Zara Globalization: Impact on Organizational Strategy and Decision Making

This report discusses the impact of globalization on Zara's organizational strategy and decision making. It explores the interrelationship of functions, internal and external analysis, and the influence of globalization on Zara's decision making. The report also provides recommendations for companies entering new markets.

Zara globalization
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Contents
1.0 INTRODUCTION.....................................................................................................................3
2.0 LITEREATURE REVIEW........................................................................................................3
Different types, size and scope of organisations.........................................................................3
Interrelationship of functions of organisations............................................................................4
Impact of internal and external environment on business operations..........................................4
Influence of globalisation on organisational strategy and decision making................................5
3.0 Discussion and Analysis............................................................................................................5
Explain with justification of type, size & scope of chosen organisation.....................................5
Analyse the influence of interrelationship of functions on organisational structure of Zara......6
Internal and external analysis of Zara..........................................................................................6
Evaluate impact of globalisation on decision making and strategy on Zara...............................8
Conclusion & Recommendations....................................................................................................8
References........................................................................................................................................8
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1.0 INTRODUCTION
Globalisation is defined as a process by which an entity and other companies develop
international influence or initiate business at international levels. In addition to this, it is also
termed as a procedure of integration and interaction between companies, people and government
at global level (Beck, 2018). For the present report, Zara is taken into consideration. It is a
multinational fashion retailer and its head office is located at Arteixo. The company was
established in the year 1975 and at present it has around 2,250 stores globally. Zara specialise in
fast fashion product, shoes, bags, accessories, clothing, perfumes and many more. The report will
discuss about size, scope and type of organisation. In addition to this, there is discussion about
interrelation of functional departments and their impact on chosen organisation performance.
Moreover. Internal and external analysis is describe by using different frameworks and their
impact on respective company. At last, influence of globalisation on decision making and
strategy on organisation is discuss in report properly.
2.0 LITEREATURE REVIEW
Different types, size and scope of organisations
According to the view point of Zicheng,(2019), there are mainly three forms of
organisation that is private, public and voluntary organisation. Private organisations are
corporate in order earn higher profits and enhance wealth of owners. For example, Zara is a
multinational Spanish brand that offers fast fashion products such as bags, clothing, sunglasses
and many more. The scope of company is wide as it offer products as well as service in around
13 countries and has around 2200 shops globally (Cao and Chen, 2019). Public organisation are
corporate for development of societies and economy and it is determine that it is owned and
managed by government. Foe example, INTA is a public organisation that main objective is to
improve aerospace technology that consist of huge scope as it improve the condition of country.
Moreover, voluntary organisation is establish for welfare of societies and raise living standard of
people. For instance, DARA is a voluntary organisation that is established in year 2003 in order
to assess the influence of humanitarian that help in modifying practices and policies. The scope
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of organisation is wide, as it has carried out evaluations in around 60 countries that involve
United Nations and European commission.
Interrelationship of functions of organisations
As per the opinions of Steffani Cameron,(2018), every organisation consist of various
departments such as marketing, operations, finance, human resource, IT and so on. The activities
of such departments is different but they are working for attaining common goals and objectives
within in given time frame. The marketing department help in promoting products and services
and to implement such activities, it require funds that is approved by the financial department.
This interrelationship help an organisation to ensure availability of resources and implement
marketing activities that has positive influence on sales and profitability of company.
Human resource department help company to recruit effective and talented candidate for
IT department, who has the knowledge about technical skills and perform activities of company
in an effective manner whereas IT department develop software for HR department that help in
keeping information of employees in effective manner. This interrelationship help an
organisation to enhance its productivity and profitability level in an effective manner.
Impact of internal and external environment on business operations
On the basis of view point of Sampson Quain, (2019), internal and external factors has
high influence on success and failure of company that is not in control of an organisation. In case
of internal factors, employee has direct impact on business operations and in order to gain
success, it is important for an entity to provide training and motivate them in a proper manner.
Decline in the efficiency level of staff members has direct influence on performance and
profitability of company in a negative manner (Canbaz, Gürsoy and Gökce, 2018). Another,
internal factor is leadership, it is determine that organisation having strong leadership help
company to clear mission and vison on mind set of employees due o which activities is
implement in an effective manner. In context to External factor, technology plays vital role as it
is changing rapidly and in order to sustain in market, it is important for an organisation to adopt
it that occur high cost and decline revenue level of organisation. Another external factor is
customers, which are unpredictable and their preferences are changed according to market
trends. In order to attain success and growth, it is essential for an entity to conduct market
research that help in gaining insight about market trends and customer requirements due to which
an entity fulfil needs of customer and retain them for longer time period.
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Influence of globalisation on organisational strategy and decision making
As per the view pint of Michael and Roohen, (2019), it is determine that globalisation has
both positive as well as negative influence on strategies and decision making of organisation. It
is determine that government have decline trade barriers due to which companies is able to
expand their operations in an effective manner that has positive impact on performance and
profitability. In order to enter in new market, it is important for companies to develop effective
strategies and take decision by considering factors such as market trends, customer requirements,
culture and many more (Crane, Matten and Spence, 2019). Globalisation enhance the level of
competition that direct impact on strategies of an organisation as to remain in competition,
companies alter or change their strategies and decision that will help them to attain competitive
advantage at marketplace.
3.0 Discussion and Analysis
Explain with justification of type, size & scope of chosen organisation
Zara is a Spanish retailer based company that offers fast fashion products involving shoes,
clothing, bags, perfumes, accessories, swimwear and so on. The company has more than 2200
shops globally and is trying to expand in Asia market. Zara offer unique designs and quality
clothes due to which it attain competitive advantage at marketplace (Lala, 2018). At present, the
revenue of company is € 18. 022 million that states Zara has high market share and revenue level
as well. The scope of Zara is wide as it offer variety of products and its existence is more than in
12 countries. Moreover, the higher authorities of company is developing strategies for expanding
operations in more countries that will help company to earn higher profits and strengthen market
position in an effective manner.
Analyse the influence of interrelationship of functions on organisational structure of Zara
Interrelationship among the functional departments help Zara to attain its objectives within
stipulated time frame. One of the influence of such interrelationship is increase in productivity
and development of positive working environment in an effective manner. It help company to
enhance its efficiency and profitability level in a proper manner. Moreover, this interrelationship
aid company to implement activities in a smooth and proper manner that directly leads to
increase in productivity and revenue of company. It is analysed that such interrelationship help
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company to develop a positive mind set of employees due to which they can work with full
potential towards attainment of goals and objectives as well (Holm, 2019).
Internal and external analysis of Zara
It is significant for companies to analyse internal and external environment and its impact
on organisational activities and performance. For this, managers of Zara make use of PESTLE
analysis and SWOT analysis that is given below:
PESTLE analysis: It is termed as a framework that help an entity to determine impact of
macro environmental factors that help in developing effective strategies and decline level of
threats. The elements of PESTLE analysis is given below:
Political factors: Zara is a Spanish brand that comes under the European Union and it is
determine that company has the advantage of tax concessions and free trade agreement, which
have become hallmark of European Union business (Croucher, 2018). If the company is looking
for expanding operations in other countries, it is essential to consider political factors such as
trade policy, fiscal policy, political stability of that particular country. It can help Zara to prove
to be important that hinders progress of expansion of business.
Economical factor: It is determine that economic status of country is good where Zara
operates. For instance, in Spain the labour cost is low and there is easy availability of workforce
that help company to enhance its profit and revenue level. In addition to this, being a fashion
brand, it is able to remain relevant at the time financial slowdowns and economic turmoil
globally.
Social factors: One of the main reason of success of company is the ability to research
cultural and social needs of its target market. It help Zara to offer product which is acceptable by
its target market and develop brand image in market effectively. In addition to this, it is
determine that company offers an exclusive products which is not like to be miss by people and
has positive impact on sales and profit of Zara.
Technological factors: Technology plays vital role in the overall success of company as
the brand have online stores that make it easy to reach globally and enhance its customer base
level. In addition to this, using artificial intelligence and automation help company to deliver
products and improve operations in an effective manner.
Legal factors: An entity can perform in proper manner when it follows all the legal
structure of country where it operates. The higher authorities of Zara undertaken all legal
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formalities when entering into new market. It help company to easily and smoothly implement
activities and operations as well.
Environmental factors: It is analysed that stores of Zara are made more energy efficient
& its manufacturing process is streamlined that decline level of waste. In addition to this, it is
determine that fashion industry is undertaken as one of largest promoters of waste and in order to
remain in market for longer time, it is essential for Zara to maintain eco-friendly business
practice.
SWOT analysis
Strength Weaknesses
 One of the strength of Zara is its unique
design that attract people and help in
increasing level of sales.
 Another strength is its global presence,
Zara has more than 2100 stores
worldwide, which is the main reason of
its high market share (Majumder and
Prakash, 2018).
 Lack of advertising is consider as one
of the weakness of company due to
which its competitors take advantage
that has negative impact on its sales.
 Another weakness of Zara is, it keep
low stock in order to make customer
reach again but it sometimes develop
negative mind set of customer towards
brand.
Opportunities Threats
 The company has the advantage to
make use of E-commerce in order to
enhance its sales. It has its own online
store but using E-commerce platform
help in reaching more number of people
and increase its profit level.
 The company can expand its operations
and enter into new market that help in
gaining higher profits and also
strengthen market position of Zara.
 One of the biggest threat of Zara is its
competitors such as H&M, Vero moda
and many more that decline its sales
and revenue level as well.
 The company has low reach as it dies
not have smaller displays especially in
Asia, which give an advantage to
competitors to set their presence in
market.
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Evaluate impact of globalisation on decision making and strategy on Zara
It is analysed that globalisation has both positive and negative influence on decision making
and strategy of Zara. Globalisation enhance the level of competition in market and due to which
it is important for managers of Zara to develop effective strategy and take better decision in an
effective manner (Leimgruber, 2018). In addition to this, it is determine that globalization allows
an entity to exchange technology and adoption of modern technology help company to make
improvements and enhance their productivity and profitability level. Moreover, due to
globalisation, there is flow of products and service and in order to properly implement it, the
higher authorities develop strategy and is required to change decisions in an effective manner.
Conclusion & Recommendations
From the above study, it has been concluded that globalisation has both positive and
negative impact on business performance and activities as well. It is recommended to companies
to analyse factors such as culture, values, opinions, market trends, customer needs if particular
market in which they enter so that their product and service is accept in market and attain success
as well . By the assistance of PESTLE analysis and SWOT analysis, an entity gain insight about
uncontrollable factors or internal and external factors that has direct influence on performance as
well as productivity of company.
References
Books & Journal
Beck, U., 2018. What is globalization?. John Wiley & Sons.
Canbaz, O., Gürsoy, Ö. and Gökce, A., 2018. Detecting clay minerals in hydrothermal alteration
areas with integration of ASTER image and spectral data in Kösedag-Zara (Sivas),
Turkey. Journal of the Geological Society of India, 91(4), pp.483-488.
Cao, H. and Chen, Z., 2019. The driving effect of internal and external environment on green
innovation strategy-The moderating role of top management’s environmental
awareness. Nankai Business Review International.
Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing corporate
citizenship and sustainability in the age of globalization. Oxford University Press, USA.
Croucher, S., 2018. Globalization and belonging: The politics of identity in a changing world.
Rowman & Littlefield.
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Eriksen, T.H., 2018. Globalization. In Handbook of Political Anthropology. Edward Elgar
Publishing.
Gopinath, C., 2018. Globalization: A Multi-dimensional System. Edward Elgar Publishing.
Holm, H.H., 2019. Whose world order?: uneven globalization and the end of the Cold War.
Routledge.
Lala, A., 2018. FAST FASHION. BENETTON AND ITS MAIN COMPETITOR INDITEX
(ZARA) (Bachelor's thesis, Università Ca'Foscari Venezia).
Leimgruber, W., 2018. Between global and local: marginality and marginal regions in the
context of globalization and deregulation. Routledge.
Majumder, M. and Prakash, D., 2018. Zara Brand Affect-The Trans-Border Reputation of
Trademarks. Indian JL & Just., 9, p.181.
Prajogo, D., Toy, J., Bhattacharya, A., Oke, A. and Cheng, T.C.E., 2018. The relationships
between information management, process management and operational performance:
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pp.95-103.
Online:
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