Proposing changes for Zara with reference to macro environmental analysis

This article discusses the macro and micro environmental analysis of Zara and proposes changes for the organization with reference to the analysis. The article also includes a PESTLE analysis of Zara.

Running head: BUSINESS MANAGEMENT
Proposing changes for Zara with reference to macro environmental analysis
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Macro environmental analysis of Zara
Political  High government debts
 Political instabilities
Economic  High employment rates
 Inflation
 High exchange rates
Social  Changing lifestyle of the
customers
Technological  Social media marketing
Legal  Consumer Protection Act
Environment  Schemes like Reuse, Reduce and
Recycle
Table 1: PESTLE analysis of Zara
(Source: Zaras.co.uk 2018)
High government debts aggravate the complexities of Zara to conduct the import and
export activities. These difficulties adversely influences the purchasing behaviour of the
customers, which stalls the productivity of the organization. Unemployment and inflation in
the food prices financially affects financial parameter of the organization, Zara. This is
particularly an issue in the process of setting prices for the apparels (Burns and Dewhurst
2016). Adopting schemes beneficial for the customers helps the personnel to strengthen the
customer base. Introducing online retail marketing has enables Zara to increase the
trafficking of the audience towards the brand image. Here, 3C model can be applied, as it

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involves the interaction between the organization and the customers. This is in terms of
catering to their specific needs, demands and requirements, so that they can secure their
market position within the competitive ambience.
Taking the initiative of Reduce, Reuse and Recycle proves beneficial for Zara in
terms of preserving the biodiversity of the environment. Along with this, reduction in the
carbon footprint is also an initiative towards preventing the environmental pollutions (Parris
et al. 2016). Adherence to the marketing legislations seems fruitful in terms of averting the
illegal instances.
Micro environmental analysis of ZARA
Competitive rivalry
Zara receives tough competition from brands like H&M, Gucci, Channel, Christian
Dior among others. Conducting target market segmentation helps Zara to fulfil the specific
needs, demands and requirements of the customers (Burns and Dewhurst 2016). Supply chain
network of Zara is strong and flexible, which helps in enriching the stock. Adopting latest
technology helps Zara to maintain the pace with the contemporary brands in the competitive
ambience of the market.
Threat of the new entrants
Unique design within the apparels helps Zara to attract foreign clients and investors.
This reflects the penetration into the foreign markets. However, more workforce in the
contemporary brands like Hawthorn, Blue Clothing among others pose as challenge in terms
of stabilizing the market position (Carroll and Buchholtz 2014). High quality and reasonable
prices help Zara to maintain the market position, restricting the contemporary brands to
overpower.

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Bargaining power of the suppliers
The supplier power is low in case of Zara. This aligns with the goal of seeking
prospective customers, who would purchase their merchandise. Licensed contracts with the
suppliers is assistance in terms of enhancing the stability in the professional relationships.
This stability is indicative of collaborative attempts in terms of introducing quality goods for
the clients and the customers.
Threat of substitute
Fashion industry is unpredictable in terms of the projects. However, innovation helps
Zara to stand out from the contemporary brands. The major drive behind this is the skills and
efforts of the research and development team (Parris et al. 2016). On the contrary, local
brands like Blue Clothing achieved excellence for complying to the International Codes of
Conduct. The fabric sourcing is an integral part of the business, which helps in attracting the
local customers. Lab tests helps in preventing substitutes or poor quality fabrics, to be used in
manufacturing the apparels.
Bargaining power of buyers
Like all other brands, Zara adopts conscious approach towards fulfilling the needs,
demands and requirements of the customers. Typical evidence of this are the loyalty
programs, which acts as a valuation for the purchasing power of the customers (Swift and Piff
2014). Spending quality amount on advertising the apparels and the discounts helps Zara to
increase the trafficking of audience towards the brand image.
Proposed changes
If the personnel of Zara indulge in alliance with the members of the trade union, it
would help in coping up with the instances of inflation, high prices of the raw materials and

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exchange rates. Contracts with the trade unions would help in regulating the labour charges,
which is necessary in terms of extracting effective labour. However, Swift and Piff (2014)
proposes that rationality needs to be maintained during the duration of the contracts. This is
because rationality would help the personnel of Zara in protecting the secret and confidential
data. Here, behavioural theory can be relation. This rationality would be a planned and
reasoned action in terms of luring the clients towards the services. On the contrary,
lackadaisical approach towards maintaining relationship with the clients would seem
irresponsibility in terms of securing the organizational data.
Introducing physical stores would be effective in terms of providing quality services
to the customers under one roof. On the other hand, Wang and Alexander (2015) argues that
mention can be made of services other than the production of apparels, which has expanded
the scope and arena of the business. If campaigning for these initiatives is done properly, then
prospective customers would be bestowed on the organization. For this, proper advertising
strategy needs to be adopted. This can be done through the consideration of customer
approaches. However, conscious approach towards the traditionalism would help Zara to
attain loyalty, trust and dependence from the clients and the customers (Carroll and
Buchholtz 2014).

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References
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Carroll, A., and Buchholtz, A. 2014. Business and society: Ethics, sustainability, and
stakeholder management. Nelson Education.
Parris, D.L., Dapko, J.L., Arnold, R.W. and Arnold, D., 2016. Exploring transparency: a new
framework for responsible business management. Management Decision, 54(1), pp.222-247.
Swift, L., and Piff, S. (2014). Quantitative methods: for business, management and finance.
Macmillan International Higher Education.
Wang, L. and Alexander, C.A., 2015. Big data driven supply chain management and business
administration. American Journal of Economics and Business Administration, 7(2), p.60.
Zaras.co.uk 2018, About us, Available at: https://www.Zaras.co.uk/ [Accessed on 2nd Dec
2018]