Strategic Management: Analysis of Zara's Macro Environment and Internal Resources

This report analyzes Zara's macro environment using the STEEPLE model and examines its internal resources and capabilities using the VRIO model. It also discusses the scope of Zara's products and services, the industry it operates in, and conducts a six force analysis. The report provides valuable insights for strategic management.

Strategic management.

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1............................................................................................................................................3
Macro environmental analysis with using STEEPLE.................................................................3
PART 2............................................................................................................................................4
Scope of product and services.....................................................................................................4
Scope of industry.........................................................................................................................5
Six force analysis........................................................................................................................5
PART 3............................................................................................................................................6
Analysis of internal resources and capabilities...........................................................................6
PART 4..........................................................................................................................................10
Discuss the importance and influences of the macro environment...........................................10
Industries are important for strategic analysis..........................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic management is the collection of ongoing process which is include planning,
monitoring, analysis and assessment of all the necessities an organization to needs to meet their
goals and objective of company in effective manner. Changes in business environment will
require organization to constantly assess their strategies for the success of company. The present
report is based on the Zara which belongs with fashion industry. This is the Spanish apparel
based in Arteixo in Spain. The company serves various products but best in clothing department.
The company is face some problems which reducing sell in present situation. For that, the report
will analysis with macro environmental factors with the help of STEEPLE model. The report
will analysis the internal capabilities and abilities of company with the help of VRIO model. This
will also analysis the competitors for that here is used six force analysis model in effective
manner. At the end of report will evaluate the findings and learning from their model in proper
manner.
MAIN BODY
PART 1
Macro environmental analysis with using STEEPLE.
Macro-environment: means the major uncontrollable, external forces, which influence a
firm's decision making and have an impact on its performance. It can be affected by GDP, fiscal
and monetary policy, inflation, employment rates, and consumer spendings, borrowings and
investing. STEEPLE Analysis measured the macro environment external factors
Social Factor:the social factor includes analysis of being aware about the cultural
changes taken place in the environment. With the respect of this it is necessary for Zara limited
to cope up with the changes and produced as per the requirements and needs of the customers
Technological Factor: It is useful in terms of helping designers and customers to get
what they want as per changing technology (More, Probert, and Phaal, 2015, ). Zara limited
running its business on virtual platform as well as in physical shops so the customers easily take
place order and pay online otherwise go through the stores. It saves time of the customers and
company.
Economic Factor: it includes economic growth, unemployment policy, inflation and
interest rate and other monetary policies. For instance if inflation rate is high then it affects

negatively and if rate of inflation is low then it is good for the industries, because sales starts
increasing.
Environmental Factor: company follows environmental rules and protections, business
affect the environment either positively or negatively (Jiag, and Ren, 2019.). Our fashion
company impact negatively on environment because of wastes and pollution. Sometimes it
impacts positive when cleaning waste of clothes used in different departments
Political Factor: it includes changes in government policies like changes in tax rates,
providing subsidies, political stability of governments tax rates increases then company's profit is
decreases because of more taxes to pay and if government changes them rules and regulations
also changes.
Legal Factor: it includes tax policies, employment laws, safety regulations. To operate
in this environment it id necessary to follow all the laws. The business will also focus on health,
safety, employment and even competitors for compliance of laws company need to check new
regulations on daily basis.
Ethical Factor: company wants to continue the business in unforeseeable future than it is
necessary to follow social values and norms of the society. Ethical factors are those factors
which helps a company to decide what is wrong and right for the consumers. Ethics are the
moral status and code of conduct of the environment which is followed by peoples.
PART 2
Scope of product and services.
Zara is the fashion retail industry which is specialized in fast fashion and product
includes clothing, accessories, shoes, swimwear, beauty products and perfume. It is the largest
company in the industry which is listed into the Inditex Group. The company serves various
products and services in effective manner in order to attract more customers. There services are
more effective for the business and reflected about the products (Demir, Wennberg and
McKelvie, 2017). The company deals with the best quality of product and clothing material.
Their material is so soft and best to used in proper manner. This could be more effective and
valuable for the growth of business in effective manner. The company have effective scope at the
market place for because their material and quality make it better and good for the business.

Scope of industry.
Company belong with fast fashion industry which have great expansion at the market
place. This creates more effectiveness for the business in order to growth of the business in
effective manner. Presently industry has face some issues due to coronavirus at the market place.
Through that industry is decline which is create negative impact on the business in effective
manner (Dvorský and et.al., 2020). This could be create some negative impact on the business.
But, this industry have great scope to develop their sales again because company Zara is produce
best quality of products and services in effective manner.
Six force analysis.
It is very important for company to analyse their competitors at the market place in
effective manner. For that here is select Six force analysis in effective manner. Explanation of
this are as follows:
Industry competitors:
In the industry have various competitors which are creates issue for Zara by offering
same quality of products and services in effective manner. For that company have need to
analysis about their competitors which are creates issues for company. The main competitors of
Zara such as Marks and Spencers, Next, H&M, AND and many more (Dzwigol, 2020). Those
creates negative impact of the business for offering same products at the market place in
effective manner.
Suppliers:
Within the industry have different type of suppliers who supply various raw material at
the market place in order to produce products for company in effective manner. But the suppliers
have high bargaining power at the market place (Hitt and Duane Ireland, 2017). Through that it
can affect to the growth of company when Zara is not provide the same amount to them. But in
that company have effective and strong relationship with suppliers who are very old in industry
is give low effect on company. As per that bargaining power of suppliers are create lower impact
on company within the industry.
Buyer:
A buyers have effective bargaining power within the industry. That is give high impact
on the business in negative manner. This high affected factors of the six force analysis. Buyer
have high bargaining power with that they can force to company to reduce price of products. But,

if company not done that then they chance to switch from one product to another product.
Through that customers have higher switching cost within the industry which is create issue for
company in negative manner.
Potential entrants:
Within the industry potential new entrants are come with the new and unique products
for attracting more customers towards the business in effective manner. This creates lower
impact on the business because for establishing new business required more capital and trust of
customers. That have with Zara in effective manner (SIX force model, 2020). Zara have not any
fear from the new entrant because company strong financial conditions and better quality of
products which is help to attract more customer towards the business in effective manner.
Substitutes:
At the market there are various same products within the industry which is create some
issues for the business in negative manner because through that customer have switching cost.
But company have best quality of product and their customers are more loyal for the business in
effective manner which is create effectiveness for the Zara. As that company have requirement to
use better quality of products with lower price is help to attract more customers in effective
manner.
Complements:
There are various products which are same in the industry which are give negative impact
on the business in effective manner. Zara produce clothing, beauty products but same product are
having at the market place which help to customers to attract their side only (Konovalova and
et.al., 2018). Through that company have loss because most of the customers are goes with the
price of product they have not any work with quality of product in this manner. This create
negative impact on the business in negative manner.
Those are the effective analysis of six force analysis. Through that company is able to
find out possible affect within the industry.
PART 3
Analysis of internal resources and capabilities.
It is very important for company to analysis their internal resource and capabilities of
business in effective manner. With the help of this company is able to make effective changes

within the company in order to manage their positive growth at the market place. This create
more effectiveness for the business. Resources are very important part of the company which are
used by company to achieve goals and objectives of company in effective manner (Leskaj,
2017). This is an important for the business to create more effectiveness. For that here is select
VRIO model which is help to analysis internal resources and capabilities of company. it is a form
of four questions framework for value, rarity, limitability, and organization. For uncover
“sustained competitive advantages” this model is used by industries. Explanation of that are as
follows:
Valuable:
The V stand for valuable resources of company which are used by Zara to runs their
business in effective manner. By using this model companies find out whether the resources and
investment used is valuable or not (Lopes, and et.al., 2018). NPV method is most helpful
techniques used by the companies. This creates more effectiveness for the business. The VRIO
analysis of Zara reflected that the financial resources of company is highly valuable because that
is help for investing into the external opportunities which are arises. Employees of Zara also
most valuable for the business. Their employees are highly trained and skilled, they lead to more
productive output for the company in effective manner. This could be more valuable and
effective for the business in effective manner. On the other side, patent is also most important
aspects for the Zara as that is allow to company for sell their products without competitive
interference. This result in greater revenue for the company because that is provide licensing
revenue when it licenses these patents out of other manufacture. In addition to that distribution
network of Zara is valuable for company which is help it in reaching out to more and more
customers for achieve their goals and objective of company in effective manner. This ensure
greater revenue for the company and some of the promotion activity translate into the sales as
that products are more easily available at the market place (Velikorossov and Loshkov, 2020).
Research and development is the not the valuable for company because their costing is more than
the benefits it provides in form if innovation. The cost structure is not the valuable resources
because method of cost structure is more costly for used within the organization in effective
manner. That is affect to the overall profits of company. The cost structure is more competitive
disadvantages which need to be worked on that in effective manner.
Rare:

Resources are limited and scare and we have to use alternatively (Ktt,no, 2015). so this
model helps to find out whether the resources are used in right place in right manner. Financial
resources of Zara are found to be rare as per the analysis. The strong financial resources are only
possesses by the new companies within the industry in effective manner. Employees of Zara also
the rare resources for the company because they are highly trained and skilled which is not the
case with employees in other companies. For that company is provide better compensation and
effective work culture for ensure that these employees do not leave for other firms in effective
manner. This creates more effectiveness for the business. On the other side, patent is also the rare
resources of the company because that are not easily available and not possessed the competitors.
This allows company to use them without any kind of interference from the competitors. This
creates more effectiveness for the business at the market place. This is an important for business
to generate their more profits with the sales of products and services in effective manner. The
distribution network is rare resources which is defined as with the analysis of the VRIO model.
This is because of the competitors would be required a lot of the investment as well as the time
to come up with the better distribution network of company. These are also possessed by the
very few companies within the industry.
Illustration 1: VRIO analysis
(sources: VRIO analysis of Zara. 2018)
Imitable:
It is very difficult to find an equivalent substitute to compete with your offerings, but if
the resources are easily affordable then companies have temporary competitive advantages.

Financial resources of the company Zara are very costly to imitate as identified by the VRIO
analysis in effective manner. This creates effectiveness for the business and their growth of the
company in effective manner. These resources are acquired by the company with prolonged
profit over the year. As per that new entrants are required the same profit for the longer period of
the time of to accumulate the amount of financial resources. Employees are not the effective
imitate resources for the Zara because company train their employees for improve their skills in
effective manner (Pozdnyakova and Saveleva, 2017). Patents of Zara is very difficult to imitate
which is identified by using the proper model because that is not legally allowed to imitate a
patented product. In order to get the same products developed and getting patent for that is very
costly process for the companies. As that patent is very imitate resources for the company in
effective manner. The distribution network is also very imitate for the company. This has
effectively developed over the year gradually with the company. For that competitors are more
required the same process which is very costly for the business in effective manner. This make
the higher contribution for achieve goals and objectives of company in effective manner.
Organisation:
If the company have organized management system, processes, structures and culture to
capitalize on resources than only company use sustained competitive advantages. Organization is
the best part of the VRIO model which is create more effectiveness for the business. This refers
with the proper structure of work in effective manner. Financial resources of the company is
organized because Zara use their finance at the correct place, effective of opportunities and
combatting threats. This creates the sustained competitive advantage for company in effective
manner. Their distribution network is well organized in proper manner. The company Zara use
this network in order to reach out their customers in effective manner. This help to company for
ensuring about the products are available on all of its outlets. Therefore, these resources are the
part which is prove to be a sources of sustained competitive advantage for company in effective
manner (Shujahat and Ali, 2017). The patent is not the organized which means that company is
not using these patents to their full potentials. That is unused competitive advantage which is
exists that can be changed into the sustainable competitive advantage if company started with
selling patented products before the patent is expires. Those are the organized products and
services which are well defined with the company in effective manner.
Resources Valuable Rare Imitate Organisation

Financial
resources
Yes Yes Yes Yes
Employees Yes Yes No No
Distribution
network
Yes Yes Yes Yes
Patent Yes Yes Yes No
Research and
development
No No No No
Cost structure No No No No
Those are the effective and valuable resources for the company which is effective for the
company in order to make effective profit at the market place in effective manner. Valuable, rare,
imitable and organisation resources are the most important and effective aspects which is create
more effectiveness for business. The well managed resources are give productive performance of
employees because have idea to use those techniques in effective manner.
PART 4
Discuss the importance and influences of the macro environment.
From the discussion I have learn there are various factors which are affect to the macro
environment factors in effective manner. Social factors is affected and influenced by the attitude
of people and customers towards the products and services of company. Technological factor is
affected to company when new technology come at the market place. Through that company is
affected day to day (Teece, 2019). Those are very important to understand by company which
factor of macro environment has been affect to company because through that company is able
make changes as per the macro-environment. With the help of this, company have opportunities
to develop their effectiveness at the market place in effective manner. Considering those factors
employees are feel safe and more effective at the company place to make effective work.
Industries are important for strategic analysis.
Industry have been very important for strategic analysis. This creates more effectiveness
for the business to generate more effectiveness at the market place. Strategic analysis is reflect

the critical and any kind of situation which is runs at the market place. Through that I have learn
more effectiveness of strategic analysis about the company (Trigeorgis and Reuer, 2017). I have
learn that strategic analysis is important for the proper management at the workplace by knowing
the condition and position at the company place. With the help of this, company have advantage
to get idea about the position and what is going in the industry. Through that business can make
new strategies as per requirement and after reviewing whole industry and their consequence
which are happening at the market place in effective manner. Industry is most important part of
strategic analysis.
CONCLUSION
From the above study it had been concluded that the strategic management has been
ongoing process of planning, organisation and controlling the thinks in effective manner. Those
has helped to create effectiveness for business in effective manner. For that report had been
covered and analysed by STEEPLE model which reflected social, political, economical,
environmental, technological, legal and ethical concept of the working environment. This helped
to analysis macro-environment of industry. With the help of six force analysis company had been
get the idea of their those factors which affect to company within the industry such as supplier,
buyer, industry competitors, complementary, entrants and substitute products. On the other side,
VRIO model helped to analysis the resources and capabilities of companies internal factors. At
the end of report had been covered with the reflection about the learning from the module in
effective manner about the importance of work.

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