Strategic Management of Zara Assignment

Running head: STRATEGIC MANAGEMENT OF ZARA
STRATEGIC MANAGEMENT OF ZARA
Name of the Student
Name of the University
Author Note
Part A

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About the company
Zara is a Spanish retailer which operates in the industry of fast-fashion
and the company has its base in Arteixo, Galicia in Spain. The organization was
established in the year 1975 by Rosalia Mera and Armancio Ortega. Zara is
considered to be the main brand of the Inditex Group and is the largest retailer
of apparel in the world. The various fashion brands that are owned by Zara
include, Massimo Dutti, Pull&Bear, Stradivarius, Zara Home, Oysho and Uterque.
Zara manages around 20 collections of clothing per year. The first store of Zara
was opened in the year 1975 in Spain (Zarahome.com. 2018).
SWOT Analysis of Zara
Strengths
 The designing abilities of Zara
are the major strengths that
can be used by the organization
to create a competitive position
in the market.
 The elegant and superior
quality of the products is a
strength of Zara.
 The huge presence of Zara in
various areas of the world has
helped in the increase of
revenues (Durand, Grant and
Madsen 2017).
 Zara has also gained huge
brand value in the fashion
industry and has been placed at
the 53rd position by Forbes
magazine.
 The effective supply chain of
Zara has helped the
organization in increasing the
revenues in the industry.
 Zara has been launching more
than 1000 new designs in the
Weaknesses
 The collection of fashion
apparels that is offered by Zara
is quite generalised in nature
and this is a reason for the shift
of consumers from the products
of the organization.
 The lack of proper advertising
and promotional activities have
also been a weakness for the
growth of the company in the
fashion retail industry.
 The safety stock that needs to
be maintained by the
organization is quite low as
Zara is a fast fashion retailer
(Frynas and Mellahi 2015).

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market each year in the fashion
industry.
Opportunities
 Online e-commerce is a huge
opportunity that is provided to
Zara in the retail sector.
 The flagship designs that have
been introduced by the Zara
stores are gaining popularity in
the market which has provided
a future opportunity for the
company.
 The growth of the market
potential of Zara is an
opportunity related to the
future growth of the company
in the industry (Hill, Jones and
Schilling 2014).
Threats
 Low levels of advertising can
act as a hindrance to the
development of the
organization in the future.
 The competition that is being
faced Zara in the fashion retail
industry is high. This has
further led to the loss of
revenues for the company.
 Zara needs to increase its reach
in the fashion retail industry so
that it is able to gain more
customers which can be helpful
in the future growth (Hubbard,
Rice and Galvin 2014).
Porter’s Five Forces Analysis of Zara
Rivalry in the industry – The greatest competitors of Zara in the fashion
retail industry are, Benton, H&M and Gap. The sales of these organizations have
however been on the same level as that of Zara. The supply chain of Zara is
however the most responsive among these. Zara is quite fast in the introduction
of new collection of clothes as compared to its competitors in the market.
Potential of the new entrants in the industry – The increasing growth
of the fashion industry has created opportunities for the entry of new
organizations in the industry. The problems related to new entry been taken by
Zara with the help of the low priced products that it offers to the customers.
However, the expansion of the industry has created enough space for the entry
of new organizations. Zara has however been able to attract the customers
towards the organization due to the fast fashion based reputation that has been
gained by the company (Ma and Seidl 2018).

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Power of the suppliers – The power of the suppliers of Zara is not quite
high as the low wages that can be provided to the labour of the third world
countries have provided opportunities for the increase in the number of
suppliers. However, the suppliers of the organization have high power and are
able to control the prices of the raw materials. The high costs related to the
switch of suppliers have been a major reason behind their high power (Meyer,
Neck and Meeks 2017).
Power of the buyers – The advertising related investment that is made
by Zara is quite less as compared to the other retail organizations in the fashion
sector. The organization mainly relies on the word of mouth based advertising for
the promotion of its products. The creation of a loyal customer base in the
fashion industry is quite difficult. The consumers are provided with huge number
of choices in the market from which they need to choose. This has further
increased the power of the buyers in case of Zara and the fashion industry.
Threats related to the substitutes – The major brand named H&M has
the capability to compete with Zara in terms of the affordability and quality. The
organization can thereby provide substitute products to the consumers of Zara.
This makes the fifth force of the Porter’s Framework quite strong (Mitchell and
Leiponen 2016).
Part B
The analysis of the capabilities of Zara earlier in the assignment has
shown the strengths and the weaknesses of the company. The areas in which the
company has opportunities to grow and the threats that are faced by in the
fashion industry have been discussed in part A of the assignment. The discussion
has revealed that Zara needs to involve in the different areas in which it has
weaker operations. The various strengths that are held by the company can be
used to gain a better position in the market as compared to its various
competitors (Morschett, Schramm-Klein and Zentes 2015).
The key strengths of Zara lie in the ability of the company to create
various designs of the products with the help of the large numbers of in-house
designers who create new designs for the customers of Zara. The elegant and
high quality of the clothes which are provided at the lowest prices is a major
strength of Zara in the fashion industry. The organization has created a strong
presence in different areas of the world. This is a strength of Zara which needs to

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be exploited in a proper manner so that the organization is able to create a
position in the market. The expansion related policies of Zara will be able to
provide advantages to the organization in the future growth. The rank that has
been gained by Zara in the fashion retail industry can be used by the
organization in the future so that it is able to create its market share (Peppard
and Ward 2016). The high brand equity of Zara has been a major strength of the
organization which can be helpful for the increase of revenues in the future. The
ways by which the brand has avoided controversies has helped the Zara in
maintaining its position in the industry. Zara has provided consistent quality and
performance in the years of its operations in the fashion retail industry. The
reputation of the organization in the industry can be used in a successful manner
to improve the position of Zara in the market. Zara has been able to create a
loyal customer base with the help of healthy culture that is followed by the
employees in the organization. The loyal customers of Zara have been a great
asset of the company which can be used for its future growth (Rees and Smith
2017). The strong and well-developed supply chain of Zara is a strength that can
be used for the increase of its product line and profitability. The fast-fashion
organization has always remained true to its name and has provided the newest
fashion products to the customers. This strength can be used in a proper manner
to increase the future growth of Zara in the industry. This low cost based
products that are offered by Zara to the customers have been a differentiation
factor that has helped the company in gaining a position in the industry. The
organization needs to use this ability to further grow in the domestic and the
international markets (Sakas, Vlachos and Nasiopoulos 2014). The main strength
that has been exploited by Zara in the years of its operations by increasing the
number of physical stores all over the world. The deep and wide layout of the
stores of Zara are a major reason behind the success of the company. Zara has
an opportunity to increase its revenues by improving its online presence with the
help of its e-commerce website (Wheelen et al. 2017).
The strategy has been used by Zara for the purpose of gaining share
in the market is a mix of segmentation, targeting and positioning. This strategy
has been useful for the growth of the company and the market is segmented by
using the mix of demographic, psychographic and geographic methods. This is
useful for the growing needs of customers in the fashion retail market. The
organization has been successful in using the targeting strategies so that the
products can be made available in the market. The positioning strategy which is

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used by Zara is customer centric in nature and this has been helpful for the
company to satisfy the needs of the customers. The changes that occur in the
trends have also been taken care by the usage the positioning strategy (Slater
2015).
Competitive advantage has been gained by Zara with the help of the
strong portfolio of products that have maintained by the organization over the
years. The company has a portfolio of 8 brands which has helped Zara in
nurturing the brands with the strong financial base and experience. The
comparison of
Zara with the other players in the fashion retail industry has depicted that the
company has been pursuing the competitive advantage during the years of its
operations. The parent organization of Zara in the Inditex Group which has
helped Zara in maintaining the competitive advantage in the market. The
locations of the stores of Zara has been placed in such a manner so that the
customers are influenced in an effective manner. The stores of Zara are
designed in such a way so that the customers are attracted towards the products
that are offered in the stores (Stead and Stead 2014). The distribution related
network that has been formed by Zara has been formed in an effective manner
with more than 2000 stores all across the world. The organization operates the
business and the offers newly designed products to the customers in the leading
cities of the world. The exclusive stores of Zara are created to operate the multi-
brand retail chains of the organization where the various clothing items and
accessories are offered to the customers on a global basis. The supply chain of
the organization has been successful in creating the greatest competitive
advantage of Zara. The fast-fashion retail organization has been successful in
bringing new and improved designs to the stores on a frequent basis. The stores
of Zara are created with the help of the new designs and the new designs are
brought to the stores within the destined period till the stocks of the company
last (Steinbach et al. 2017).
The main highlight of the strategy that has been used by Zara is the
concept of fast fashion, where the stocks of the products appear according to the
changes that take place in the trends. The company has not spent huge amounts
on promotions and advertising. However, Zara has been able to generate high
amounts of sales with the help of the amount of advertising that has been
performed by the organization in the market. The increase of advertising and

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promotional activities will help Zara in maintaining the competitive advantage by
increasing its reach towards the customers belonging to the various areas of the
world. The feedback provided by the customers are given utmost importance by
Zara. The organization can thereby develop its ecommerce platform so that it
can offer the products to a wider range of customers and further collect their
feedback on the webpage that will be created by Zara (Trigeorgis and Reuer
2017). This strategy can help Zara in increasing the revenues that are earned in
the different areas of its operations all over the world.
Part C
I have analysed the strategy process model of Zara which is a fast-fashion
based organization based in Spain. The vision of the organization and the ways
by which Zara has formulated its strategies in the market have been analysed in
detail by me with the help of secondary research. The strategy process model of
Zara has taken me through the various areas of the business operations. The
ways undertaken by Zara to gain competitive advantage in the fashion retail is
also analysed in the strategy process model of the organization. I have also
analysed the business model that has been created by Zara with the help of the
strategy process model framework. The strengths and the weaknesses of the
company are also a part of the detailed strategy process model of Zara. I have
analysed the current business position of Zara with the help of this model. The
industry in which Zara operates has also been analysed by me with the help of
this model. The various online activities and the e-tivities have taught me that
the strategic analysis of an organization is necessary for deciding the future
policies that can be suggested. The future policies are thereby based on the
previous strategic performance of the organization and the current share that is
held by them in the market. My notion regarding the process of strategic
management has been changed with the help of the analysis of Zara and its
processes. My thinking has been changed by the holistic view that has been
provided to me by the analysis of the environment in which Zara has its
operations. I had faced many challenges during the learning process related to
the lack of knowledge and skills regarding the ways by which the strategic
environment of an organization can be analysed. The course has further taught
me the ways by which the strategic analysis can help in increasing the
knowledge regarding the strategic processes of the organizations. I have also
been able to understand the position of the company in the market and suggest

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ways by which the company can create a strong position in the market in an
effective manner. The strategic analysis of the organization has been helpful in
providing me with the entire picture of Zara and the various operations that it
has in the different parts of the world. The information about the company has
been collected by me with the help of the various secondary sources of research
which have helped in the collection of information about Zara. The ways of the
operations of the organization has been analysed by me with the help of the
knowledge that I have gained in the market regarding the strategic management
of organizations.

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References
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