Strategic Management of Zara Assignment
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Added on 2021-05-31
Strategic Management of Zara Assignment
Added on 2021-05-31
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Running head: STRATEGIC MANAGEMENT OF ZARASTRATEGIC MANAGEMENT OF ZARA Name of the Student Name of the University Author NotePart A
STRATEGIC MANAGEMENT OF ZARA1About the companyZara is a Spanish retailer which operates in the industry of fast-fashionand the company has its base in Arteixo, Galicia in Spain. The organization wasestablished in the year 1975 by Rosalia Mera and Armancio Ortega. Zara isconsidered to be the main brand of the Inditex Group and is the largest retailerof apparel in the world. The various fashion brands that are owned by Zarainclude, Massimo Dutti, Pull&Bear, Stradivarius, Zara Home, Oysho and Uterque.Zara manages around 20 collections of clothing per year. The first store of Zarawas opened in the year 1975 in Spain (Zarahome.com. 2018). SWOT Analysis of Zara Strengths The designing abilities of Zaraare the major strengths thatcan be used by the organizationto create a competitive positionin the market. The elegant and superiorquality of the products is astrength of Zara.The huge presence of Zara invarious areas of the world hashelped in the increase ofrevenues (Durand, Grant andMadsen 2017). Zara has also gained hugebrand value in the fashionindustry and has been placed atthe 53rd position by Forbesmagazine. The effective supply chain ofZara has helped theorganization in increasing therevenues in the industry. Zara has been launching morethan 1000 new designs in themarket each year in the fashionindustry. WeaknessesThe collection of fashionapparels that is offered by Zarais quite generalised in natureand this is a reason for the shiftof consumers from the productsof the organization. The lack of proper advertisingand promotional activities havealso been a weakness for thegrowth of the company in thefashion retail industry.The safety stock that needs tobe maintained by theorganization is quite low asZara is a fast fashion retailer(Frynas and Mellahi 2015). OpportunitiesOnline e-commerce is a hugeopportunity that is provided toZara in the retail sector. The flagship designs that havebeen introduced by the Zarastores are gaining popularity inthe market which has provideda future opportunity for theThreatsLow levels of advertising canact as a hindrance to thedevelopment of theorganization in the future. The competition that is beingfaced Zara in the fashion retailindustry is high. This hasfurther led to the loss of
STRATEGIC MANAGEMENT OF ZARA2company. The growth of the marketpotential of Zara is anopportunity related to thefuture growth of the companyin the industry (Hill, Jones andSchilling 2014). revenues for the company. Zara needs to increase its reachin the fashion retail industry sothat it is able to gain morecustomers which can be helpfulin the future growth (Hubbard,Rice and Galvin 2014). Porter’s Five Forces Analysis of ZaraRivalry in the industry – The greatest competitors of Zara in the fashionretail industry are, Benton, H&M and Gap. The sales of these organizations havehowever been on the same level as that of Zara. The supply chain of Zara ishowever the most responsive among these. Zara is quite fast in the introductionof new collection of clothes as compared to its competitors in the market. Potential of the new entrants in the industry – The increasing growthof the fashion industry has created opportunities for the entry of neworganizations in the industry. The problems related to new entry been taken byZara 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 entryof new organizations. Zara has however been able to attract the customerstowards the organization due to the fast fashion based reputation that has beengained by the company (Ma and Seidl 2018). Power of the suppliers – The power of the suppliers of Zara is not quitehigh as the low wages that can be provided to the labour of the third worldcountries have provided opportunities for the increase in the number ofsuppliers. However, the suppliers of the organization have high power and areable to control the prices of the raw materials. The high costs related to theswitch 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 madeby Zara is quite less as compared to the other retail organizations in the fashionsector. The organization mainly relies on the word of mouth based advertising forthe promotion of its products. The creation of a loyal customer base in thefashion industry is quite difficult. The consumers are provided with huge number
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