logo

Cost Leadership through Economies of Scale

   

Added on  2019-09-30

21 Pages4179 Words402 Views
 | 
 | 
 | 
ZARA COMPANYCase Report
Cost Leadership through Economies of Scale_1

Table of ContentsIntroduction......................................................................................................................................3Company background......................................................................................................................3Part: 1 External analysis..................................................................................................................3Pestel analysis..............................................................................................................................3Porter’s five forces model............................................................................................................4Opportunities and threats.............................................................................................................5PART: 2 internal analysis................................................................................................................5Value chain model.......................................................................................................................5VRIO framework.........................................................................................................................7Strength and weakness.................................................................................................................7Part: 3 Corporate and business strategy...........................................................................................8Generic strategic model...............................................................................................................8Part: 4 Issues and challenges...........................................................................................................8Part: 5 Strategic options.................................................................................................................10Generic strategic options............................................................................................................10TOWS matrix.............................................................................................................................10SFA framework..........................................................................................................................11Implementation of strategic options...........................................................................................12
Cost Leadership through Economies of Scale_2

Part: 6 Recommendations and conclusion.....................................................................................12References......................................................................................................................................13
Cost Leadership through Economies of Scale_3

IntroductionIn this present paper, we will discuss the strategic appraisal of Zara Company. The paper also describe company background, external analysis through using pestle analysis and porters five forces model in order to determine the opportunities and threats of the company, internal analysisis conducted through using value chain model and VRIO framework in order to determine the strength and weakness of the company, business strategy is analyzed through using generic strategic model, identification of threats and weakness of the company, and strategic options for growth through applying TOWS matrix and SFA matrix with the implementation of strategic options. Company background Zara is a Spanish clothing as well as accessories retailer which are mainly based in Arteixo, Galicia. The company lies in retail industry, and it is present in approximately 2169 locations. It was founded in the year 1975 by Amancio Ortega. The company operates worldwide, and it is the largest index division, and it provides clothing for men’s as well as for women’s and childrenfashions with accessories segment. The company is using differentiation strategy in order to provide the unique style of products and services to the target audience. The success of the company is mainly based on providing the high quality of innovative products and services to thetarget audience through using differentiation strategy. The company had started its foreign expansion in the 1990s when index entered in twenty-nine countries.The vision statement of Zara states that the company wants to develop niche market of their own in the competitive market and to attain market leadership through unmatched quality,
Cost Leadership through Economies of Scale_4

empowered employees, unique products, highly ethical, world-class system, and professional standards. The mission statement of Zara states that the company is consistently improving its quality and value in order to satisfy its customers. Part: 1 External analysisThe external analysis is conducted to determine the health of an organization, political environment, technological, social, economical, and environmental factors which impacts on the sales volume of the company.Pestel analysisThe pestle analysis of Zara is explained below:1.Political factorsThere is a highly competitive textile industry which forces to price in order to attract a large number of the target audience which is a deregulation of textile industry. Furthermore, import quotes are removed for Spanish retailer which provides access to theinternational market that helps to generate high revenue through economies of scale.2.Economic factorsThe company has faced the economic crisis during a recession which impacts on the sales volume of the company, and the company has the large share in the fashion industry which directly contributes towards the gross domestic product of the country. The company also contributes towards the employment generation of the company (Rachet et al., 2014). 3.Social factors
Cost Leadership through Economies of Scale_5

The company has also considered about social factors in developing products and services for the target audience as social factors play an important role in selecting fashionable clothes. Zara has a strong brand identity which helps to retain social popularity, and high sales of the company ensure that the brand has high social acceptance due to which it is seen as a desirable option.4.Technical factorsThe company uses innovative technology in order to develop unique and highly fashionable products for the target audience. It helps to fulfill needs and demands of the consumers through providing innovative products and services. 5.Legal factorsThe fashion industry is much concerned about intellectual property, and Zara has overcome this threat through providing less time framework within its supply chain. It provides first mover advantage to the company as their design is looked by other designers then the similar design is copied by them. In addition, legal requirements in terms of intellectual property protection may limit opportunities as imitation is inherent infashion design. 6.Environmental factorsIt is concerned with the textile companies which are transporting textile across the world, and a new approach to the textile industry concerns about the environment at the time of developing products and services. It creates a burden on the companies to develop eco-friendly products with the retention of basic position within the same industry.
Cost Leadership through Economies of Scale_6

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents