improvement in their own advertising processes such as providing the customers with the real advertisements in which the organisation's products actually looks like so that it could not impact negatively on the mindset of their customers. With the help of this, it will be possible for the company to prevent itself from indulging in the government compliances. Along with this, the focus is also made on making improvement in the overall working of the organisation such as by contributing towards the environment so that could image of the company could be made in the minds of customers and society. Porter's Five Forces Model The following tool was developed by Michael E. Porter in the year 1985 and is used in order to know about intensity of competition in an industry and the level of profitability (Porter's 5 Forces.2019). Competitive forcesThreat to Industry Profit LowModerateHigh Bargaining power of suppliers √ Bargaining power of customer √ Threat of New Entrances √ Thread of Substitution √ Rivalry among existing competitors √
Summary of Porter Five Forces Analysis Competitive Rivalry:There are a number of companies operating in this industry. So the following power is considered as high because the threat is not only from international competitors but also from local companies as well. Bargaining Power of Buyers: The following power is considered as Moderate because the buyers do have some power to influence upon the prices of the company but not much. It is because of continuous updated technology of the company and latest designs which are produced by the company. So due to this reason, buyers do not have much option and also do not possess much power to influence on pricing decisions of the company (Chang, 2016). Threat of Substitutes: Due to the large number of competitors on the international as well as local level, there are large number of substitutes of the products of the company. However, depending upon the quality of products, the comparison could not be made. So the following power is also considered as moderate.The threat of substitutes comes from other apparel retailers, designer clothes tailor houses. The examples are Marks and Spencer, H&M and many more companies which are giving competition to the company. So the following power is considered as high. Threat of New Entrants: The business operations of ZARA are being operated on a large scale and there is a lot of difference in between the rules and regulations of different countries regarding their processes of entry and exit from an industry but looking at overall, it can be said that the following power is high due to low barriers to entry and exiting the industry (Jones and Comfort, 2018). Bargaining Power of Suppliers: As ZARA is operating at global level, so the company is having good brand image in the market. Along with this, there are number of suppliers with which ZARA makes purchase of raw material all over the world and the material used is also available with many suppliers. This makes it difficult for suppliers to bargain upon this power. Hence, the power is considered as low. This analysis also provides good industry position of ZARA in relation to other performers in the industry because of its ethical working and high quality products and services that provided it with a distinct place in the industry. Synthesis of the analysis According to SWOT Analysis, it has been said that the unique designs of the company are considered under the main strength of the company which is important and
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
provides the company with competitive advantage over their competitors. ZARA'sposition in the international market is good and with this it will be possible for the organisation to provide their customers with high quality goods at affordable prices. The company is focusing on continuous expansion of their markets so that the vision of the company could be achieved which is related to expand their business globally and to meet the needs of current and future generations as well. Porter Five Forces Model also provides about the industry condition which makes it important for the company to focus on making improvement in their strategies that will provide an individual with many advantages such as improvement in profitability level and many more. PESTLE Analysis will provide the company with the situation prevailing in the external market and the ways to make improvement in them. ZARA is also required to consider the importance of this analysis so as to gain more opportunities and remove the issues related to threats to the company as well. Conclusion From the above described report, it is concluded that strategic management plays an essential role in the growth of company. It has been identified that is a continuous based process thus it is required by business organisations to modify their strategies according to the changing environment so that they can remain competitive at marketplace for longer period of time. Usage of different framework like PESTEL analysis, Porter’s five forces analysis, SWOT and Ansoff matrix allows companies in understanding favourable non supportive market conditions which supports and hinders them from growth. Along with this, Adoption of SWOT and PESTEL have collaboratively supported in identifying major threats weaknesseswhichaffectsbusinessperformanceandkeepsthemawayfromattaining competitive edge. It has also been identified that businesses are required to develop their knowledge about current market trends so that they can provide training to their employees accordingly which also supports them in becoming market leader of industry. Recommendation to chosen organisation Accordingtotheoverallanalysismadeinabovesection,therearesome recommendation provided to manager of ZARA through which they can improvise their organisationalperformanceandgaincompetitiveedge.Theserecommendationsare developed with base of expressed frameworks. The core recommendations for this ZARA are explained below in effective manner:
At next, it is advised to management department to conduct regular based market research so that customers needs and requirement can be identified at preliminary stage. As a result, this will support company in developing and designing trendy cloths according customers requirement. Furthermore, it is suggested to managerial team to conduct some constant based training and development sessions for the existing employees through which they learn new skills that are helpful for them as well as their company. This will also result in enhancement in the productivity of employees as they are able to use their full potential with developed skills. At last, it is recommended to ZARA to develop certain corporate social responsibility campaign. This will help the company in contributing in societal development. Also, it will support in creating positive image of company in front of customers and society. This will also bring more number of opportunities for ZARA at marketplace as customers are accepting them easily with its positive image. By following all these recommendations, ZARA can easily improve its performance at global scale and gain competitive edge effectively.
REFERENCES Books and Journals Aluko, O. and Knight, H., 2017. From corner store to superstore: a historical analysis of Sainsbury’s co-evolution.Journal of Management History,23(4), pp.423-435. ANTREAS, D., 2017. Ratio and Frontier Analysis for Assessing Corporate Performance: Evidence from the Grocery Industry in the UK.Decision Science,44, p.177. Bansal, P. and Song, H.C., 2017. Similar but not the same: Differentiating corporate sustainability from corporate responsibility.Academy of Management Annals,11(1), pp.105-149. Bell, E., Bryman, A. and Harley, B., 2018.Business research methods. Oxford university press. Brewster, C., 2017. The integration of human resource management and corporate strategy. InPolicyand practiceinEuropean humanresourcemanagement(pp. 22-35). Routledge. Cavusgil, S. T. and et. al., 2014.International business. Pearson Australia. Chang, J. F., 2016.Business process management systems: strategy and implementation. Auerbach Publications. Charter,M.andPolonsky,M.J.,2017.ReviewingCorporateEnvironmentalStrategy: Patterns,PositionsandPredicamentsforanUncertainFuture.InGreener Marketing(pp. 41-56). Routledge. Chen,Y.andJermias,J.,2014.Businessstrategy,executivecompensationandfirm performance.Accounting & Finance.54(1). pp.113-134. Davies,A.,2016.Bestpracticeincorporategovernance:Buildingreputationand sustainable success. Routledge. Du,S.andet.al.,2013.Therolesofleadershipstylesincorporatesocial responsibility.Journal of business ethics.114(1). pp.155-169. Elfarmawi, W., 2019. Correlation Between Customer Relationship Management System Usage,ProductInnovation,AndCustomerSatisfaction.Foundationsof Management,11(1), pp.23-32. Engert, S. and Baumgartner, R. J., 2016. Corporate sustainability strategy–bridging the gap betweenformulationandimplementation.Journalofcleanerproduction.113. pp.822-834. FORT, E., 2019. The Role of Industry in Building Human and Social Capital.The Oxford Handbook of Higher Education Systems and University Management, p.356. Gnan, L., Montemerlo, D. and Huse, M., 2015. Governance systems in family SMEs: The substitutioneffectsbetweenfamilycouncilsandcorporategovernance mechanisms.Journal of Small Business Management.53(2). pp.355-381. Online Zara clothes to be made from 100% sustainable fabrics by 2025.2019. [Online]. Available Through: <https://www.theguardian.com/fashion/2019/jul/17/zara-collections-to-be- made-from-100-sustainable-fabrics> Porter's Model of Generic Strategies for Competitive Advantage.2018.[Online]. Available Through: <https://www.tutor2u.net/business/reference/porters-generic-strategies-for- competitive-advantage> SCHLOSSBERG, M., 2016.While the rest of the industry struggles, this store has created the 'best business model in apparel' - and millennials are flocking to it.[Online]. AvailableThrough:<https://www.businessinsider.in/retail/while-the-rest-of-the-
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
industry-struggles-this-store-has-created-the-best-business-model-in-apparel-and- millennials-are-flocking-to-it/articleshow/52784616.cms> What Is a SWOT Analysis, and How to Do It Right (With Examples).2018. [Online]. AvailableThrough:<https://www.liveplan.com/blog/what-is-a-swot-analysis-and- how-to-do-it-right-with-examples/> Porter's5Forces.2019.[Online].AvailableThrough: <https://www.investopedia.com/terms/p/porter.asp>