Management Strategies of Zara and H&M: A Comparative Analysis

This report compares the management strategies of Zara and H&M, conducts a SWOT analysis, evaluates the appropriateness of Porter's Five Forces model, and discusses strategic lessons for other Australian fashion retailers.

Case study
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Outline the management strategies of Zara and H&M.
.....................................................................................................................................................3
Conduct a SWOT analysis of both Zara and H&M....................................................................4
How appropriate is Porters 5 Forces model in analysing the Australian Fashion Industry?......5
Discuss the strategic lessons that you take away from this case for other Australian fashion
retailers?.....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES:...............................................................................................................................8
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INTRODUCTION
In today's business environment, everyday the complexities and competition are
increasing. This is the reason that organisations need to analyse their strategies which they are
suing in their workplaces (Duoyan, 2021). It is necessary for companies to identify their
strengths and weaknesses so that they will be able to formulate management strategies. This
report aims to comparing of giant organisations that are ZARA and H&M. This report will be
discussing management strategies of ZARA and H&M. In addition to this, it will also discuss
competition analysis, and the strategic lessons from the case study. In order to grow and make
the business successful, it is necessary for an organisation that they should analyse all these
activities with the use of necessary frameworks.
MAIN BODY
Outline the management strategies of Zara and H&M.
ZARA and H&M both are the giant fashion retailers that are running their business in
global market. Their management style decides their growth and success. It is very crucial for
organisations that they should make their strategies effectively so that they will be able to get
competitive advantage (Tomaszewska, 2021). It is found that there are many risk that facing by
fashion retailers in the business environment. There are two important reason for risk that are
competition and continuous change in tastes and preferences of customers. That's why
companies need to formulate management strategies that assists organisations to perform more
effectively for overcoming with the risks. ZARA and H&M are two most successful
organisations in fashion industry that have a tough competition They are competitors of each
other.
ZARA is the Spanish-owned business which is not limited to the Spain as they are selling
their goods and services in global market. They opened their stores in Australia in 2011. From
that period, they are continuously growing their business very well. ZARA is focusing on the fast
fashion model, this is the reason that they change their trends in just three weeks. It is found that
they give permission to the store managers that they can take own decisions independently of
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inventory. Their main strategy is latest fashion in their stores. It is very important for them that
they should keep eye on the fashion trends. They are managing their supply chain very
effectively and efficiently. They are more focused on cost leadership and try to differentiate their
fashionable clothes by latest fashions. In the marketing field, it is found that ZARA is not
spending too much on marketing.
In the case of H&M, it is identified that they are following traditional seasonal model.
Their stores are always stocked with staple items and other seasonal fashion items. It is found
that they are similarly growing in the market (Xuejie, Chang and GuangHao, 2019). They are
highly outsource their production process. In their fashion styles, H&M is not aiming to the
styles as they are more focus on the use of big names such as Jimmy Choo, Karl Lagerfeld, etc.
They promote their fashion clothes by using these names. In the marketing, H&M is spending
approximate 30% of revenues in advertising so that they will promote their goods and services in
the market. They are reducing their cost of productions by choosing low cost locations.
Conduct a SWOT analysis of both Zara and H&M.
SWOT analysis is the model or framework which helps organisation to analyse their core
competencies and also assists in taking corrective decision (Seo and Suh, 2019). It is found that
formulation of management studies need to do a SWOT analysis so that they will be able to
know strengths which can be use in their strategies. H&M and ZARA both are large fashion
retailers. The SWOT analysis of both organisations are mentioned below:
SWOT of ZARA
Strengths Weaknesses
 The greatest strength of ZARA is their
supply chain which is very effective
and efficiently.
 They are using latest fashions, that's
why they are coming in the fast fashion
model.
 They are adopting a strategy in which
they have to change their old styles
very frequently. Due to this, they are
not focusing on the quality as well as
the sustainability.
 Zara does limited marketing
investments as they are doing
promotion in the market place.
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Opportunities Threats
 As per their sales in Australia, it is
found that they have an opportunity of
expanding their business.
 It is found that ZARA is facing an
intense level of competition as
everyday the number of retailers are
increasing.
SWOT of H&M
Strengths Weaknesses
 They are providing wide range of
products in the market places such as
staple and seasonal fashion items.
 They have a global presence in the
market that shows that they are selling
their goods and services in all over the
world.
 They are not focus on the latest trends
as they relive in using of big names.
 It is found that they are spending too
much on marketing that is reducing
their profit margins.
Opportunities Threats
 It is analysed that they are come at the
second position after ZARA on fast
fashion model so they have an
opportunity to run their business
successfully.
 Evolving fashion trends are one of the
biggest challenges for H&M as they are
not highly trendy.
From the discussion of SWOT analysis of both companies, it is analysed that they are
running very well business. Both are doing great in Australia and they are big competitors of
each other.
How appropriate is Porters 5 Forces model in analysing the Australian Fashion Industry?
It is necessary for Australian Fashion Industry that they should analyse the competition
with the help of using Porter's Five Forces model. This is one of the best model which is used for
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the purpose of competitive analysis in the market (Ullah, 2021). It is crucial for an organisation
that they should use this frameworks in their workplaces. In fashion industry of Australia, this
framework is appropriate in order to analyse the competitive market. Some points which are
discussed below that shows appropriateness:
 It is very helpful in order to identify and analyse the five competitive forces that shapes
fashion industry. This is also useful for the company in order to determine their corporate
strategy.
 Australia's fashion industry is able to measure the competition intensity, profitability,
attractiveness, etc. of an industry (Su, 2020). It included five important forces that are
intensity of competitive rivalry, bargaining power of suppliers, threat of substitutes,
bargaining power of buyers and threat of new entrants.
 With the help of this model, fashion industry get to know the power of buyers and
suppliers. They analyse what are the power of buyers in the industry as they can give an
impact on prices of the product.
Discuss the strategic lessons that you take away from this case for other Australian fashion
retailers?
From the case study of ZARA and H&M, it is analysed that it becomes necessary for
other Australian fashion retailers to focus on trends as well as marketing strategies in the
company. It is found in ZARA that they are not spending on advertising but it is necessary for
other organisations that they should make a marketing strategies (Camargo, Pereira and Scarpin,
2020). In their marketing strategies, other retailers should take a lessons from ZARA and H&M
that where they need to spend. Digital marketing is becoming one of the important method or
strategy that should be used by companies. It is found from the case of H&M that business
promotion is necessary and that's why their budget should be separately made. In ZARA case, it
is found that companies should focus on fast fashion model as it is one of the best method to
attract more and more customers in the organisations. It is also analysed from the case study that
companies should use SWOT analyse model as it helps in making the strategy more effectively.
When organisations get to know their strengths and weaknesses then it becomes very easy for
them to use their strengths in their strategies (Kim and Woo, 2021). Other retailers should focus
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on analysing the management strategies and competitive analysis in the market so that they will
get to know where they are positioned in the market place.
CONCLUSION
It can be concluded from the above discussion that management strategies are very
important for running the organisations effectively and efficiently. This is necessary for
companies to analyse their core competencies and weak areas when they are formulating
strategies. In this report, there was a discussion of comparison of two giant fashion retailers that
are ZARA and H&M. Both are opened there stores in Australia and found that they are giving a
tough competition to each other. This report also discussed strategic lessons from the discussion
of case study of these two organisations.
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REFERENCES:
Books and Journals
Camargo, L.R., Pereira, S.C.F. and Scarpin, M.R.S., 2020. Fast and ultra-fast fashion supply
chain management: an exploratory research. International Journal of Retail &
Distribution Management.
Duoyan, H., 2021, April. Research on ZARA Strategy from the Perspective of SWOT Analysis
Method. In 2021 6th International Conference on Social Sciences and Economic
Development (ICSSED 2021) (pp. 201-205). Atlantis Press.
Kim, S. and Woo, H., 2021. Global fashion retailers’ responses to external and internal crises
during the COVID-19 pandemic. Fashion and Textiles, 8(1), pp.1-26.
Seo, K. and Suh, S., 2019. A study on the characteristics and social values of vegan fashion in
H&M and Zara. Journal of Fashion Business, 23(6), pp.86-100.
Su, Y.Z., 2020. The Internationalization Strategies of Fast Fashion Clothing Retailer Brands: A
Cases Study of ZARA, H&M, UNIQLO, and Gap.
Tomaszewska, M., 2021. CSR practice in the clothing industry. The experience of H&M and
Zara. Zeszyty Studenckie Wydziału Ekonomicznego Uniwersytetu Gdańskiego" NASZE
STUDIA", (11).
Ullah, N., 2021. Fast-Fashion Labels Industry: Strategy Evaluation of H&M.
Xuejie, C., Chang, Q. and GuangHao, Z., 2019, August. Research on innovation supply chain
management in fast fashion industry—A comparative analysis of ZARA and H&M.
In Proceedings of the 3rd International Conference on Education, Culture and Social
Development (ICECSD 2019), Guangxi, China (pp. 29-30).
Online
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